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Payroll Processing Cost Calculator

Compare payroll provider costs — per-employee pricing, base fees, and add-ons — against the true cost of running payroll yourself.

Short answer

Payroll Processing Cost Calculator

$1,344Provider cost per year

DIY costs $3,600/yr in owner time — more than the provider before counting penalty risk. The tiebreaker is risk: IRS payroll penalties for late or wrong deposits start at 2% and hit 15%, and one missed 941 deposit can cost more than a year of fees. At your headcount, a provider is the standard call; multistate filing alone justifies it.

How it's calculated: $112.00 per employee per year. Adjust the inputs below to recalculate for your own numbers.

Disclaimer: Estimates only — not legal, tax, or payroll advice. Pay rules vary by state, contract, and collective agreement; confirm figures with your payroll provider, CPA, or employment counsel.

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12
40
6
2
4
75
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Formula used

Payroll cost comparison

Mainstream providers (Gusto, OnPay, QuickBooks Payroll, ADP Run) price as a monthly base plus per-employee fee — typically $40–$80 base and $6–$12 per head. The DIY comparison must include penalty exposure and year-end W-2/1099 filing time, not just the runs themselves.

Provider = (base + per-employee × headcount) × 12; DIY = hours × your rate × 12
Typical PEPM fee
$6–$12
Avg base fee
$40–$80/mo
IRS late-deposit penalty
2–15%
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Worked example: 12 employees, bi-weekly payroll

Provider math: $40 base plus 12 × $6 equals $112 per month, $1,344 per year — $112 per employee. DIY at 4 hours a month and a $75 owner-hour is $3,600 in time alone, before counting the quarterly 941s, state filings, and W-2 season. The provider wins by $2,256 a year and removes the penalty tail-risk entirely.

  • • Watch add-ons: time tracking, benefits admin, and HR libraries often double the PEPM fee.
  • • Multi-state employees trigger extra state registrations — some providers charge per state.
  • • Contractor-only payroll is often free or near-free (Gusto/Square contractor plans).

FAQ

How much does payroll processing cost per employee?

Mainstream small-business providers run $6–$12 per employee per month plus a $40–$80 base fee — roughly $100–$200 per employee per year for a typical team. Enterprise HCM suites cost more but bundle HRIS.

Is it worth paying for payroll software?

For almost any employer, yes. The fees are a rounding error next to owner time and IRS deposit-penalty exposure (2–15% of the deposit). The break-even is usually 1–2 hours of your time per month.

What do Gusto, ADP, and QuickBooks Payroll cost?

As of 2026, entry tiers cluster around $40–$50 base plus ~$6/employee/mo for Gusto and QuickBooks; ADP Run quotes custom but typically lands higher. Watch promotional pricing that steps up after 3–6 months.

Can I run payroll myself for free?

You can, with IRS EFTPS deposits and state portals, but you own every deadline: deposit schedules, quarterly 941s, W-2s, and state equivalents. For contractor-only payments, several providers offer $0-base plans that are strictly better.

How this calculator is built

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Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.

Sourced from primary data

Benchmarks come from public AdSense / Stripe / IRS disclosures and reader-submitted data — never third-party "$X per view" claims. Full methodology.

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Reviewed on a rolling quarterly cycle. Dated reviews are published on the methodology record for each calculator.

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See our editorial policy and disclaimer. Results are estimates, not advice.

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