Payroll is likely one of your businesses largest expenses.
Because of this, you need to make sure you have the right budget for payroll cost every month. Otherwise, your employees might not get their paychecks on time.
But how big (or small) should that budget be? We’ve put together a quick guide to walk you through common payroll costs and help you find out.
So let’s get started.
How Much Should You Budget for Payroll Cost?
There isn’t a “one-size-fits-all” answer to this question. The exact amount of money you should budget for your payroll cost depends on your specific needs.
In general, most payroll services cost anywhere from $20 to over $200 a month. So to figure out the right budget for your business, you have to consider several things, the first of which is your employees.
Here’s what you need to think about first.
How Many Employees Do You Have?
The more employees you have, the more money you’ll have to budget for payroll.
Why?
Many payroll services charge a small, additional fee per employee (or per check). This fee can be anywhere from $1.50 to as high as $5.
That mean’s you could end up paying a normal price for the payroll service plus $5 on top of that for every employee you hire.
Even if you don’t have a lot of employees, this price can add up fast. If you’re a small business and don’t have a large budget for payroll, you should look for payroll services geared toward small businesses. They may be able to help you save a bit of extra money.
How Often Do You Pay Your Employees?
Payroll services can also charge more for a more frequent payment schedule. In other words, paying your employees every week will cost you more money than paying them bi-weekly or once a month.
If you’re trying to save on payroll costs, spend some time thinking about how often you pay your employees. Paying them every other week instead of every Monday might save you some money in the long run (without hurting the team).
Other Services That Require Additional Fees
The number of employees you have working for you and how often you pay them are the two most important things that will affect your payroll budget. But they aren’t the only ones.
There are several other payroll services (many of which you can choose as add-ons) that require additional fees.
Here are a few of the most common:
- Direct deposit
- Tax filing services
- Number of employees that reside in more than one state
- W2 processing
- 1099 processing
- New hire reporting
- Automatic check signatures
- Check delivery
It’s important to remember that not all of these things are offered as add-ons. If you don’t have a large payroll budget, make sure you take a look at the service carefully to find out what exactly you’re paying for.
DIYing Payroll Yourself
It is also possible to do payroll on your own. There are several services out there that will help you through the process, and it can save you a few hundred dollars.
But remember, doing payroll on your own can be time-consuming and difficult if you don’t know what to do. That doesn’t mean it isn’t worth the savings that come with it, though.
You can click here to learn more about DIYing payroll.
Understanding the Payroll Process
You can’t run a successful business without a payroll process. But payroll (even if you do it on your own) isn’t free. Setting up a monthly budget will help you stay on top of the payroll cost and get your employees their paychecks on time.
Looking for some other financial business tips?
Make sure you check out the business section of our blog!
