Outsourced payroll services have become a popular choice among businesses looking to streamline their operations and ensure compliance while reducing administrative burdens.
Yet, how much does it cost to outsource payroll? In this article, we’ll delve into some of the factors that influence the cost of these services and provide insights that hopefully help you make better-informed decisions for your business.
Understanding outsourced payroll
Before we look at the costs, let’s clarify what payroll outsourcing means. Outsourced payroll involves hiring a third-party service provider to handle all aspects of your payroll for you.
This includes a payroll specialist or accountant calculating employee wages, deducting taxes and other withholdings, processing payments and filing tax returns.
Factors influencing the cost of payroll services
The average cost of outsourced payroll services varies greatly – they cost however much the firm or accountant charges. Here are some of the factors that influence payroll outsourcing costs.
- The size of your business: The more employees you have and the more complex your payroll needs, the higher your fees are going to be.
- Scope of services: Whether you choose a basic package or a complex one will dictate how much you are charged. A basic service typically includes payroll processing, tax calculations and direct deposit payments. Additional services may include time and attendance tracking, employee benefits administration and HR support.
- Customisation and complexity: Businesses with unique payroll requirements or industry-specific regulations may require customised payroll solutions, which could increase the cost of outsourcing.
- Software and technology: The payroll software and technology used by the outsourcing provider can affect costs. Providers that offer advanced software with robust features and functionalities may charge higher fees for their services.
- Frequency of payroll processing: How often you process payroll can affect the cost of outsourcing. More frequent payroll processing may result in higher fees due to increased administrative efforts.
- Additional fees: Be wary of any additional fees that may apply, such as setup fees, implementation fees or fees for additional services or add-ons.
- Expertise: When evaluating the cost of outsourcing payroll services, it’s essential to consider the value provided by the outsourcing provider. Experience means accuracy, data security and reliable customer support, which may come with a higher price tag.
Typical cost structures
So, those are the factors that influence the cost of payroll services. But how can you expect to be charged? You need to know so you can pick the payment option that suits you best.
Cost structures include the following:
- Flat fee: Some payroll outsourcing providers charge a flat fee per payroll processing cycle, regardless of the number of employees or the complexity of the payroll. This pricing model offers simplicity and predictability.
- Per employee, per pay period: Other providers may charge businesses a set amount for each employee processed in each payroll cycle. This pricing model scales with the size of your workforce.
- Percentage of payroll: In some cases, payroll outsourcing providers may charge a percentage of the total payroll amount processed. This pricing model is less common and may be used for larger businesses with more complex payroll needs.
Why should I outsource payroll?
While the cost of outsourced payroll services depends on a range of factors, it’s important to remember the different benefits that they offer.
So, if you’re too busy to do your payroll on top of your regular work, and you have been wondering ‘how much does it cost to outsource payroll?’, why not outsource your payroll to us? With a great deal of experience managing payroll, we can take care of the tricky bits, leaving you to focus on the growth and success of your business.
Talk to us about our payroll services.
