Hiring a payroll company for your small business may save you time and money. Since you won’t need dedicated payroll specialists on staff, you will have fewer personnel to pay and can save on additional business software costs. There’s also a good chance you will have fewer errors and, ultimately, fewer tax penalties if you outsource to a professional.
If you have decided outsourcing is the best choice for your business, how much should you pay so you get the most return on your investment? That depends on your needs and how much you want the service to handle.
What Do Payroll Companies Cover?
Most payroll services offer different packages for different company sizes and needs. You can usually get as little as a basic payroll system or as much as an integrated HR, payroll and benefits system. Basic systems often include features such as simple tax filing, direct deposit, employee access systems and processing of paychecks.
More complete packages may cover some additional tax requirements, including tax processing, reporting and mailing, but these can come with extra payroll costs. Delivering paper paychecks may also be part of a package, but you could incur delivery charges each pay period. When you add integration with other business tasks, like managing benefits and HR, this may increase the payroll services cost as well. However, even with additional costs or payroll packages in the higher range, hiring a professional may still be more cost-effective and efficient than paying someone in-house.
How Much Should I Be Willing to Pay?
You might pay around $100 to $350 per employee each year to get the entire range of payroll and human resource services. When you compare the cost of outsourcing to the hourly wage or salary you would have to pay for an employee to prepare payroll each period and learn the tax requirements, not only can you get more value with a provider, you get resources from certified professionals.
Since every company’s needs are different, as a general rule, try not to spend more than one-third of your business’s revenue on payroll costs. This will help keep your spending on internal processes in check so you can spend more on growing the business and making a profit.
While there is not necessarily a standard payroll cost when you outsource, you can usually save on the process by taking it outside of the company. There are plenty of package options available to serve businesses of all sizes and needs, so figure out what services are necessary and talk to a provider about how they can meet those requirements. If you want a little help getting started, contact AmCheck to speak with one of our representatives or get a quote to find out what package and pricing options will work for you.