How Much Does Payroll Cost for a Small Business?

Payroll software for a small business costs $17 to $180 a month in base fees plus $4 to $22 per employee, going by the prices the major providers publish as of September 2026. For a 10-person business, that works out to about $700 to $1,300 a year on an entry-level plan. Having an accountant run it for you, approving each pay run, handling the state registrations and notices, and tying it to the books, typically adds $150 to $400 a month on top of the software. Either way, the processing fee is the small number. The employer’s own payroll taxes run about 7.65% of wages plus unemployment tax, and a missed deposit draws an IRS penalty of 2% to 15% of the amount.

What do the payroll providers charge?

Full-service payroll plans start at $35 to $49 a month plus $5 to $6 per employee, and a mid-tier plan with HR tools, such as Gusto Plus, is $80 a month plus $12 per person. These are the list prices on each provider’s own pricing page as of September 2026. Promotional discounts for the first few months are common and aren’t shown.

Provider and plan	Base fee per month	Per employee per month	10 employees, per year
Patriot Basic (you file the taxes)	$17	$4	$684
Patriot Full Service	$37	$5	$1,044
Square Payroll	$35	$6	$1,140
Gusto Simple	$49	$6	$1,308
OnPay	$49	$6	$1,308
Gusto Plus	$80	$12	$2,400
QuickBooks Workforce Payroll with Simple Start accounting	$88	$6.50	$1,836
Gusto Premium	$180	$22	$4,800
ADP and Paychex	Quote only	Quote only	Not published

A full-service plan calculates pay, withholds and deposits the taxes, files Forms 941 and 940 and the state equivalents, and produces W-2s at year end. The cheapest tier on the list, Patriot Basic, runs the calculations and leaves the deposits and filings to you, which is where the penalties are.

ADP and Paychex price by quote. You’ll find specific ADP figures on review sites, but none of them come from ADP, and the company’s own page only offers a custom quote. If you’re comparing, get the quote in writing with the per-run fees, year-end W-2 fees, and any setup charge spelled out, because those are the line items that don’t appear in a headline price.

How much does it cost to outsource payroll completely?

Software still needs someone to run it. Somebody enters new hires and terminations, checks the hours, approves each run, registers with a new state when you hire a remote worker, answers the state unemployment notices, and books the payroll into the accounting records. Outsourcing means paying a bookkeeper or CPA firm to be that person.

An accounting firm’s payroll fee for a small team typically runs $150 to $400 a month, on top of the software subscription. Our own price is published: $145 a month plus $20 per employee, with the business paying its Gusto subscription directly. For 10 employees that’s $345 a month, or $4,140 a year, plus $1,308 for Gusto. Add-ons are published too: $75 per month for each additional state, $75 for an off-cycle run, $35 a month per wage garnishment, and $150 per project for certified payroll. Details are on the payroll page.

The alternative is an in-house hire or an owner’s evenings. For a small team, payroll is a few hours a month when nothing goes wrong, and the value of outsourcing shows up when something does.

What does payroll cost beyond the processing fee?

The taxes, which are many times the processing fee. For every employee, the employer pays Social Security tax, Medicare tax, federal and state unemployment tax, and workers’ compensation premiums. On a $50,000 salary that’s more than $3,800 a year in federal payroll taxes alone, against roughly $130 a year in per-employee software fees.

• Social Security tax of 6.2% on wages up to $184,500 for 2026, matched by 6.2% withheld from the employee, per IRS Topic 751.
• Medicare tax of 1.45% on all wages, also matched by the employee.
• Federal unemployment tax (FUTA) of 6.0% on the first $7,000 of each employee’s wages. Employers who pay state unemployment tax on time get a credit of up to 5.4%, which brings the rate in most states to 0.6%, or $42 per employee per year (more in a state whose credit has been reduced), per IRS Topic 759.
• State unemployment tax, at a rate and wage base that vary by state and by the employer’s claims history.
• Workers’ compensation insurance, priced by payroll and job classification.

On a $50,000 salary, the employer’s Social Security and Medicare alone come to $3,825, and FUTA adds $42. Ten such employees cost the business about $38,670 a year in federal payroll taxes, against $1,308 for the software that calculates them. The payroll tax basics guide covers the forms and deposit schedules.

What does a payroll mistake cost?

A single late deposit can cost as much as a year of payroll software. The IRS failure-to-deposit penalty is 2% of the late amount for deposits 1 to 5 days late, 5% for 6 to 15 days, 10% beyond that, and 15% if the amount is still unpaid more than 10 days after an IRS notice. A business with a $12,000 monthly deposit that pays 20 days late owes a $1,200 penalty for that one month.

The serious exposure is personal. Withheld income tax and the employee share of Social Security and Medicare are trust fund taxes, held by the business on the government’s behalf. If they aren’t paid over, the IRS can assess the trust fund recovery penalty, equal to the full unpaid amount, personally against anyone who was responsible for collecting and paying the taxes and willfully failed to. Responsible means having the duty and the authority to direct which bills get paid, which usually points at owners and officers and can reach a bookkeeper or controller who has that authority. Willful means knowing the taxes were due and paying other bills instead. An LLC or corporation doesn’t shield a responsible person from it. The trust fund recovery penalty guide explains who counts as a responsible person.

Which option fits which business?

An owner paying only themselves through an S corporation can run a full-service plan for $42 to $55 a month all in and spend ten minutes a month on it. The S corporation payroll setup guide covers the registrations involved.

A business with 3 to 25 employees in one state is well served by any of the full-service plans, and the real choice is whether the owner wants to be the one running it. Once there are employees in several states, tipped or hourly staff with overtime, garnishments, certified payroll on government jobs, or benefits deductions, the cost of mistakes climbs quickly, and handing payroll to the same firm that keeps the books starts paying for itself. The first employee guide covers what changes when you make your first hire.

What should I do next?

Count your employees, your states, and your pay frequency, then price two or three of the published plans against that headcount using the table above. If you’d rather not run payroll yourself, ask any firm quoting it for the monthly fee, the per-employee fee, and the price of each add-on in writing.

• The payroll mistakes guide covers the errors that generate most penalty notices.
• The payroll deposit guide explains the monthly and semiweekly deposit schedules.
• The small business accountant cost guide shows payroll alongside bookkeeping and tax in a full annual budget.
• The bookkeeping cost guide covers the monthly bookkeeping that payroll feeds into.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.