Choosing a payroll provider can be tricky. After all, there are so many different variables to consider: do you want to do it all online, with software, or with assistance? How involved do you want to be in the process of paying your employees and filing taxes? Some providers have an extensive list of add-on services, each with an extra charge.
So, how do you know what to expect before you start calling different providers? We decided to do some of the legwork for you, getting a sample quote from 4 top payroll services: Intuit, Paychex, SurePayroll, and ADP Small Business Services.
Keep in mind that the specifics of each service may vary considerably. Before you start your research, it pays to make a comprehensive list of your needs. Also, take a look at ChoiceVendor’s reviews of payroll service providers to read about other people’s experience with each firm.
Some factors that can affect what you ultimately pay for payroll services:
1. How often do you pay your employees?
2. How many employees do you have?
3. Will employees require direct deposit?
4. Do you need tax filing services?
5. Do you have employees in more than one state?
6. Do you require additional HR services?
7. Where is your company located?
For purposes of comparison, we came up with the following scenario:
- Small business with 5 employees, located in San Francisco
- Yes, all of them want direct deposit
- Employees paid bi-weekly
- Has employees in one state only
INTUIT
Intuit offers 4 different payroll options, including online payroll (“basic” and “plus” versions – “plus” includes state tax form completion), basic payroll (using Quickbooks but you handle taxes separately), enhanced payroll (using Quickbooks, plus tax form preparation), and assisted payroll (using Quickbooks, plus Intuit handles taxes for you). All of these products are targeted at small businesses.
For the purpose of this exercise, we chose to look into 2 options: Intuit Online Payroll Plus and Intuit Assisted Payroll. We phoned a representative who was happy to answer questions, but told us we could just use the online quote calculator to determine our price. She emphasized that there were no additional fees that are not explained via their pricing grid and calculator.
How much would it cost for our sample company?
Intuit Online Payroll Plus: $45 per month (this fee is assessed on a monthly basis, with unlimited payrolls per month)
Cost breakdown:
$39 per month for base service fee plus 1 employee.
$1.50 per month for each additional employee.
Direct deposit is included (no fee).
Electronic tax payments, tax filings, and W-2s are included.
Each additional state for filing costs $12 per month.
Intuit Assisted Payroll: $37.94 per payroll, or $82.21 per month
Cost breakdown:
$60 per month plus $1 per month per pay period.
$1.05 per paycheck for direct deposit
$49 one-time set-up fee (not included in the quote above)
$40 per year for W-2 printing, plus $4.25 per W-2 (not included in the quote above)
Each additional state for filing costs $10 per month.
PAYCHEX
Paychex has 2 distinct options for payroll services: 1 option is aimed at businesses with 1-49 employees, while the other is for firms with 50+ employees. Smaller companies (option 1) have the option of submitting payroll data via phone, fax, or online.
First, we filled out a quote form online that asked for very basic information. Then, we called a representative on the phone, who tailored a package for our company with a higher price tag than the original online quote. She wasn’t sure why there was a discrepancy, but explained that the tailored quote she provided was for full payroll services in our area, including all tax liability – Paychex would essentially take the role of our payroll department.
How much would it cost for our sample company?
Online quote: $44.65 per payroll, or $96.74 per month
Representative quote: $76 per payroll
Cost breakdown:
$55 base service fee, plus $4.25 per employee
Direct deposit included (no fee).
$45 one-time fee for W-2s, plus $5.50 per employee
No charge for additional state filing.
SUREPAYROLL
SurePayroll is an online solution targeting small businesses. They offer one comprehensive package that includes direct deposit and tax filings. The company has an iPhone app for inputting information on the go. In this case, we filled out an online quote and received one price, and then we called a representative and were actually quoted a lower price. The rep explained that the company had recently changed their pricing model from per payroll to per month in order to have an edge in a highly competitive market.
How much would it cost for our sample company?
Online quote: $40.20 per payroll, or $87.10 per month
Phone quote: $54.99 per month
Cost breakdown of phone quote:
In SurePayroll’s new package model, everything is included under one price tag.
ADP SMALL BUSINESS SERVICES
ADP offers 3 different plans for small business clients: Compliance Services, Compliance With Pay, and Compliance, Pay and Employer Tools. The basic Compliance Services package doesn’t include direct deposit, while Compliance, Pay and Employer Tools has tools that our sample company doesn’t need. So we decided to look at Compliance with Pay.
How much would it cost for our sample company?
We completed an online price quote, and then phoned ADP to find out more information. The representative we spoke with wanted a lot of highly specific data on our sample company. We ended up getting referred to someone else, left a message on an answering machine, and nobody called us back. So, we’re going with the basic quote found through the online calculator:
$87.50 per payroll (not sure about the exact breakdown of fees).
Go to ADP Small Business website >>
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In conclusion, when selecting a payroll service, your options are numerous – and the ultimate price you pay will depend on your company’s needs. Hopefully, this research will give you a general idea of the costs involved.
Look for payroll firms on ChoiceVendor
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Tags: Finance, How to select a vendor, HR, March 2010 newsletter, May 2010 newsletter
Good basic info on payroll services for small businesses. Generally speaking, we see the costs for payroll only (including taxes, w-2′s and direct deposit) to run about $100 per employee per year. However, we recommend additional HR services to cover compliance.
Thanks for the helpful info, Kristian!
Thanks it’s good to know that what I charge is on the low side.
I would charge $55/month for your sample company. My breakdown is as follows:
$20 per month for base service fee
$1.50 per month for each employee.
Direct deposit is included (no fee).
Electronic tax payments, tax filings, and W-2s are included.
This blurb really saved me much time from all the searching I would have had to do!
The secret to learning about PAYROLL SERVICES is to know the questions to ask.
Who is liable if tax payment is late
Who completes the W-2′ & I-9s?
Who report to the state the new employee and maitains employment records?
Where do your employees go to with a mistake on their check.
AND SO MANY MORE!!
The secret ti to contact a broker who studies each firm and helps you ask the right questions as you make the choice right for YOUR company.
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I really loved this post. You write about this topic very well. A payroll company should recognize the needs of today’s small to medium sized business owner. Your time is priceless! You cannot afford to waste time on non productive/non revenue producing activities such as Payroll, HR, or Employee benefits. Your payroll company should specialize in filling this need for you and their staff of experts should consult with you to develop a payroll and business services plan that is custom-made to your exact situation. Your payroll provider should offer quick and convenient online access for any payroll service, benefit or reporting need. It should assist employers in meeting business compliance issues today and in the future as your business prospers in this cutthroat environment. The benefit of out-sourcing your payroll is that it relieves you of the hassle and technicalities of running a business so you can focus on building your business.