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When it comes to handling payroll for a business, owners have to decide whether they want to take care of it themselves or hire an outside service to perform payroll duties. Though it may seem better to just handle payroll with an in-house team, there are a plethora of benefits to hiring a dedicated payroll service.
What Services Do Payroll Providers Offer?
What you get out of a payroll service depends on the specific company you hire, the services, you choose, and your business's needs. Basic services from payroll companies include payroll and tax calculation, printing and delivery of checks, and management reports. Most payroll services allow you to set up bi-weekly, weekly, monthly, semi-monthly, or yearly paychecks.
Payroll companies may offer additional services, such as 401(k) tie-ins, automatic deductions, and direct deposit. Many larger companies also offer integrated HR software and other system solutions to provide a complete payroll and benefits package. What you get out of a payroll service mostly depends on what you need from your payroll service.
What Are the Benefits of Outsourcing Your Payroll?
There are a host of benefits that come with hiring a payroll service, some of which include:
- Avoiding penalties: Making sure you've filed the right deductions in the right way can be difficult, leaving many small business owners with penalties to pay. A professional payroll service is familiar with the requirements for both state and federal taxes. It also ensures that you file properly and on time. This helps you to avoid IRS penalties and saves you money in the long run.
- Cost savings: For a large business, maintaining large in-house payroll departments is usually easier and more affordable. But for a small business, staffing an in-house payroll eats up funds and work hours. Maintaining a payroll department means hiring, training costs, additional payroll costs, and extra work. Outsourcing to a payroll service saves you training and hiring costs, leaving you free to focus on the rest of your business while professionals handle your payroll.
- Regulatory compliance: Keeping up with the various payroll laws and penalties is difficult, requiring you to pay close attention to existing and changing laws at the state and federal levels. Payroll services are trained on these laws and the various penalties that may occur should they be broken, and work to keep you compliant with all payroll-related laws.
- Security: Payroll services have secure systems that protect sensitive company and employee information, such as multiple server locations and redundant backup systems.
How Much Does Hiring a Payroll Service Cost?
Providing an exact cost for payroll services is difficult, as prices are based largely on the size of your business, the amount of employees you have, the payroll company you choose, and the payroll company's method of charging for its services. Here is a general pricing guide to give you an idea of what you can expect to pay for your payroll services:
- A payroll service that charges by the month has an average cost between $55 and $75 per month for an office with two to five employees.
- Weekly payroll for a company with 30 employees has an average cost between $300 and $600.
- 1099 and year-end W2s for a business with between 30 and 50 employees have a one-time cost per year that averages between $250 and $500.
- Payroll processing has an average cost between $1 and $1.50 per check, not including base rates.
- Direct deposit fees have an average cost of $0.10 per check.
What to Look for in a Payroll Service Provider
It is important to note that not all payroll service providers offer the same level of service, or even the exact same options. When looking at possible payroll companies, there are multiple factors you need to consider.
First, look for a provider with a reputation for quality service and support; there is no need to select a company that isn't known for its reliability. You also want to make sure that whatever systems the service uses are easy to understand and can integrate with your existing software. Otherwise, you'll be spending money to replace all your programs and time trying to understand it all.
While cost is a major deciding factor, it should never be your only consideration. Even if a service is exactly within your price range, it still needs to offer the features you need and want. Any payroll company that doesn't provide what you need simply isn't a payroll company worth hiring.