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Updated Jan 03, 2024

How Much Do Payroll Services Cost?

CPAs and payroll services can handle payroll accurately with differing costs, service levels and features.

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Sean Peek, Senior Analyst & Expert on Business Ownership
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When it comes to processing your business’s payroll, you have several options. You can do it yourself or outsource the task by hiring a certified public accountant (CPA) or a payroll company to manage it for you. While both outsourcing options can complete your payroll accurately and on time, CPAs and payroll solutions provide different service levels. 

Before hiring anyone to help you manage payroll and other functions, it’s crucial to understand how you’ll be charged, where hidden fees may lurk and what each option provides. We’ll break down the services payroll companies and CPAs offer and what they charge. 

What is a payroll company?

Payroll companies help employers compute their employees’ pay and payroll withholdings. Payroll services may be full-fledged companies that perform an array of services; they may also come in the form of self-service software.

Payroll services collect employee wage and timesheet data to calculate gross wages. Next, they subtract the appropriate withholdings and deductions and compensate employees via payment methods like printed checks, direct deposit and direct deposit alternatives like payroll cards. Payroll services can also manage employee tax filing information.

How much do payroll companies charge?

Payroll services have various cost structures and pricing based on several factors, including the payment methods your employees need and where your business operates. Most businesses can find a professional payroll platform that fits their budgets. 

Editor’s note: Looking for the right online payroll service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

Payroll companies generally charge monthly fees, taxes and additional fixed fees for each employee on your payroll. Additional costs may include fees for managing 401(k) distribution, direct deposit, dealing with payroll taxes and payroll forms and more. 

Payroll pricing structures

Payroll companies have varying pricing structures to accommodate different business needs. In general, they incur the following costs: 

  • Base fee: Most payroll services charge a monthly or per-payroll base fee. With a per-payroll base fee, you pay every time you run payroll. For example, if your company pays employees every two weeks, you pay the base fee every two weeks. If you run payroll weekly, you pay the fee each week.
  • Per-employee charge: Payroll services typically charge a per-employee fee each month or pay period. These fees typically range from $2 to $15, depending on your service plan and the features it includes. 
  • Monthly fee: Some payroll processing services have a monthly subscription plan. With this option, they charge a set price to accommodate unlimited employees. This option may have feature restrictions. Subscription payroll plans are a good choice for small businesses with teams that need only essential services.
  • Set fee: Some payroll providers have a set fee structure they publish online. This practice is common among do-it-yourself (DIY) services designed for smaller companies where employers monitor and input payroll processing data.
  • Custom quote: Some services provide a custom quote for your business based on the specific payroll functions and features you need. Your employee numbers, payroll frequency, payroll methods and the number of states in which you operate will affect your quote. 
  • License fee: Some businesses prefer DIY payroll software they install on local computers or access online. In this case, you’d pay a license fee to access this software. This license fee may be a monthly subscription charge or a one-time fee. You may have to pay for annual software upgrades. 
FYIDid you know
Friday is the most popular day to pay employees. Additionally, 43% of employees are paid biweekly, making it the most common payroll cycle, according to the Bureau of Labor Statistics.

Payroll service hidden fees

Payroll services may also charge additional, less apparent fees, including the following: 

  • Tax service fees: Your payroll company may charge for full-service tax filing services, including processing your state, federal and local taxes.
  • Implementation fees: Payroll processing services may charge an implementation or setup fee that covers functions, such as adding your employees to the system.
  • Payment method fees: Some payroll services may charge extra for direct deposit, while others may charge an additional fee if you require printed checks.
  • Support fees: You may also encounter customer support fees or maintenance charges.

Are payroll services worth the cost?

Paying for a full-fledged payroll service may be worthwhile for the following reasons: 

  • Payroll services take the guesswork out of payroll: A payroll service that handles all your company’s payroll needs will increase payroll accuracy and efficiency while helping you avoid and fix payroll discrepancies and adhere to paycheck record-keeping laws. The reduced headaches may be worth the cost.
  • Payroll services provide tax protection: Most payroll services provide a tax guarantee. If the company makes a mistake on your taxes, it will correct the error and pay any resulting fines. The service will also keep your business compliant with ever-changing tax laws and payroll liabilities.
  • Payroll services provide HR services: Many payroll companies offer a host of helpful HR services. For example, many payroll services handle time and attendance tracking, benefits administration and retirement savings plans. When a payroll service handles these HR functions, employers have time to focus on bigger-picture issues. Additionally, employees benefit from bundled services that make it easy to track hours and access benefit and retirement information.

However, paying for a payroll service may not be worth the cost for some businesses. Consider the following: 

  • Payroll services may provide more features than you need: Your payroll service costs may include various features your business doesn’t need. You could end up paying for unnecessary functions or tasks your team could handle easily. For example, according to Matthew Venuto, regional vice president at ConnectPay, businesses often purchase a full HR suite when they need only a few HR features.
  • Payroll service prices may be too high for your business: For some businesses, payroll software or running payroll manually would be a better fit cost-wise. High upfront costs and monthly or per-payroll payments can get prohibitively expensive. 

The best payroll services

The best online payroll companies will provide the services your business needs at a price you can afford. Consider the following top-notch options as you choose the right payroll provider

  • Gusto: Gusto uses a single interface to support the entire payroll process and provides essential HR tasks, including new hire reporting and digital onboarding. It’s a full-service, one-stop shop for your payroll and HR needs. Read our Gusto Payroll review to learn how this platform syncs with third-party systems and allows numerous helpful add-ons. 
  • Rippling: Rippling uses a straightforward, clear interface that users find intuitive and easy to navigate. Our Rippling review details how this platform streamlines many standard HR functions, including applicant tracking, task management, payroll processing and benefits training.
  • OnPay: OnPay caters to small businesses with its first-rate customer support functions and user-friendly tools, such as unlimited payroll runs. Check out our in-depth OnPay review to learn about its transparent and inclusive pricing structure. 
  • Paychex: Paychex has the unique ability to scale functions within its platform quickly and easily, making it an ideal option for larger businesses with many employees. Our comprehensive Paychex review details the platform’s robust feature set. 
TipBottom line
Your business may also consider using a PEO service for payroll. A PEO becomes a co-employer and manages payroll administration and employee taxes via its tax identification number.

Do CPAs offer payroll solutions?

CPAs can be extremely helpful regarding payroll and other financial functions. A CPA is a financial advisor who helps businesses, entrepreneurs and other organizations map their finances and reach their fiscal goals. 

“I would never say payroll replaces CPAs,” explained Sara Menke, founder and chairman of Premier Talent Partners. “But they can complement one another because [payroll companies] don’t offer the same work as an accountant.”

How much do CPAs charge?

According to the National Society of Accountants (NSA), the average CPA rate is $180 per hour for filing federal or state tax returns and $174 per hour for other tax services. 

On average, CPAs handle complete payroll services for $100 per hour and bookkeeping for $109 per hour. However, that price can vary based on factors like the CPA’s knowledge and experience, your business’s location and the size of your company. Because of their level of expertise, a full-time dedicated CPA can be expensive, so most small and midsize businesses work with CPAs on an hourly or project basis.

Typically, CPAs bill clients hourly, but fixed fees are becoming more common. Many businesses opt for fixed-rate CPA plans to get crucial services at a price they can afford. With more custom options now available for managing payroll, CPAs are adjusting their services to better serve small businesses.

What are the advantages of using a CPA?

CPAs can help your organization meet its financial goals and do the following:

  • Offer tax and accounting consultations 
  • Help you make financial decisions
  • Handle payroll processing and administration
  • Ensure retirement withholdings are properly deducted
  • File payroll taxes
  • Run payroll reports
  • Track expense reimbursements and profit-sharing disbursements
  • Act as a bookkeeper
  • Collect accounts receivable
  • Send invoices
  • Pay vendors

“[CPAs] provide an extremely high level of service to a small business owner,” Menke noted. “It’s not just bookkeeping and the incoming and outgoing of cash management and investments; it’s future strategy. We do a really good job of keeping clients compliant.”

Did You Know?Did you know
Paying employees on a regular schedule is critical. According to the American Payroll Association, nearly 72 percent of employees said that paychecks being delayed a week would cause trouble for them in meeting their financial obligations.

What are the disadvantages of hiring a CPA to manage payroll?

While having a CPA manage payroll can be a great strategy, there are some disadvantages:

  • CPAs may not be cost-effective for your business: Outsourcing your payroll to a CPA can be expensive, depending on the number of employees you have, your tax situation, the services you need and where your company operates. If cost is a concern, it may make more sense to outsource the task to a payroll services company and then consult a CPA on taxes and your business’s more complex financial needs.
  • CPAs might charge additional fees: CPAs can be a big help come tax time, but some businesses may find that the extra fees a CPA charges cost more than anticipated. For example, some CPAs charge a fee if a service must be expedited, if a client provides incomplete information or if the client submits information later than requested. It’s important to know what services are covered and what is considered an add-on service that will cost more than you budgeted.

CPAs vs. accountants for payroll

If you hire an accountant to run payroll, you’d likely pay less than you’d pay a CPA. However, CPAs have additional certifications and expertise that justify their price. When you use a CPA to handle your payroll, you ensure the following: 

  • Payroll will be done correctly.
  • Your company’s tax payments will be made on time.
  • Withholding calculations will be error-free.
  • Your business will comply with the laws that change every year.

Although both accountants and CPAs have robust accounting knowledge, CPAs receive more in-depth and rigorous training that drills tax laws and standard accounting practices into their expertise. They are also held to ethical standards by the state and must take courses to keep their licenses.

Did You Know?Did you know
Hiring a CPA to manage your accounting, tax planning and payroll can help grow your business and improve your long-term financial stability.

Payroll service & CPA FAQs

Selecting the right payroll company or CPA for your business's payroll needs requires research and preparation. Below, find some common questions about bringing on an expert to handle your payroll.
Before deciding on a payroll service, ask about sign-up discounts or see if the company will match the price of a cheaper payroll service. You may also save money by agreeing to an annual contract instead of paying monthly. Additionally, ask about onboarding fees and if they can be waived.
If you can help it, avoid signing up for payroll software or services with long-term contracts unless you've mapped out all payments and are comfortable with the price, support and services you'll receive. "Check out the surface model, security and how it runs," Venuto advised. "Ask about your access to payroll specialists and whether they're well-versed with tax laws in your state. Do your research." Before signing an agreement, read your contract thoroughly to ensure it doesn't have built-in price increases. Contract lengths can vary but you should determine if the contract renews automatically. It's also important to understand how the cancellation process works so you can avoid getting stuck or charged heavily when you're ready to close your account. Find out how much notice you must give and any cancellation costs the company may charge. Beware of signing any contract that has a liquidated damages clause as it can be very expensive to get out of. Also, look into the company's employee onboarding process and see if there's a free trial so you can take the service for a test run before committing.
CPAs manage your taxes, help your business comply with government-mandated regulations and serve as trusted advisors who can help grow your business. When hiring a CPA, ask how long they've been in business, what services they offer and what their fee structure is. These elements are as important as the CPA's work style, availability, accessibility and acumen.
You may decide that a CPA isn't the right payroll solution for your business. However, CPAs can be a valuable resource in multiple areas. For example, if you are considering acquiring, merging, selling or closing your business, a CPA can help you make well-thought-out decisions. They can guide you through various tax implications and financial documents, help you analyze assets, prepare final reports and statements and provide a thorough report of your business's fair market value.
While it is technically and legally possible to handle your own small business payroll, the possibility of human error is high ― especially considering federal and state tax laws and local regulations. Outsourcing your payroll to an expert will ensure you don't make mistakes that can cause tax penalties and other costly issues.

Danielle Fallon-O’Leary contributed to this article. Source interviews were conducted for a previous version of this article. 

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Sean Peek, Senior Analyst & Expert on Business Ownership
Sean Peek co-founded and self-funded a small business that's grown to include more than a dozen dedicated team members. Over the years, he's become adept at navigating the intricacies of bootstrapping a new business, overseeing day-to-day operations, utilizing process automation to increase efficiencies and cut costs, and leading a small workforce. This journey has afforded him a profound understanding of the B2B landscape and the critical challenges business owners face as they start and grow their enterprises today. In addition to running his own business, Peek shares his firsthand experiences and vast knowledge to support fellow entrepreneurs, offering guidance on everything from business software to marketing strategies to HR management. In fact, his expertise has been featured in Entrepreneur, Inc. and Forbes and with the U.S. Chamber of Commerce.
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