Payroll Software Cost & Outsourcing Break-Even Simulator
Compare the true cost of payroll software vs in-house processing vs PEO outsourcing. Calculate per-employee costs, find your break-even point, and get personalized recommendations.
Company Profile
Payroll Software Costs
In-House Processing Costs
PEO Outsourcing Costs
Cost Comparison Analysis
Per-Employee Cost Breakdown
| Option | Monthly | Per Employee | Annual |
|---|
Break-Even Analysis
Scaling Projection
How costs change as you hire more employees
Personalized Recommendation
Hidden Costs to Consider
Understanding Payroll Costs: Software vs In-House vs PEO
Payroll Software
- Best for: Businesses with 1-100 employees who want control
- Typical cost: $40-150/month base + $4-12/employee
- Pros: Control, flexibility, lower cost at scale
- Cons: Requires some HR knowledge, manual oversight
- Examples: Gusto, QuickBooks Payroll, ADP Run, Paychex Flex
In-House Processing
- Best for: Very small businesses with simple payroll
- Typical cost: Your time + spreadsheet tools
- Pros: No monthly fees, complete control
- Cons: High error risk, compliance burden, time-consuming
- Warning: Tax penalties can exceed software costs
PEO Outsourcing
- Best for: Growing companies wanting HR support
- Typical cost: $100-200/employee/month (bundled)
- Pros: Full HR support, benefits access, compliance handled
- Cons: Higher per-employee cost, less flexibility
- Examples: ADP TotalSource, Insperity, TriNet, Justworks
Frequently Asked Questions
When should a small business outsource payroll?
Consider outsourcing when you have 10+ employees, spend more than 5 hours/month on payroll, or face compliance complexity. The break-even point typically falls between 15-25 employees depending on your hourly value and error costs.
What's the true cost of payroll software?
Beyond the advertised base price, factor in per-employee fees, pay-run fees, tax filing add-ons, setup costs, integration fees, and time spent learning the system. A $45/month plan can easily become $150+/month for 20 employees.
Is PEO worth it for small businesses?
PEO makes sense when you want comprehensive HR support, access to enterprise-level benefits, and risk transfer. The break-even analysis shows PEO becomes cost-competitive at 20-50 employees when you factor in HR time savings and benefits costs.
How do I calculate per-employee payroll cost?
Divide your total monthly payroll expense by employee count: (Base Fee + Per-Employee Fees + Tax Filing + Time Cost) / Employees. This helps compare options and project scaling costs accurately.
What hidden fees should I watch for?
Watch for: year-end W-2 processing fees, state filing add-ons, direct deposit fees, contractor payment surcharges, implementation costs, training time, and premium support tiers. Always get a full pricing breakdown before committing.
Can I switch payroll providers mid-year?
Yes, but timing matters. Switching at year-end simplifies W-2 reporting. Mid-year switches require historical data transfer and coordination between providers. Budget 2-4 weeks for transition and expect some overlap costs.
Disclaimer: This calculator provides estimates for informational purposes only. Actual payroll costs vary by provider, location, and business needs. This is not financial or business advice. Consult with a CPA or HR professional for guidance specific to your situation.