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Topics: benefits of outsourcing, Outsourcing, payroll, payroll outsourcing

How Much Does Payroll Outsourcing Cost? Price Breakdown, Engagement Models and More

6 MIN READ | Posted on June 27, 2022
Written By Divya Ramaswamy

How much does payroll outsourcing cost?

Payroll processing is one of the most important functions for all business owners. Timely and accurate payroll enhances employee satisfaction and keeps you in compliance. Irrespective of your organization’s size, processing payroll can be time-consuming and quickly get more complicated as you grow. If you are considering outsourcing your payroll, you are probably wondering how much it costs. Although payroll outsourcing is surprisingly affordable, the pricing depends on several factors.

Let’s discuss how payroll pricing is structured, the factors that drive up the cost, and ways to save on payroll services.

So, How is Payroll Outsourcing Pricing Structured?

Most payroll providers charge based on frequency. The frequency refers to the number of times a client will be paying their employees. You will be charged each time you pay your staff. And some businesses charge you based on the number of employees in your organization. Fixed pricing is yet another pricing model that payroll providers follow. The average cost of payroll services entirely depends on your payroll needs.

Basic Costs

Payroll providers usually charge a basic package fee, including paycheck processing, online access, direct deposit, and basic tax filing. To determine your cost, your provider will examine your pay frequency, the number of employees, and the complexity of your payroll tax computations and give you a quote accordingly. Some payroll providers also charge an initial cost to set up your account and another fee whenever you add or drop an employee.

Tax Assistance Charges

Sometimes, payroll service providers charge extra for payroll tax duties, which might cost you additional for year-end tax processing, including printing, mailing, and reporting. Your payroll provider might charge you based on the complexity of your payroll, pre-tax plans, year-end reporting, etc.

Pay Frequency Factor

This is one of the most common pricing models that payroll companies use. You will be charged based on the number of times you pay your employees. Such an approach is suitable for businesses with predictable payrolls and ones that don’t have extra payroll runs.

Per Employee Per Month structure

Such a pricing structure is popular these days, given its results in cost savings for employers. Instead of being charged for each payroll, you can run unlimited payrolls and just pay a monthly base fee and a fixed rate for the number of employees you pay every month.

Fixed Pricing:

As the name suggests, with this model, payroll providers charge you a fixed monthly rate covering a specific number of employees or a given range. That will be the only charge irrespective of the frequency or number of employees you pay monthly. This model works well if your organization has a steady employee count.

Also read: Choosing the Right Payroll Outsourcing Provider: 7-Point Checklist For CPA Firms

So, What are the Factors that Can Drive Up Payroll Outsourcing Costs?

Just like an a la carte menu at a restaurant, you might have to pay for ancillary services such as tax filing, courier & delivery charges, check stuffing & sealing, quarterly & year-end reporting, employee pay options, general ledger interface, etc. Most payroll service providers offer full-service payroll and the ability to choose which services you wish to outsource. You have the option of selecting which payroll functions you want to outsource. You might want to keep a close eye on a particular process yourself but do not want to be involved in another. And the best part? It isn’t a lifetime commitment as you can enjoy a fair amount of flexibility when it comes to switching providers.

The exact cost for payroll outsourcing services depends on factors such as the outsourcing firm’s reputation, the volume of work, the number of resources you want to hire, and the engagement models.

The payroll outsourcing service companies with positive reputations and vast experience will likely offer highly professional and dedicated payroll professionals who can handle your clients’ end-to-end payroll needs. As far as the volume of work is concerned, you have to gauge the amount of work that you wish to outsource. When you have determined the exact volume of work, your payroll provider can recommend a suitable pricing model.

Now let’s take a look at the different engagement models:

Full-time Employee Model (FTE)

With this model, a payroll service provider’s staff will work exclusively for your accounting firm. This model is ideal for accounting firms that want to build an offshore team of experienced accountants who can work in tandem with their in-house teams. With this model, dedicated FTEs will report to you directly and ensure a quick turnaround time.

PAY-AS-YOU-GO or Ad hoc Model

As the name goes, you will be paying only for the number of hours or maybe the number of tasks you choose to outsource. This model is recommended for firms with lesser or ad-hoc volume and those that aren’t sure of the amount of work they want to outsource. Actual usage is metered, and you will be paying only for the capacity of services you avail. Although you will be getting skilled, dedicated staff working exclusively for you, just like the FTE model, this will be for a pre-defined period.

Pricing-related questions to ask your payroll outsourcing service provider:

  • What does your basic level of services cover?
  • In case of mistakes, how quickly can you re-run payroll?
  • Will you cover the penalty and interest fees if I sign up for your payroll tax filing services?
  • Do these rates expire? And how much should I be paying after they do?


Payroll outsourcing is priced based on several factors and the kind of engagement model you choose for your firm. Global payroll outsourcing service providers have standard pricing and offer engagement models such as FTE or pay-as-you-go models. You can discuss with your payroll outsourcing partner to find out which model is the best suited for your business. Payroll outsourcing opens the door to affordable, world-class security standards that ensure data security. Approximately 40% of small to medium-sized companies are fined for miscalculating taxes, failing to deposit withholdings, and submitting incorrect filings. Payroll outsourcing can help minimize risks and manage your firm’s payroll smoothly, saving you a lot of money.

Must Read: The Ultimate Guide for CPAs to Decode Payroll Outsourcing Services

Get a Payroll Quote From QXAS today!

Contact us today to get a payroll quote if you are considering payroll outsourcing services for your CPA firm. Choose your preferred pricing model and payment method when you outsource your payroll to QXAS.

Ours is a dedicated team of highly experienced payroll processing professionals who

  • Can smoothly manage payroll
  • Takes care of local taxes, laws & compliance,
  • Guarantees data security
  • Has well-equipped with a user-friendly platform &
  • It offers a transparent pricing structure


  • Highly experienced (14 + years) in delivering outsourced payroll solutions to firms across geographies & industries.
  • Specialized in catering to high-volume payroll processing requests, our team of experts has processed over 1,000,000 timesheets annually
  • First-ever Indian GDPR compliant payroll outsourcing company affiliated with prestigious accountancy organizations such as ACCA & ICAEW
  • Most trusted and successful Payroll outsourcing company with highly efficient, resolute, and experienced accountants
  • Fully compliant: ISO 27001 for information security & ISO 9001 for quality

Book a Consultation

We hope you enjoyed reading this blog. Payroll outsourcing in the US has never been more affordable! Reach out today to learn how QXAS’ payroll outsourcing services can help you scale.

Originally published Jun 27, 2022 07:06:29, updated Jul 07 2022

Topics: benefits of outsourcing, Outsourcing, payroll, payroll outsourcing

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