Payroll processing for a small business typically runs $40 to $200 per month, sometimes more. Most payroll providers charge a base monthly fee plus a per-employee fee, so costs scale as you add people. A business with 3 employees pays a lot less than one with 15.

Self-service payroll software like Gusto or QuickBooks Payroll usually starts around $40 to $50 per month as a base fee, plus $5 to $8 per employee. For a crew of five, you’re looking at roughly $65 to $90 per month. That typically covers tax calculations, direct deposit, payroll tax filings, and year-end W-2s. Some platforms include workers’ comp integration and basic HR features at higher tiers.

Full-service outsourced payroll through a provider like ADP or Paychex tends to cost more, often $100 to $300 per month for a small team. The tradeoff is that someone else handles everything including tax deposits, quarterly filings, and year-end reporting. You just approve the hours and the rest gets done.

What drives the cost up is complexity. If you’re running payroll in California, you’re dealing with EDD registration, state disability insurance, and paid family leave withholding on top of federal requirements. Multiple job sites, overtime rules, and certified payroll for public works projects all add layers. A simple weekly payroll for a few office employees is straightforward. Paying a mixed crew of field workers across different job types takes more effort.

There are also costs that don’t show up on the monthly invoice. Getting payroll wrong results in penalties from the IRS and state agencies that can add up fast. Late payroll tax deposits trigger automatic penalties starting at 2% and going up to 15% of the unpaid amount. California is particularly aggressive about enforcement. The cheapest payroll option that leads to filing errors ends up being the most expensive one.

For trade and service businesses, the decision often comes down to whether you want to manage payroll yourself or hand it off completely. If you’re comfortable with the software and can dedicate the time each pay period, a platform like QuickBooks Payroll keeps costs low. If payroll is one more thing you don’t have time for on top of running jobs, outsourcing makes more sense. Either way, getting the initial payroll system setup done correctly saves you from compounding mistakes down the road.

The monthly payroll fee is just one piece of what it costs to manage your team. When you pair it with proper contractor bookkeeping services, the payroll data feeds directly into accurate financial statements and cleaner tax returns. That’s where the real savings show up, not in picking the cheapest per-employee rate.