As I mentioned in my post on payroll outsourcing yesterday, I did some research on payroll processing services. Note that many services charge a basic fee, so that even if you have just one employee you are paying more, because the service has to all the same filings for one employee as it would do for 10. For example, they would still have to file a 941 each quarter, even if you have just one employee. The incremental cost for each additional employee is quite small. With that in mind, here is some information on payroll processing services, with their costs and what they provide:
Assisted Payroll Services. Some services do all your filing for you. For example:
Paychex
Paychex charges $55 per pay period, for one check, with filing, direct deposit, and checks cut. You can input information online and they assign a payroll specialist to help you.
ADP
ADP's small business service which includes direct deposit is $72 per payroll. You can see the full range of services on the website.
Self-Service Online. Other services help you do your own filing. For example
Intuit
Intuit's online payroll service allows you to fill out payroll forms online. They offer six months free, then a monthly cost of $9.95. This service works with some Quicken and QuickBooks products but not all (it doesn't work with Mac or Online versions). Intuit also has an Assisted version (starting at $60 a month) and a packaged version with support starting at $15 a month.
Paycycle
Paycycle gives you the tools to complete your payroll and do your own filing with their assistance. Payroll Basic offers "30 days FREE + 2 more months at $9.99" (Includes 5 employees and 1 state), then $24.99 per month. Payroll Plus includes 5 employees and 1 state for $42.99 per month.
I have done just a very brief review of these services. Some may have additional features that you might need for a specific situation (timecard input, for example). Read the information on the websites and contact the representatives of the companies. This is always a good way to tell how friendly they will be. I have presented only a few of the many services you can find online. The IRS has a list of payroll providers you might want to look at.
So, Is Outsourcing Payroll Worth the Cost?
Even if you have only one employee, you might want to seriously consider a payroll service to help you with preparing paychecks, and paying and reporting payroll taxes. Remember, one fine or penalty for a missed payment or report might be more than a whole year's worth of service. Setting up a payroll system for your business is not your first priority. And if you have a service, it is one less thing you have to think about.
Thanks for the quotes it’s very interesting to see. I think the outsourcing option does seem relatively expensive on the one employee comparison. But it should also be noted that it would take the business owner a relatively long time to process just one employee as well.
Thanks for this info. I also read some articles about why most small businesses pair with online payroll services. I found out that it’s ideal for new ones because some business people takes more time on managing payroll. They consider outsourcing payroll so they can focus more on their expanding their business. I think it’s a wise move.