In the United States of America, small businesses employed around 59.9 million employees in 2019. Payroll processing involves managing the payments of these employees’ wages. As a company owner, it is essential to pay your staff accurately on time.
The payroll process can be detail-oriented and time-consuming. There can be no room for errors. Small businesses tend to outsource their payroll tasks. Managing these tasks accurately and efficiently becomes easier. The payroll processing fees in your business can vary. Several aspects play a role in determining the cost.
The factors that affect payroll processing fee in your business include:
Number of Employees on Your Payroll
The number of employees matters while estimating payroll processing costs. Most payroll services offer to reduce the prices if you have a more significant number of employees. Mid-size companies usually have around 100 to 1,000 employees. For such organizations, the payroll processing costs tend to reduce by about 9 percent.
Larger organizations benefit more from such offers. If your employee count is higher than a thousand employees, you can receive a more considerable reduction. It usually helps cut down your expenses by around 27 percent.
Payroll services tend to charge a monthly fee according to your number of employees. An additional subscription cost may also apply. Generally, the per-employee rate ranges from about $2 – $15. It can be higher for smaller businesses.
Frequency of Pay
The frequency of your payments to employees may also affect the payroll processing costs. Do your employees receive their pay twice per month, bi-weekly or weekly? A higher frequency of pay requires more work. It involves several tasks that can contribute to the overall cost estimate.
The monthly payment for payroll services may be less expensive for you. However, it may be illegal to do so in your area or for certain worker classes. Meanwhile, paying your employees each week may be more beneficial for you. Weekly payrolls involve a smaller and more consistent payment. It can help in maintaining a stable cash flow.
Some payroll processing costs may be charged for every payroll run. Others may offer an unlimited payroll for each month, including an off-cycle run as well. Semi-monthly paying on fixed dates can also be complicated. Every pay period will have a different number of working days.
Direct Deposit
Generally, payroll processing fees include direct deposit of wages to the bank accounts of your employees. Direct deposit can eliminate the costs of paper checks that may misplace among the mail.
Moreover, it ensures that the payment to your employees always reaches their respective bank accounts on time. Regardless of whether the employees are on vacation or business tours, they will receive their payment.
Payroll services that offer direct deposit setups can help to save some of your costs. This setup of direct deposit usually costs between $50 to $149. It depends on the number of employees and their bank account type. Additional costs may involve the bank’s flat fee and a separate rate for each employee’s payment.
Tax Filing Services
Along with paying your employees, it is essential to file payroll taxes accurately and on time. Otherwise, you may face expensive penalties. Business owners may need to contribute to the state, federal and local taxes of their employees. You have to pay a share of their Medicare and Social Security taxes.
Some payroll services offer to take care of all your payroll tax filings. Payroll processing costs can include additional charges for providing such services. They can help you in managing various taxes promptly.
They can also identify any errors in the taxes that you previously filed and paid. In such instances, they can assist you in getting a refund.
Other Benefits and Features
The features and additional benefits that a payroll package offers can also affect the payroll processing costs. Some of these features may include:
- HR services
- Employee benefits
- Attendance and time management
- Benefits administration
Some payroll services offer to automatically calculate, pay and deduct your employee’s compensation insurance. Others may partner with some providers to offer dental, vision, or medical insurance. If you want your hiring manager to review the payments, some services can arrange such provision. However, this functionality may charge extra.
Make sure to consider if these features are beneficial in running your business more seamlessly. Invest in them only if they are worthy of your company’s progression.
If you are considering hiring a payroll service, it is essential to estimate the expenses. The above factors tend to determine the payroll processing fees. Ensure to consider them while establishing your budget for these services.
