Is a Payroll Service Worth the Cost for Your Small Business?
Managing payroll is often a task small business owners aren’t prepared to handle when opening their doors.
Payroll can be complicated, and mistakes can be expensive and time-consuming to fix. While you may choose to hire an accountant or bookkeeper instead of going the DIY payroll route, another option is choosing an online payroll service to help you with your small business payroll needs.
Since price is one of the biggest deterrents for opting for online payroll software and just handling payroll yourself, we are breaking down costs you should be aware of when shopping around so you can determine if a payroll service is worth the money for your small business.
Breaking Down Payroll Service Costs
If you’re wondering if a payroll service is worth the cost, start by answering these questions:
- How many employees do you have?
- How often do you pay your employees?
- Do you currently pay via direct deposit or paper check?
- Are you looking for help filing payroll taxes?
You might be wondering why these questions matter and how they can affect costs. When it comes to the number of employees you have, most payroll services charge for each employee that is added to your account. If you really just need somebody to manage payroll and you feel confident that you can handle the associated taxes, opting out of that extra help could save you too. Just remember that payroll mistakes can be costly, so it might be worth the peace of mind to have somebody manage that part of it as well.
Hidden Costs of Payroll
While there are going to be some common items that will impact the cost of your payroll service provider, there are others that you might not think about or be prepared for. One example is set-up costs, meaning that your new provider may charge you just to set your account up for the first time. Granted, this is a one-time fee and depending on your account and the company you choose, it may be a minimal expense, however, it’s still another cost that you might not have budgeted for. Another common hidden payroll fee revolves around contracts and breaking those contracts. Unfortunately, owning a small business is risky, and many owners are forced to close their doors. . If this happens to you and you’re in a contract with an online payroll provider, they may charge you to break that contract even though you aren’t in operation anymore.
Helpful Payroll Costs
Sometimes a service may cost more, but it could save you tons of headache and money later on down the road. An example of this comes to flexible payroll options. A typical payroll processing window is four days. However, things come up, employees unexpectedly quit, and suddenly you’re scrambling to get a last-minute payroll out the door. Some online payroll providers offer flexible payroll options which will make the quick transition a little easier. While these options may come with a cost, you may find it could get you out of a sticky situation and be worth the extra dime.
Payroll costs are going to vary due to a variety of factors. When choosing whether or not a payroll service makes the most sense for you, the decision is likely going to come down to more than just the actual price. Saving time, having peace of mind that your employees will be paid accurately and on time, and knowing that your taxes are done correctly are things that you can’t really place a monetary value on, but they will certainly save you some headaches you could face so that you can focus on running your business. No matter which option you choose, make sure you’re doing your research and digging up all of the costs/benefits you need to know to make the best decision possible.