How Much Accountants Charge For Payroll Services?

Payroll management is an important financial task for any business. While business owners can choose to handle it internally, many rely on accountants to take care of payroll tasks.

This ensures accuracy and compliance with regulations. This article explores How Much Accountants Charge For Payroll Services.

Factors that Influence Payroll Services Pricing

Processing payroll involves many components, such as calculating taxes, ensuring deductions, preparing returns, etc.

The size of the business, frequency of payroll, and additional services required are some factors that influence pricing. 

Larger businesses requiring quarterly or monthly payroll will be charged more than those with only a few employees and annual or biannual payroll needs.

Add-on services like direct deposit, check printing, and year-end reporting also affect costs. Accountants provide customized quotes after understanding the business requirements.

Per Employee Fees

Most accountants charge a flat transactional fee per employee to cover the basic payroll functions. This is the most common fee structure. The per-employee rate ranges usually between $5 to $10 for a small business under ten employees. 

As the number of employees increases, the per-head rates may reduce slightly. For over 50 employees, rates between $3 to $7 are common. Some accountants also have minimum fees for small businesses to cover their overhead costs.

Pay-As-You-Go Subscription Models

Rather than charging per payroll run, some accountants offer monthly or annual subscription plans. Common features include unlimited payroll processing, tax filings, support, and software access for a fixed monthly fee.

These plans work out more economically for businesses with regular payroll needs. Subscription costs vary based on the number of employees but average from $50 to $150 monthly.

Annual or Quarterly Package Rates

Some accountants provide packaged payroll solutions for businesses paying employees annually or quarterly. These save money compared to per-transaction fees.

An annual payroll package for up to 10 staff may cost $500-800, covering four payroll runs per year. Quarterly packages for smaller teams of 2-5 people range from $150-300 per quarter.

Software subscriptions and standard services like pay stubs and tax forms are often included in package prices.

Additional Service Benefits

While basic payroll processing ensures accurate wage and tax calculations, accountants add value through auxiliary services. Financial advisors assist with wage structure planning, compliance training, and audit preparation. 

HR experts help set employee benefit policies, handle inquiries, and create handbooks. These extra skills minimize risks and maximize payroll efficiency. Payroll support via phone and email also provides timely answers to address issues.

One-time Setup or Conversion Fees

For new clients requiring accountant-handled payroll, initial setup charges apply to establish payroll systems, accounts, tax profiles, etc.

One-time setup fees for a small business are usually $150-300. If an existing in-house or outsourced payroll needs migrating to the accountant’s platform, conversion fees in the $500-1000 range cover data transfer and testing. These startup costs are then rolled into an affordable monthly or annual service contract.

Multi-Location or Remote Employee Charges

Businesses with offices across locations or remote employee teams have slightly higher payroll requirements. While per pay period prices don’t change much, additional state and local tax compliance costs more.

Fees for multi-state tax filings are approximately 30-50% higher than a single location. Accountants specially trained in multi-state payroll compliance ensure all requirements for different jurisdictions are adequately addressed.

Payroll Audit Support

If a business undergoes an employment tax audit, accountants assist in navigating inquiries, document requests, and examinations.

Charges cover the time spent reviewing records, preparing responses, and attending audit meetings.

Standard hourly rates apply but average $150-250 depending on complexity and time needed. Having accountants manage payroll reduces the chances of errors and makes any future audits smoother.

Pay-As-You-Go Apps and Software

A growing trend is all-inclusive online payroll applications priced on a usage basis. Companies pay a low monthly subscription and only for employees currently on payroll, like $5 per active employee.

They offer core functions through easy-to-use templates and calculators. While lacking the personal touch of an accountant, these solutions suit very small businesses with uncomplicated payrolls and budgets.

Additional Charges

Accountants may levy additional charges for services beyond basic payroll processing.

Common extras include printing and mailing checks or direct deposit advice, preparing tax forms and returns, setting up new hires or processing terminations, handling audits and inquiries, and reporting.

These are usually charged hourly at the accountant’s standard rates in addition to the core payroll fees.

Importance of Payroll Accounting

Below, we have discussed the importance of outsourcing payroll to experienced accountants:

Ensure Accuracy

Payroll involves careful wage calculations, tracking deductions, and managing bonuses and incentives accurately as per employment contracts and labour laws. A single error could lead to underpayment or penalties.

Accountants use compliant systems, minimizing mistakes and ensuring on-time payslips. They update tax rates and filing procedures to maintain compliance. This saves bosses time that could be better spent on core business.

Compliance with Regulations

Employment tax rules vary between jurisdictions and change regularly. Accountants specializing in payroll understand current laws and filing deadlines for income, social security, and other deductions.

They complete paperwork such as tax forms precisely, reducing audit risks. By handling payroll legally, the company faces no penalties or harm to reputation due to mistakes. Management avoids stressful tax audits that distract from the main goals.

Reduce Overhead Costs

Hiring dedicated payroll staff needs office space, and software costs add to overheads. Outsourcing eliminates these since accountants provide equipment and hold required licenses.

Their automated systems efficiently process multiple payrolls weekly/monthly at competitive rates. Pay-as-you-go pricing ensures affordable payroll for all budgets. Shared resources among clients keep each business’s payroll spending low and predictable.

Focus on Core Operations

Instead of managers spending hours on payroll tasks, accountants assume full responsibility, freeing time for key priorities. Bosses get time to understand market changes better, strategize growth, mentor employees, and satisfy customers – vital for profits and sustainability.

Outsourced payroll optimizes costs while empowering leadership to concentrate on their business goals. Employees, too, work uninterrupted, knowing pay is handled expertly.

Conclusion

Accountants ensure accurate and hassle-free payroll management tailored to a business’s needs. Their fees are affected by several factors but remain affordable for most.

Outsourcing payroll gives business owners peace of mind while allowing them to focus on their core operations. Carefully reviewing service levels and negotiating suitable payment plans keeps payroll costs optimized.

Frequently Asked Questions (FAQs)

Q.1: How do accountants charge for payroll services?

Ans 1: Most accountants charge per employee on your payroll. The fees range from $5 to $10 per employee per pay period. Some accountants have a minimum fee even if you just have 1 or 2 employees. They may charge around $50 to $100 as a minimum per pay period.

Q.2: Do fees include filing payroll taxes?

Ans 2: The payroll fees usually include preparing and filing all required payroll tax forms like W-2s and 940/941 forms. It also has direct deposit of wages and payment of payroll taxes. Some accountants may charge extra if you need help with tax audits or amendments.

Q.3: Does the fee change if I have many employees?

Ans 2: The fees usually don’t increase much if you have more employees. The per-employee rates stay the same, but you get discounts if you have over 20 or 50 employees. Some accountants offer fixed monthly fees for large companies, cheaper than per-employee rates. This helps large businesses get predictable budgeting for payroll costs.

Q.4: When do I pay fees?

Ans 4: Most accountants will ask for payment of fees after preparing each pay period’s payroll. So if you pay employees bi-weekly, you pay the accountant every two weeks after they complete the payroll. A few may ask for payment at the month’s or quarter’s end. But paying after each pay period is more common.

Also read:

• What is Payroll Accounting?
• What are Payroll Management Services?