How Payroll Processing Fees Work in 2023
Published January 19, 2023.
In today's economic landscape, more businesses are tightening their belts and squeezing every penny to ensure they can survive any headwinds that form in the marketplace. A critical area for budget-conscious companies to monitor relates to payroll processing fees, which are costs typically priced on a per-employee or per-check basis. And, of course, this is in addition to the base account fee.
While payroll processing fees may vary in 2023, employers can anticipate spending anywhere from $20 to $100 per month, as well as $2 to $15 for each employee. In this article, we'll break down these costs and see what affects them.
» Other payroll challenges in 2023: see what employers can expect
When it comes to processing payroll, many tasks need to be performed, including the following:
- Employee forms
- Hours worked
- Overtime costs
- Employer taxes
- Payroll and income taxes
- IRS deposits
- Payroll service
And this is just the tip of the iceberg!
» Payroll considerations: see the essential employer policies and procedures
Common Factors That Affect Payroll Processing Fees
As previously noted, payroll processing fees will vary based on many circumstances and factors. Some of the most common components employers should consider are whether the company is outsourcing its payroll-related activities or paying an employee to process payroll using in-house payroll software.
Meanwhile, the following list of considerations could help you calculate how much you'll spend on payroll services:
- The number of employees
- The states employees reside in and whether they're remote employees
- Employees' pay frequency
- If the business adds tax filing services
- Payment method: direct deposit or paper checks payment
When you're crunching the numbers, understanding these factors can be of tremendous assistance to the success of your company and achieving your goal of doing a better job balancing the books.
Understanding the total cost of the payroll process can ensure you make the right decisions about managing payroll and ensuring payroll compliance. Unfortunately, when too many mistakes happen, additional costs may arise, further affecting your bottom line.
But what can increase your payroll costs? The two most common issues are payroll errors and payroll taxes.
- Payroll errors: These can happen when there's manual input rather than automated insertions, potentially leading to a greater chance of mistakes that can cost employers plenty of money.
- Payroll taxes: If the organization pays an incorrect amount or submits an incorrect filing, the company can face hefty fines and penalties from the federal or state government.
» Want to reduce payroll taxes? Learn 5 legitimate ways to do so
Expertly Handle Processing Fees in 2023
Let's face it—when processing payroll by yourself, it will be a time-consuming affair that can require an immense amount of resources. This is especially true if you're not professionally trained in this area. Your tasks would consist of ensuring everyone's payroll deductions are correct and taxes are accurate, which can easily result in mistakes.
Because these tasks can cause problems if done incorrectly, it would be smart to adopt payroll software instead. This option is accurate and fast, and it will facilitate the necessary compliance with laws, regulations, and rules outlined by various jurisdictions.
» Need help choosing payroll software? Check out TBR's payroll software reviews and browse the available resources.