Running a small business isn’t easy, especially when you have employees that need to get paid. If your payroll and accounting systems aren’t up to par, things can get complicated very quickly. The last thing you want is to run into tax problems or incorrectly pay your workers.
Payroll cost varies depending on the type of system you use and whether you outsource payroll, or if you are paying an employee to do it in-house. First, consider the tasks involved in running payroll:
- Employee forms
- Hours worked
- Overtime costs
- Payroll and income taxes
- Employer taxes
- IRS deposits
- Payroll service
The costs of payroll
Whether a business is using an in-house employee or a service, there are costs associated with running a smooth payroll. When using a payroll service solution, there are typically base monthly fees, fees for each employee that is on the payroll (costs of calculating taxes, deposits, and cutting the check), and employer-paid taxes.
Many payroll providers have fixed package pricing that varies from $30 to over $150 a month, in addition to the cost of each employee, which could run from $2 to $15.
Depending on the type of payroll solution used, there are additional costs that may come up, unless it is a part of the initial package. These costs include:
- 401k distribution
- Tracking employee time
- Workers’ compensation
- Direct deposit, state and federal tax filings
- Check delivery
- Processing end-of-year tax forms
Costs often increase with the frequency in which employees are paid. Every pay period, there are costs for checks to be sent out, whether they are manual or electronic. If the cost of doing this per person is $2 each pay period and you have 20 employees to pay bi-weekly, that is $4 per month (some months $6). If employees are paid weekly, that cost is now at least $8 per month. Multiply that by 20 employees and the cost is $80 or $160 per month.
Direct deposit provides a convenient perk for employees and employers, but it is an additional cost. Setting up the direct deposit and other variables add to monthly costs, in addition to any direct deposits of employer fees.
One of the biggest costs for employers in relation to payroll is having different locations and states. Each state has its own tax laws, which makes things tricky to navigate. When using a payroll provider, things may be a little easier, but the costs could exponentially increase.
Payroll tasks and options
Payroll and its nuances need dedicated experts to successfully handle things. You can hire a bookkeeper, which is someone who can handle your payroll process, but you’re looking at about $75,000 a year if they are an employee on staff.
You can also consider doing it yourself, but you may not realize the work and time that goes into making sure everyone’s deductions are correct, payroll is disseminated on time, and the taxes are accurate. It’s not as easy as it may sound.
You can outsource a professional bookkeeper. However, the costs may outweigh the advantages because of overhead costs that compare to that of a dedicated payroll solutions service.
An online payroll service provider solves the problem of knowing the tax laws, making the correct deductions, and handling all payments, filings, and other payroll items you may not have realized you needed. This may actually be the most cost-effective option that can help your business stay in compliance and scale as you need.
When considering the overall costs, time, and manpower needed, think about the tasks, the number of employees you have, and the type of service you will need. A service like Homebase makes things easier with its payroll system for hourly teams.
With an employee app that makes information accessible at the click of a button and a painless process that easily converts timesheets into hours and wages, everything can be processed on time with no hassle.
Manually inputting timesheets can leave room for error. With an automated system like Homebase, employees electronically clock in and out, so their breaks, overtime, time off, and accumulated time lives in one place. Any payroll or changes to their tax information can be confidentially changed online by the employee.
At a reasonable price, it’s easy to make payroll for your business work for you. Sign up for Homebase today and see how effortless payroll can be.