How Much Do Accountants Charge for Payroll Services? A Detailed Breakdown

Latest Facts and News:

• The average CPA rate for payroll services is $100 per hour.
• Small business payroll costs can range from $20 to $250 per month, depending on the number of employees and services required.
• Outsourcing payroll can save businesses up to 80% compared to in-house processing.

Managing payroll goes beyond just paying your employees. It’s about staying compliant, reducing penalties, and keeping your business running. Asking for a professional’s help can save you a lot of time and money that you might be paying in penalties. But how much do accountants charge for payroll services?

Now, the answer depends on many factors, from the size of your team to the sophistication of tax filings and deductions.

If you’ve been wondering whether outsourcing payroll is worth the cost, you’re not alone. Many business owners think about the pros and cons of hiring an accountant versus using payroll software. In this blog, we will break down the typical payroll service fees, what affects pricing, and how to find the right fit for your business.

Let’s dive in and see what accountants really charge for payroll services.

Typical Pricing Structures for Payroll Services

When you try to figure out how much service providers charge, It is important to understand different payroll pricing structures.

Here are some common payroll tax filing fee structures:

Monthly Base Fee + Per Employee Fee

Many payroll service providers use this pricing model. This model has a monthly base fee and an additional fee for each employee. The monthly fee can be between $20 and $120. And on top of this, you will also have to pay a per-employee fee. This usually falls between $1 and $5. This means your monthly payroll costs will depend on the number of employees and the base fee.

Example:

• Base Fee: $50 per month
• Per Employee Fee: $5 per employee per month

For a company with 10 employees, the monthly payroll cost will be:

• Base Fee: $50
• Employee Fees: $5 x 10 = $50
• Total Monthly Cost: $50 + $50 = $100

Per Pay Cycle + Per Employee Fee

This is another common payroll pricing model. In this model, the service provider charges a base fee every time you process payroll, with an additional fee for each employee. This pricing model usually ranges from $20 to $60 as a base fee every time you run payroll, plus an extra fee of $1 to $3 per employee. For example, if you run payroll every week, you’ll pay more as compared to doing it every two weeks or once a month.

Fixed Pricing

In this pricing model, you have to pay a fixed fee. It can be a fee you pay every month or year for a list of services. This model is not based on the number of employees or how often you run payroll. It’s also called annual fee pricing. This pricing model is good for small businesses that have a fixed number of employees and consistent payroll processing needs. Businesses can predict and budget for their payroll costs without worrying about the price going up and down.

Optional Services

In addition to basic payroll tasks, many payroll companies provide extra services that you can include in packages. These optional services can be:

• Tax Filing: Taking care of your payroll tax filings at the federal, state, and local levels.
• Reporting: Offering customized reports that can help you keep track of payroll costs and manage your finances better.
• HR Integrations: Linking payroll with other HR tasks like time tracking, employee benefits management, and onboarding.
• Compliance: Making sure your business follows laws and regulations.
• Garnishments: Handling wage garnishments for employees when needed.

These extra services can make the payroll process smoother by easily connecting with other tools.

Software Fees

If you prefer to handle everything yourself, you can buy payroll software to manage employee payments. These payroll software usually comes with a monthly or yearly fee, along with extra costs per employee.

Custom Pricing

A customized pricing model lets your business make a payroll service plan that fits your specific needs, like the number of employees, how complex your payroll tasks are, and the amount of support you need. Unlike fixed pricing or pay-per-employee models, this model gives your business more flexibility.

Here is a breakdown of all the pricing models for you to compare:

Factors Affecting Payroll Service Costs

Now that you know what are the pricing models of a payroll service provider, let us understand the factors that affect the costs of a payroll service:

Number of employees

The total number of employees your company has has a big impact on payroll processing fees. Many service providers charge based on the number of employees you have, meaning the cost increases as your team grows. Small business payroll costs become lesser with this model.

Pay frequency

Pay frequency directly affects the price of payroll services. It depends on how often you run payroll, weekly, bi-weekly, semi-monthly, or monthly. Some payroll services charge based on each payroll run. So if you pay your employees frequently, then this can be a bit costly for you.

Additional services required

If you want extra services with payroll services, it will undoubtedly affect the final price you pay to the provider. Additional services like payroll tax filing, direct deposit, wealth management, and year-end reporting can increase costs. Each added service has its own payment structure and can be different from any other service.

Geographic location

The location of your business and employees can have a big impact on your payroll service pricing. Different states have different payroll rules and tax laws and this makes the process a little complicated. If your business operates in different states, then the payroll costs can be higher because you need to make sure to follow each state’s laws.

Complexity of payroll

The complexity of your payroll system also impacts costs. Payroll becomes more complicated if you have different pay rates, commissions, bonuses, overtime, or wage garnishments. Businesses that operate in different states or countries can face even higher costs because the service provider has to follow different tax laws and regulations. Payroll service providers often charge extra to handle these complex situations.

Comparing Accountant Fees to Payroll Service Providers

When you manage payroll in your business, you might find yourself deciding between whether to hire an individual accountant or go for dedicated payroll service providers. Let us see the differences in pricing and services offered by the two.

Payroll Services

• Scope of Services: Service providers like Focus CPA specialize in payroll processing or have a team only for this. They can handle all aspects of payroll like calculating wages, tax preparation, filing payroll taxes, and making sure of compliance with labor laws. Their expertise allows them to provide more accurate payroll services.
• Cost-Effectiveness: Payroll service providers have different pricing models. You can expect to pay between $20 to $120 as a base fee, plus a per-employee fee of $1 to $5.
• Automation and Efficiency: Payroll service providers automate many time-consuming tasks like calculating wages and withholding taxes. This not only reduces time but also reduces the chances of errors and makes sure that payments are made on time.
• Additional Services: Many payroll services can offer extra features like direct deposit, tax filing, reporting, compliance with laws, etc
• Scalability: These payroll services can quickly adjust to your changing business needs. They can adapt to every situation, whether you are hiring a new employee or expanding to other states, they have got you.

Individual Accountants

• Scope of Services: Accountant typically offers a range of financial services like tax preparation, financial reporting, and strategic financial advice. Payroll services are not their primary focus, but some may provide these services. This means they can handle payroll, but they might not have the special tools and support that payroll service providers do.
• Pricing Structures: The cost of payroll services can depend on their hourly rates and how complicated the payroll is. Some accountants may charge a fixed fee for payroll services, while others can charge hourly. For example, accountants could charge anywhere from $100 to $200 per hour.
• Expertise and Training: CPAs are trained in tax laws and accounting, so they can handle complex payroll situations. They also follow strict rules and stay updated on the latest laws.
• Personalized Service: Accountants can provide custom advice to fit your business needs. They can also manage special cases like bonuses, benefits, and complex taxes.

How Focus CPA can help you?

When analyzing prices for payroll services, ensure you fully understand them so that you can understand if they align with your expectations. One’s selection of a payroll service provider, be it a service company or an accountant, greatly impacts the financial part of a business. If you are looking for a dependable solution with exceptional service, Focus CPA is best for you. Focus CPA specializing in payroll, taxation, business evaluations, and many other aspects in order to implement systems that guarantee accurate payroll processing and smooth operations of the company.