How Much Does a Payroll Company Cost?
How Much Does a Payroll Company Cost?

If you are part of a new business, or even an old one, that is starting to get big, you might have some questions on how to best deal with payroll. The laws dictating payroll are many and multifaceted, but thankfully there are companies the can help you with all the bookkeeping.

What Is a Payroll Company?

These companies do exactly what their name suggests: they focus on payroll and make sure employees are paid what they are legally entitled to. As an employer, they make sure you are following all government guidelines on how you should pay your employees.

Aside from just making sure workers are paid on time, many payroll companies also offer multiple other services like 401(k), adjustments, keeping records, calculating taxes and deductions, along with setting up direct deposit.

Why Do I Need a Payroll Company?

There are many federal guidelines that you need to follow. Payroll companies help with this, as they are experts in the laws that govern payroll. By ensuring you are compliant, you can be sure that you are safer from possible legal action.

According to Payroll Specialties, an Oregon payroll company, need to have set pay schedules, such as weekly, biweekly, monthly, or quarterly. You also need to make sure you are following proper deductions and tax collection, including payroll taxes, Social Security, and Medicare taxes.

What About State Laws?

As expected, these laws can vary depending on the location. For instance, about 28 states in the United States are right to work states, and thus don’t have many of the protections unionized states have in terms of labor and payroll.

What Labor Laws Do I Need to Follow?

The U.S. Department of Labor has a great guide on what you should expect to follow. Some of the big ones you need to be aware of are the Fair Labor Standards Act (FLSA), the Immigration and Nationality Act (INA), and Occupational Safety and Health (OSH).

The two mandatory forms you need during the onboarding process are a W-4 and an I-9. From here you’re going to want to have other forms related to bank accounts, emergency contacts, state tax withholding, and benefits.

How Much Do Payroll Companies Cost?

This can vary dramatically depending on the size of your business and the additional services offered by the company in question. The majority of small business can expect to pay less than $500 per month, but this can go over $5000 in some cases.

Oftentimes these professional employer organizations charge a service fee from anywhere between 2% and 11%. Other things that may influence payroll costs can be how often your employees get paid and how many employees you have.

What Other Services Do Payroll Companies Offer?

Many companies offer tax assistance services that help with end of the year tax processing, specifically tied to W-2 printing and mailing to employees. There are also smaller fees related to check signing and direct deposit.

The best payroll companies typically streamline the process for you, making it easy to do and understand. They also offer a wide variety of options for employees, letting them get paid by check or direct deposit. You should also have multiple options to run your payroll.

What Are Some Other Options for Running Payroll?

The simplest option is merely doing payroll by hand. This can be good for really small businesses, but becomes untenable the larger an organization gets. If you follow this route, make sure you know all the fees associated with paying your employees.

What About Using Software?

For intermediate companies or a tech savvy large one, using software is an excellent choice. This software typically requires a monthly fee, but saves you a lot of hassle as it organizes everything in easy to use and read metrics related to your business.

The best software has multiple options. You should be given the ability not only to pay employees and print W-2s, but also get additional support like things related to human resources and attendance. If unsure, see if they offer a free trial before you commit to buying.


Payroll companies can save you a lot of headache when it comes to keeping everything in order. Most small businesses can usually keep the costs under $500 a month easily, but there are many exceptions that depend on your location and what services you need.