Employee payroll is a crucial part of every company. Timely payrolls can increase employee satisfaction and performance. So, you should maintain quick payrolls for employees, while also creating pay stubs to include all company, employee, income and deduction information.

But you will need some important pieces of information to get things right. For example, you will need employee and tax details for quick salary payments. Many employers use payroll services consultancy for this work.

The consultancy services outsource payroll functions on behalf of the company. How much does outsourced payroll cost? We will find the answer to this question throughout the article.

3 Structures of Payroll Pricing

Different outsourcing companies have different payroll pricing structures. They will charge you according to their policies. Here are 3 structures that are common for almost every outsourcing company.

Per Frequency Charges

Payroll companies charge their companies by per payroll frequency, which is a prevalent structure of payroll outsourcing pricing. This can also cost a bit higher amount than other available structures.

The main concept of this structure is to charge companies each time they pay the employees. For example, you might be paying your employees twice a month. So, payroll companies will charge a base fee and a percentage of the employee payment every time.

This means that each payroll will incur extra costs for using outsourced services. But it can be a beneficial option for some businesses. If your company has a fixed payment structure, you should opt for this service.

Per Employee Per Month (PEPM) Charges

This is a famous pricing structure for many companies. This pricing structure can save a lot of money for employers. The concept of the structure is quite straightforward.

You can pay as much payroll as you want throughout the month. All you have to pay is a monthly fee to the payroll company. And the fixed rate for each employee’s payment is also very minimal.

PEPM is an effective structure for companies with additional payroll options. For example, your company may be paying festival bonuses to the employees. For this type of payroll, using PEPM services can be helpful.

Fixed Pricing Structure

Some companies can charge a fixed rate for each month. This amount indicates the number of employees you can pay each month. It is an effective structure for Do-It-Yourself online companies.

The most significant benefit of this structure is that you can frequently pay the employees. This will not affect the final cost of payroll outsourcing.

A Complete Breakdown of Outsourced Payroll Costs

Outsourcing a company function can come with different costs. This includes one-time, taxes, and monthly fees. So, you will need to pay attention to several factors.

Basic Costs

Almost every outsourcing company will charge a basic fee. This fee can range between 20 USD to 250 USD per month. This cost includes many things.

You will be paying for direct deposit, tax filing, and paycheck processing. The costs will be taking company details into account. This will eventually clarify the amount you will be paying as basic costs.

Payroll Frequency

The number of times you are paying your employees will determine the costs. If you are paying weekly, you will incur extra charges. The best practice is to pay monthly salaries. Monthly payments can largely benefit the company.

Payroll Taxes

Almost every company will cover the payroll taxes. But some companies can charge you extra for tax assistance, and you will be paying the extra amount at the end of each year.

This is a huge problem for companies having employees across the globe. Payroll companies will charge you extra fees for tax assistance in different countries. So, it might be best to do payroll yourself in such situations.

One-time Costs

You will always incur some costs for payroll. This is true even if you do in-house payroll. The highest cost you will incur is for a time tracking system. This is a system that records hours that employees have worked for. Then, the system updates the details to the system. Finally, the system will automatically generate the total payroll amount of every employee.

Additional Costs

Every outsourced work includes extra fees. You will not find them in the basic package you choose. This includes check signing, direct deposit, and new-employee reporting. Thus, it would help if you planned beforehand.

Ways You Can Save on Payroll Outsourcing

Outsourced payroll costs are hard to determine. Many variables play a crucial role. So, you may ask- can I save money on payroll outsourcing?

The answer has introduced the significance of Do-It-Yourself (DIY) software. You can save as much as 50% of payroll costs using this software, and DIY is very effective for the PEPM structure.

Conclusion

So, how much does outsourced payroll cost? There is no straightforward answer. But you can estimate a budget after judging the complete discussion on this article.

You should expect to incur at least $200 for each employee every year. The total price will vary depending on many factors.

Yet, outsourcing payrolls can be beneficial for your company. It is essential to check your company against the cost structures first.

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