How Much Does Paychex Payroll Cost?

Last Updated on March 7, 2024
Written by CPA Alec Pow | Content Reviewed by CFA Alexander Popinker

Handling payroll is a crucial responsibility for any business, but paying employees accurately and on time often comes with costs. For small businesses without dedicated HR staff, outsourcing payroll to a provider like Paychex can save time and money while ensuring compliance. But how much does professional payroll administration actually cost?

How Much Does Paychex Payroll Cost?

For the full Paychex Payroll service with bundled HR tools, expect monthly costs from $250 – $2,000 depending on your unique criteria. The exact monthly figure depends on your headcount, complexity, additional services and year-end support selected. Their sales team provides customized quotes after assessing your needs.

Professional payroll pricing is customized for each client based on their unique needs and number of employees. But in general, monthly costs depend on factors like:

Number of employees – Paychex pricing tiers based on employee headcount typically start around $100 monthly for 1-10 employees. Per-person charges beyond 10 employees start at $2-$8 per employee. At 100+ employees, per-head pricing may fall below $5.

Pay cycles and frequency – Offering weekly payroll versus bi-weekly or semi-monthly cycles increases transactional activity and related service fees.

HR add-on services – Additional monthly costs apply for value-added HR features like new hire onboarding, PTO tracking, generating employee handbooks, managing compliance issues, etc. But the efficiencies often offset the fees.

Implementation and onboarding – Paychex often charges 1-2 months upfront before active payroll processing to cover implementation and training time. There may also be fees for migrating data or building custom integrations.

Year-end services – Additional per employee and per form charges apply for annual services like W-2 generation, 1099 forms, and federal and multi-state tax filings and submissions.

According to Business News Daily, Paychex Flex Essentials Plan is the most affordable option, starting at $39 per month, plus $5 per employee per month.

The Costs of DIY Payroll

Let’s first examine what’s involved with handling payroll completely in-house so you can understand where costs accumulate:

• Calculating each employee’s gross pay and making deductions for taxes, 401K, healthcare, and other benefits every pay period.
• Researching and applying constantly changing federal, state, and local tax laws and rates.
• Producing paper paychecks, signing them, and distributing to employees.
• Alternatively, setting up direct deposit through your payroll account.
• Paying employer tax liabilities and filing required documents like Quarterly 941s, W-2s, and year-end tax returns.
• Researching answers to employee payroll questions and resolving any issues like incorrect withholdings.
• If using software, staying up to date on features and new releases.

While basic DIY payroll software costs anywhere from $5-$50 per month, this doesn’t factor in your time input. Small business owners estimate spending 5-20 hours each month handling the various payroll tasks above. Valuing your hourly time at a modest rate of $50 per hour translates to $250-$1000+ in monthly DIY payroll costs.

Additionally, if any payroll issues arise or mistakes are made, you must pay accounting and legal fees for amendments and corrections. Between the high time costs, ample margin for errors, and regulatory risks, the DIY payroll route is exceptionally complex, risky, and time-consuming for small business owners.

Outsourced Payroll Solutions Simplify Everything

In contrast, partnering with a payroll provider like Paychex automates your key payroll tasks:

• Specialized software calculates federal, state, and local tax withholdings customized to each employee.
• Direct data integration with your other business software like accounting, HRIS, ERP, etc.
• Expert support teams file quarterly returns, and annual state taxes and produce all year-end documents like W-2s.
• Online and mobile tools empower employees to manage their own payroll info.
• Alerts, notifications, and transparency into payroll activity through a centralized hub.

By leveraging technology and teams of experts to run payroll start-to-finish, Paychex reduces labor and oversight needed from business owners. Their specialists stay current on the evolving tax codes across all 50 states and ensure ongoing compliance. This lifts a huge operational burden so you can focus on higher-level priorities and growth.

Calculating the Potential ROI

While outsourced payroll represents an added business expense compared to DIY options initially, partnering with a provider like Paychex can drive return on investment in a few key ways:

• Time and productivity– Gain back 5-20+ hours every month previously spent processing payroll. Redirect that time towards business growth initiatives, not paycheck administration.
• Lower compliance risk– Leverage Paychex expertise to avoid expensive penalties and issues with IRS, DOL, or state regulations.
• Improved efficiency– Automated tools and integrations cut out duplicate data entry and streamline workflows.
• Peace of mind– Near guaranteed payroll accuracy provides confidence and reduces employee complaints over errors.
• Scalability– Easily ramp up additional employees without proportional added workload.

You might also like our articles about the cost of starting a business, accountant fees, and using H&R Block.

For most small business use cases, the combination of hard and soft cost savings over DIY payroll justifies partnering with a payroll provider. The price becomes very reasonable considering the benefits.

Final Words

Exact payroll costs vary based on each company’s size, needs, regional laws, and configuration preferences. But professional solutions through a provider like Paychex offer both convenience and potential ROIs starting around $100 monthly for fewer than 10 employees.

Take advantage of custom quotes and speak to their specialists directly to discuss automation benefits tailored to your specific small business. They can walk through pricing models and packages to identify the optimal solution that won’t break the budget. Outsourcing routine back-office tasks allows you to focus energy on big-picture progress and growth.

Frequently Asked Questions

How long does Paychex keep payroll records?

Paychex typically retains payroll records for a minimum of four years, as required by the Internal Revenue Service (IRS). However, the retention period may vary depending on specific state regulations and customer preferences.

How do I contact Paychex payroll?

You can contact Paychex payroll support through various channels:

• Phone: Call 1-800-322-7292 to speak with a payroll specialist.
• Online: Log in to your Paychex account and submit a support request through the client portal.
• Email: Send an email to payrollsupport@paychex.com with your inquiry.
• Live Chat: Initiate a live chat session on the Paychex website during business hours.

How long does it take Paychex to process payroll?

The processing time for payroll can vary, but Paychex generally guarantees processing within:

• 24 hours for payroll submitted before 5 PM ET on business days.
• 48 hours for payroll submitted after 5 PM ET on business days or on weekends.

However, processing times may be shorter or longer depending on the specific payroll service and any additional services or customizations required.