Outsourcing Accounting

How does it work to have an outside company manage your payroll? And is it worth the cost? April 13, 2010

Would anyone who has outsourced payroll and accounting give me some idea what an accounting service charges for that sort of service. Is it a flat fee or so much an employee or a percentage of the payroll? Also the same question goes for the accounting – is it charged at an hourly rate or percentage? Also, what do they charge for tax filings?

Forum Responses
(Business and Management Forum)
From contributor H:
We use a separate bookkeeper at 30 an hour and then have the more expensive accountant do the quarterly and yearly taxes.

From contributor W:
There are lots of companies that do payroll outsourcing - ADP and Paychex are the two biggest, and there are typically smaller companies that do it as well. They will usually charge based on the size of your payroll (not the amount, but the number of checks, paydays and employees), and by and large, they are reliable. Errors are extremely uncommon, and there should be fail-safe's in place in their process - and your’s. I have never actually used them for any of my businesses, but I have worked for more than one company that used them and do not recall any issues at all. I believe they can even take care of your tax deposits, if you want. I suspect that the answers to all of your other questions will be - yes. The way that they charge for those services will probably vary widely, based on the practice, their qualifications and level of expertise. A CPA will cost more than a bookkeeping company. Depends on what you want and what you need.

From contributor B:
When I first started my company about four years ago I outsourced payroll. It would cost about $60/payroll for ten employees. This cost included all payroll filings and processing payroll tax payments. I was paying every other week but then everyone wanted to get paid weekly. It would have cost about $3k per year so I started doing it myself with QuickBooks payroll (costs about $350/year). Realistically the time saved with outsourcing is nominal if you want to track costs by job - since you need to put hours into some accounting package anyhow. With QuickBooks software the tax filings can be processed and printed out in minutes. Once you know how to quickly process all the filings and make the federal/state payments online there really is no value to paying to outsource payroll. I do pay for an accountant once a year to figure out my federal income tax filing (S corp) and state franchise tax. This costs about 4k/year.