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How Much Do Payroll Services Cost?

Updated May 17, 2023

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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 levels of service. Before you hire anyone to help you manage your finances, it’s important to understand how you’ll be charged, where hidden fees may lurk and what you can get out of each option. To ensure you know what you may be paying for, here’s a breakdown of what the best payroll services and CPAs do and how much they cost.

How much do payroll companies charge?

The cost structure and pricing for basic payroll depends on factors such as how you want to pay employees and in how many states your company operates. The benefit of this is that most businesses can find a service that fits their budgets. Businesses should expect to spend anywhere between $15 and $200 per month for a quality payroll service.

What is a payroll company?

Payroll services offer financial management support by helping employers compute their employees’ pay and payroll withholdings. They can come in the form of self-service software or a full-service company. Payroll functions include collecting employee wage and timesheet data to calculate gross wages, then subtracting withholdings and deductions to compensate employees through printed checks or direct deposit. They can also manage employee tax filing information.

How is payroll pricing structured?

Just as each business is different in the way it operates, each payroll service structures its pricing differently to fit the needs of its consumer base.

Base fee

Most payroll services charge a base fee. This can be a monthly charge or a per-payroll fee. With the latter, you are charged the base fee each time you run payroll. So, 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. Base fees can run anywhere from $29 to $150.

FYIDid you know

Friday is the most popular day of the week to pay employees. Additionally, over 44% of employees are paid biweekly, making it the most common payroll cycle.

Per employee

In addition to the base fees, there is typically a per-employee charge each month or pay period. These fees typically range from $2 to $12, depending on the service.

Payroll providers often offer multiple service plans with different features and services. This gives you the ability to find a plan that fits your budget and needs.


Some basic payroll processing services have a monthly subscription plan. With this option, they charge a set price for an unlimited number of employees. This option may have more restrictions on features, but it can be a good choice for small businesses, since smaller teams often don’t require as many features. You can read our review of Gusto to learn more about a company that offers monthly subscription plans.

Set fee

Some payroll providers have a set fee structure they publish online. This is particularly common among DIY services designed for smaller companies where employers have more responsibility in monitoring and inputting data for payroll processing. These services can cost as little as $65 per month, depending on your number of employees.

Custom quote

Other services provide a custom quote for your business based on the specific payroll functions and features you need. The number of employees you have and how often you run payroll will factor into the quote. How many states you operate out of and what method you use to pay employees (e.g., direct deposit) can also impact how much you pay. Our review of ADP found that it provides custom quotes for each business.

License fee

If you are looking for DIY payroll software that you install on your own computers or access online, you may have to pay a license fee for it. This may be charged either as a monthly subscription or as a perpetual license fee, which is a one-time payment. It usually costs more upfront than a monthly subscription, and there may be annual upgrade costs as well.

Do payroll companies have hidden fees?

Although no one pricing structure works best for all small businesses, it’s important to understand exactly what you’re paying for and what it covers. Here are some fees to watch for when you’re choosing a payroll provider.

  • Your payroll company may charge you for full-service tax filing services, which include processing your state, federal and local taxes.
  • Payroll processing services may charge an implementation fee. This is a setup fee that often covers things like adding all of your employees into the system. There may be other charges based on how you choose to pay your employees. For example, a service provider may charge extra for direct deposit, while others may charge an extra fee if you require printed checks.
  • If you use payroll software, look out for customer support fees or maintenance charges.

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.

Which features might be worth the cost of outsourced payroll?

Tax protections

One of the benefits of outsourcing your payroll is the tax guarantee that most payroll services offer. If the company makes a mistake on your taxes, it will correct the error and pay any resulting fines. They also keep you up to date on any changing tax laws and liabilities, and make sure your business is always compliant.

Additional HR services

In addition to paying your employees and managing payroll taxes, many of today’s payroll companies offer a host of other HR services that may be worth paying extra for. These include time and attendance tracking, benefits administration, and retirement savings plans.

Having a payroll service handle all of these tasks takes additional responsibility away from the employer and allows them to focus on bigger-picture issues. Employees can also benefit from having all of these services bundled together, as it allows them to track their hours and access benefit and retirement information in one location.

When it’s not worth the cost

That said, it’s important not to overbuy on features if you may not need or use everything the program has to offer. Matthew Venuto, regional sales manager at ConnectPay, told that a full HR suite is the most common feature that small businesses purchase unnecessarily from their payroll providers. Given how expensive it is to tie all of those services together, it’s important to only add that feature on if you know you’ll make the most of it.

Do payroll companies offer any discounts?

As a small business owner, you can save a lot of money by asking about the onboarding process. Before you purchase anything, ask the provider if any discounts are available for signing up with a certain number of employees, or if they are willing to match the price of a cheaper payroll service you found. You may also be able to save money by agreeing to an annual contract instead of paying month to month.

Should you sign a payroll contract?

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 you are comfortable with what you’re paying, satisfied with the quality of the service you’re receiving, and confident that you will be happy working with this company for an extended period.

“Check out the surface model, security and how it runs,” Venuto said. “Ask about your access to payroll specialists and whether they’re well versed with tax laws in your state. Do your research.”

Before you make any agreement, read your contract thoroughly to make sure it doesn’t have built-in price increases. Contract length can vary, but you’ll want to find out if the contract automatically renews. It’s also important to understand how the cancellation process works so you don’t get stuck or heavily charged 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 you commit.

Do CPAs offer payroll solutions?

A certified public accountant is a financial advisor who helps businesses, entrepreneurs and other organizations map out their finances and reach their fiscal goals.

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

CPAs can do more than handle your payroll records. They offer tax and accounting consultations and help you make financial decisions. And yes, they can be very helpful when it comes to payroll processing and administration. A CPA will ensure your team is paid on time and your retirement withholdings are properly deducted, and they can handle your payroll taxes. They can also keep track of payroll reports, expense reimbursements and profit-sharing disbursements.

Did You Know?Did you know

Paying employees on a regular schedule is extremely important. In a survey by the American Payroll Association, almost 70% of employees said that paychecks being delayed a week would cause trouble for them in meeting their financial obligations.

“They provide an extremely high level of service to a small business owner,” Menke said. “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.”

A CPA can also act as a bookkeeper, collect accounts receivable, send out invoices and pay your vendors.

How much do CPAs charge?

The average rate for CPAs, as reported in a survey by the American Institute of CPAs, ranges from $160 to $275 per hour; however, that price can vary based on factors such as 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 to hire, so most small and midsize businesses work with CPAs on an hourly or project basis.

Typically, CPAs bill clients on an hourly basis, but fixed fees are becoming more common. Many people are opting for fixed-rate plans to get the services they need within their budget. With more custom options now available for managing payroll, CPAs are adjusting their services to better serve small businesses.

What do I gain from hiring a CPA rather than an accountant to process payroll?

Sure, you could hire an accountant to run payroll, and it would cost less, but you should understand the difference between accountants and CPAs before making this decision. With a CPA handling your payroll, your business will be in good hands. CPAs can ensure the following and more:

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

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

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

While having a CPA manage payroll can be a great strategy for your business, there are some disadvantages of hiring one:

  • Some businesses won’t find a CPA to be cost-effective.
  • CPAs might charge additional fees.

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 can be a big help come tax time, but some businesses may find that the extra fees a CPA charges cost more than they anticipated. For example, some CPAs charge a fee if a service needs to 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 for.

CPAs can help in other ways

Just because a CPA isn’t the right choice to handle payroll for your business, that doesn’t mean you can’t consult one on other matters. For instance, if you are thinking about acquiring, merging, selling or closing your business, a CPA can help you make a quality decision. They can guide you through the tax implications and financial documents, help you analyze assets, prepare final reports and statements, and provide a thorough report of the fair market value of the business.

Simone Johnson contributed to the writing and research in this article. Source interviews were conducted for a previous version of this article.

Sean Peek
Contributing Writer at
Sean Peek has written more than 100 B2B-focused articles on various subjects including business technology, marketing and business finance. In addition to researching trends, reviewing products and writing articles that help small business owners, Sean runs a content marketing agency that creates high-quality editorial content for both B2B and B2C businesses.
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