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August, 2017

How Much Should a Payroll Solution Cost?

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How Much Should a Payroll Solution Cost?

Whether you’re looking to outsource your payroll processing or looking for a better solution to fit your company’s growing needs, there is always one factor that makes a huge difference in the decision-making process: cost. It can be challenging to find that delicate balance between cost and quality.

We previously discussed how much a core HR solution should cost and offered some information to help in the research process. Today we answer the burning question: how much should a payroll solution cost?

What A Payroll Solution Should Offer

The whole point of a solution is to solve pain points and issues you’re currently experiencing and those down the road. There are several features and benefits a payroll solution should offer, including:

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A cloud-based platform that doesn’t require on-premise installation or maintenance and can be accessed anywhere on any device.
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A single point of entry with a centralized database to avoid duplicate data entry.
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A secure database that stores company and employee data to ensure confidentiality.
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Automatic calculation of what each employee should be paid each pay period based on pay rate, overtime, accruals, taxes, and deductions.
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Error-checking algorithm to catch issues before processing payroll.
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Payroll reports and dashboards for access to information like labor expenses for more visibility into company metrics.
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Tax compliance services with experts who file and pay federal, state, and local taxes on your behalf.
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New hire reporting for government compliance.
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Accrual tracking and management for paid time off.
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Employee self service so employees can access pay stubs, tax forms, and see PTO balances anytime they want on their computers or mobile devices.
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Integrations with other business investments and systems such as General Ledger and retirement packages.
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Ability to pay employees with paper checks, direct deposit, or paycards.

How Payroll Solution Vendors Determine Price

Most payroll companies will give you pricing based on the number of employees you pay. But there are also several other factors that can determine the price of a payroll solution.

Base Pricing

Base Pricing

Typically, payroll companies offer base pricing that can include features like payroll processing, basic tax filing, direct deposit, employee access to a self-service portal, PTO tracking, and reporting. The base pricing is then determined based on how many employees you pay and the pay frequency, along with how the complexity of your payroll taxes.

Consider a solution that allows you to unify HR, time tracking, recruiting, onboarding, and ACA with payroll. A solution with a single point of data entry and a centralized database will increase productivity and efficiency.

Tax Compliance

Tax Compliance Services

Basic tax compliance services may include federal tax filing in one state as well as quarterly payroll tax reports and payroll withholdings filings to state and federal agencies. The more states you file in, the more it will cost. Some payroll companies may even offer services for local tax filings.

Check to see if potential payroll providers offer a payroll tax compliance guarantee. This typically means that if a tax penalty is the result of an error made by the vendor, they will absorb the costs.

Pay Frequency

Pay Frequency

The frequency at which you pay your employees can impact pricing. A per employee per month pricing model is different than a per employee per payroll processed structure. There could also be a base monthly fee as well, so make sure you know exactly what your base pricing entails based on your pay frequency.

If you’re paying employees at different frequencies, check to see if the payroll companies you’re evaluating can easily accommodate this.

Additional Costs

Additional Costs

Along with base pricing, there can also be additional costs depending on what your specific needs are. These can include:

  • Development fees for integrations with other systems
  • Year-end processing of Forms W-2s and 1099s as well as 1094-C and 1095-C reporting
  • Additional solutions for core HR, time tracking, recruiting, and onboarding processes
  • Paycheck printing and delivery
  • Garnishment processing

Outsourcing your payroll can provide several benefits, including time saved on manual, paper-based processes and money saved by mitigating risk.

The True Cost of Outsourcing

Making the decision to outsource your payroll or change providers is a weighted one. There are so many factors to consider, it may sometimes feel easier to just stick with that is comfortable. But there does come a point where the cost of a better payroll solution far outweighs wasted time and money using inefficient, outdated processes. Let’s take a look at the true cost of outsourcing your payroll tasks and processes:

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Accuracy: You’ll process error-free payroll for less time spent on making corrections after the fact.
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Compliance and Risk: You’ll partner with tax compliance experts to help you manage your compliance and mitigate risk.
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Confidentiality: You’ll have peace of mind in knowing that confidential information such as wage data is secure.
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Control: You’ll maintain control over your payroll data to handle any last-minute changes that may occur prior to processing.
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Time: You’ll spend less time slogging through payroll processing so you can be more proactive and strategic.
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Cost: You’ll save money by eliminating the need to purchase, update, and maintain on-premise software or hardware.

Outsourcing your payroll allows you to automate processes, unify your payroll with HR and time tracking processes, and better manage compliance for your company.

Ready to Pull the Trigger on a Payroll Solution?

Having the right tools to make an informed decision about a payroll solution doesn’t have to be overwhelming. A buyer’s guide is a great place to start, as well as vendor review sites like G2TrustRadiusSoftware Advice, and Capterra. And don’t forget to demo the solutions you’re considering to make sure you choose the right solution for your company’s needs at a price that will make everyone happy.

How APS can help

APS brings innovation and scalability to modern workforce management. Our clients, their employees, and our partners deserve intuitive technology delivered with personalized service and support. APS understands the challenges organizations of all sizes face, which is why our unified payroll and HR solution is built to address all aspects of the employee lifecycle.

APS is different because of our unique approach to technology and service. As a result, we continually maintain 98% customer retention and satisfaction rates. Since 2014, APS has ranked as a High Performer, Best Support, and Easiest to Use by G2. Our most recent accolades include Best Relationship, Best ROI, and Momentum Leader.

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