Payroll outsourcing means paying somebody else to run your pay run and file your payroll taxes. It sounds like one decision and it is really three: whether you hand over the calculation, the filings, or the employment relationship itself. Each is a different product at a different price, and this page separates them before you start collecting quotes that are not for the same job.
The three things payroll outsourcing can mean
At the lightest end, a provider calculates gross to net, produces pay records and pays your people, while you keep filing your own returns. In the middle, and this is what most buyers actually want, the provider also registers you where you need to be registered, files and deposits your federal and state payroll taxes, and takes responsibility when a filing is late. At the far end, a professional employer organisation becomes the co-employer, files under its own identification number and brings your staff onto its benefits and workers' compensation. The price rises steeply across those three, and so does what leaves your desk. The Internal Revenue Service is explicit that outsourcing payroll duties does not by itself move the legal responsibility for employment taxes off the employer, which is why the filing-inclusive tier is worth reading carefully rather than assuming.
What changes the price
Headcount and the number of states you file in move a payroll bill more than any feature on a comparison chart. Providers that publish a rate almost always publish a base monthly subscription plus a per-worker charge, so a business with four people and one with forty are not buying the same thing at the same list price. Filing in more than one state is charged separately by several providers, sometimes per state per month and sometimes as one flat multi-state fee, and those two structures cross over at some number of states. Year-end forms are frequently billed once a year rather than monthly. Add all four before you compare, because the headline is rarely the bill.
Why most providers will not tell you a price
Every provider in the record on this site was read on its own pages, and most publish no rate at all. That is not evasion in every case: a professional employer organisation is genuinely pricing your wage base, your benefits take-up and your workers' compensation risk, and cannot know any of it before you talk. But it does mean the market divides cleanly into providers you can price in an afternoon and providers you can only price by spending a week on calls. Start with the first group, get a real number at your own headcount, and use it as the floor when you talk to the second.
Questions people ask about payroll outsourcing
Does outsourcing payroll remove my responsibility for payroll taxes?
Not by itself. The IRS is clear that an employer remains responsible for its employment tax obligations even when a third party runs payroll; what changes is who does the work and, with some arrangements, who is jointly liable. A certified professional employer organisation is the arrangement that most changes that liability, and it is certified precisely because that is a significant shift.
How much does payroll outsourcing cost?
Among the providers on this site that publish a rate at all, the advertised base subscription and the per-worker charge are quoted verbatim with the date they were read. Most providers publish nothing, and their price depends on headcount, states and benefits.
Is outsourcing payroll worth it for a small business?
The calculation is rarely the reason; the filings are. If you pay people in more than one state, or you have ever missed a deposit deadline, the value is in somebody else carrying that calendar. If you pay four people in one state and have never had a problem, the honest answer is that it may not be.