One of the many tasks business owners must tackle at the start and every week thereafter. When looking for ways to balance budgets and cut corners, exploring the real cost of running payroll appears often.
Small and midsized business (SMB) owners must decide which payroll “system” is going to work for them. Some of the options include:
- A Do-it-Yourself (DIY) approach where the business owner learns to do payroll themselves, directing their time from business growth activities.
- Hiring a payroll clerk, which adds to the business’s employee headcount at an average $20 hourly rate and requires finding a qualified candidate.
- Purchasing a third-party software solution, which may work for basic functions but only provides limited resources for HR administration. Costs generally include a monthly base fee as well as amount per employee and will vary based on the level of services(?) provided.
- Using your Certified Public Accountant (CPA) firm to handle payroll, which typically commands an hourly rate of $100. And fees add up quickly.
- Engaging an outsourced payroll and HR services professional employer organization (PEO) like MarathonHR. We charge pay period management fees according to the level of service needed (at MarathonHR our payroll processing services could be as low as $10 per employee per pay period)
Evaluating the True Cost of Payroll
The people costs of processing drive many SMB to a software-based solution. A quick Google search can yield numerous options for employers to license payroll products that they can set up and run by themselves. Inexpensive software can help employers get this function going in a short period of time. However, when business owners look at how to manage functions such as onboarding, HR administration and workers’ compensation, off-the-shelf software can’t always scale up. Some of the payroll software companies say that they can provide HR, too, but they merely provide access to a library of documents that you need to read and become an expert on.
There are also limitations to software when it comes to making human decisions, and a system is only as smart as what you tell it to do. One example of a real-life snafu: a friend couldn’t get her PTO approved when her boss left the company because the system didn’t know where to send the request.
Further, payroll isn’t just about paying employees; there are also recordkeeping requirements to manage. A payroll provider like MarathonHR keeps clients compliant with human resources regulations, which reduces the likelihood of employment-related litigation.
The Advantages of a PEO
When evaluating different payroll options, make sure you’re doing an ‘apples to apples’ evaluation and understanding what’s included in the providers’ packages. MarathonHR not only provides the software to run payroll; we back everything with hands-on service so that you’re not left to figure things out on your own. Our payroll packages start with payroll only but can scale up to include HR administration, timeclocks, workers’ compensation and employee benefits.
By using our payroll services, MarathonHR clients can integrate their benefits administration with payroll in one comprehensive HR system, and they are freed from payroll-related tax filings and the paperwork needed to manage workers’ comp claims.
When you consider the number of benefits and functions included in a comprehensive payroll service, you will likely find that it’s a cost-effective solution for your business.