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How Much Do Payroll Services Cost?

Written by:

Carolyn Young is a writer with over 25 years of experience in business in various roles, including bank management, marketing management, and business education.

Reviewed by:

Daniel Eisner is a payroll specialist with over a decade of practical experience in senior accounting positions.

How Much Do Payroll Services Cost?

How Much Do Payroll Services Cost?

If you’ve started a business and have employees, you’ve begun to tackle the payroll challenge – and it’s exactly that, a challenge. 

The payroll process is complex and time consuming, which is why many business owners turn to a payroll service. If you’ve ever wondered how much such a service costs and whether it’s worth the money, this guide provides the answers you’ll need to keep an eye on your bottom line.   

What Does a Payroll Service Do?

A payroll service handles the entire payroll process for you, making it nearly seamless and automated while offering additional services that simplify life for a business owner. The payroll service takes care of all the red tape so you can focus on building a successful business. 

Most payroll services offer a complete suite of services to take many tasks off your plate, such as federal, state, and local tax filings, as well as employee W-4 and I-9 forms and your W-2s and 1099s. You’ll have the option of paying employees by direct deposit or paper check, and the service will provide payroll reports. 

Benefits of a Payroll Service

Hiring a payroll service offers many benefits, including:

  • Ensuring compliance – The service will keep up with changes in payroll and payroll tax laws.
  • Avoiding penalties – Calculating deductions and correctly paying taxes is complex, and mistakes can result in penalties. The payroll service will handle the calculations and payments for you, giving you peace of mind.
  • Cost Savings – Handling payroll yourself is time consuming, keeping you from doing things that help grow your business. Hiring an employee to handle payroll for you tends to be more expensive than hiring a payroll service.
  • Security – Payroll services have cybersecurity systems in place that will protect sensitive data about your company and employees.

So, How Much Does a Payroll Service Cost?

Generally, the cost of the service depends on the client company’s number of employee. You could pay anywhere from $10 per employee per month to $100. Subscription payroll services generally run toward the lower end of that range. 

How much you pay also depends on which additional services you select, such as healthcare insurance administration or retirement plan administration.

Gusto is one of the less expensive subscription options on the market, charging as little as $40 per month, plus $6 per month per employee. For that price you get full payroll services as well as health care insurance administration.

Choosing a Payroll Service

It’s important to consider several factors when choosing a payroll service.

  • Price – You’ll want to keep costs low without sacrificing quality.
  • Scope of Services – You’ll want a payroll service that offers everything you need in terms of payroll processing, tax payments, and benefits administration.
  • Customer Reviews – One of the best measures of quality is what real customers say about the company and its services. Check with the Better Business Bureau and TrustPilot for reviews and ratings.

Using a Payroll Service

Processing payroll and dealing with taxes can be quite complex, so you should seriously consider using a payroll service. It’s likely to be less expensive than creating a new staff position for managing payroll. 

Payroll and payroll taxes come with countless laws and restrictions, and a payroll service can ensure your business remains in compliance at the federal, state, and local levels. You’ll just send over your digital timesheets and relevant information and the service provider will take care of the calculations, payments and taxes, freeing you up to focus on growing your business. 

We highly recommend hiring a payroll service — as a busy entrepreneur, you won’t regret it!