Let’s not beat around the bush. Payroll processing is hard. Factors such as time, costs, and compliance drive both the big and the basic towards payroll outsourcing.

Smaller companies, with small goals and tiny teams, may not find payroll processing to be a pain in the a-!

However, as they grow, expand, and scale, payroll outsourcing and the costs associated with it may become inevitable.

Let us examine the gems and the ruins of payroll outsourcing costs.

Payroll Outsourcing Costs: A Breakdown

Several factors have an impact on payroll outsourcing costs but they are usually 3-fold: basic payroll outsourcing costs, frequency of pay periods, and payroll tax assistance.

Basic Payroll Outsourcing Costs

Payroll outsourcing costs include direct deposits, paycheck processing, standard tax filing, etc. Like Multiplier, an online portal that can disburse salaries to employees is also a must.

Several companies spend $20 to $250 per month as a basic payroll outsourcing cost. While covering basic payroll processes, the vendor company charges based on:

• Company’s details: The intricacies of your business and its unique requirements can influence the cost of outsourcing.
• State of residence: Different states have varying tax regulations and compliance requirements, which can impact the cost.
• Legal laws depending on federal laws: Compliance with federal regulations is crucial. This can affect pricing.
• Pay period frequency: How often you pay your employees can affect your payroll outsourcing cost.
• Number of employees: The more employees you have, the more complex and time-consuming the payroll process becomes, which can increase costs.

Frequency of Pay Periods

To save payroll outsourcing costs, companies tend to change their pay period. However, it’s important for companies to be timely when it comes to paying employees. Employees trust employers to send their paychecks on a predictable schedule. Changing your pay frequency can negatively affect employee morale and retention.

Suppose you subscribe with your payroll vendor to disburse salaries every week. You incur a payroll processing fee every time your vendor makes disbursements. Consequently, you’d be billed higher processing fees than when you pay employees every month.

Payroll Tax Assistance

As a business owner, you should be aware of the fact that you will incur a separate payroll outsourcing cost pertaining to tax assistance as well. This may vary based on the various states where your company is located. Depending on the jurisdiction your company is based out of, your payroll outsourcing costs may vary.

Moreover, it also costs an additional $25 to $75 per employee to print, mail, and report tax-related documents. Hence, before choosing your payroll vendor, make sure you clearly speak to your payroll vendor and check for hidden fees or clandestine costs that may burden your budget from nowhere.

Also, did you know? Multiplier users do not incur any hidden payroll outsourcing costs related to taxes, paperwork, and printing. Our fees for payroll management start from $20 per employee. Even if you account for various parameters, your payroll fee will not go more than $200 per employee. Our SaaS-based solution makes sure fees are charged upfront and that no nasty costly surprises spring up.

What Factors Shoot up Payroll Outsourcing Costs?

Payroll outsourcing costs vary according to various circumstances. Generally, you can expect to pay about $150 to $200/year.

Aside from the aforementioned costs, you should also understand other components that can contribute to an increase in payroll outsourcing costs. Some common services business opt to include with payroll include:

• Tax filing: The price of which can increase based on the number of states you’re operating in.
• General ledger interface: Additional features can come at an extra cost.
• Employee pay options: Direct deposit, pay cards, and paper checks may have varying costs.
• Courier and delivery charges: Physical delivery of checks or documents may add to expenses.
• Check stuffing and sealing: Customized services can increase costs.
• Customized file transfers: For specific reporting needs, you may need to pay extra.
• Quarterly and year-end reporting: Compliance requirements can add to costs.
• W-2/1099 and 1095 processing: Handling tax-related documents comes with its own expenses.
• Affordable Care Act (ACA) reporting: Compliance with healthcare regulations may lead to additional costs.

Payroll outsourcing costs can also increase if your company outsources HR functions to your payroll vendor. This can include services like time and attendance tracking, HRIS, applicant tracking and recruitment, benefit enrollment, performance management, onboarding, and more.

Benefits of Payroll Outsourcing

There are several cost-based benefits to relish by outsourcing your payroll.

• More opportunities to save money and time: Outsourcing payroll processing means that responsibilities pertaining to your payroll are passed onto a specialist who is well-versed in handling this function. The purpose of hiring a specialist in any field is to amp up speed and quality.
• Enhanced Process: Another benefit of outsourcing payroll is that you can tap expert advice and the latest technologies.
• Avoid legal, tax, & compliance risks: Your payroll vendor, local or global, is someone who keeps tabs on local labor laws and regulations. This wary cognizance is difficult to keep up with.

For example, Multiplier can deliver flawless global payroll management at fair costs thanks to its slew of legal partners and local entities. Multiplier’s SaaS-based platform is super-secure as well.

How Multiplier Can Help You Save on Payroll Outsourcing Costs?

Multiplier offers an EOR solution that encompasses services such as global payroll management and global hiring.

Our payroll solution offers payroll management starting from $10/employee based on the local laws in your employee’s location.

Book a call with us to learn more.

https://bsbookkeepingtax.com/book-a-consultation/