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real cost of doing own payroll

Can a Wisconsin Small Business Do Their Own Payroll in 2022?

The cost of payroll for small businesses

Often I’m asked this question by a new prospective client or an existing client who is starting or acquiring another business.

This is what I tell them: Yes, you can, but we don’t recommend it. Here’s why:

"One mistake with payroll taxes can cost you more than a year's worth of payroll processing fees to fix with the IRS?"

I can understand any business wanting to save money. Starting with a solid foundation by outsourcing payroll to a qualified payroll service gives the owner(s) piece of mind and allows them time to work on their business instead of in their business.

There are laws that need to be followed and many government agencies that are ready and willing to take advantage of a Wisconsin small business owner’s lack of payroll knowledge by imposing fines and penalties. Here’s a partial list:

  • DOL (Department of Labor) Wage and Hour Division
  • IRS Federal and State
  • Municipalities for local and school taxes
  • FLSA (Fair Labor Standards Act) for minimum wage, overtime and record-keeping provisions, remote worker guidelines and more
  • OCSE (Office of Child Support Enforcement) re: Child Support Order

Additionally, business owners need to be aware of the difference between hiring an employee vs an independent contractor (1099). The IRS has been scrutinizing companies who use 1099s for the last several years.

There are also laws to keep in mind if there will be tipped employees or the hiring of minors to work in the business.

Payroll service cost comparison

Here are several 1st hand experiences I’ve had with prospects who became our clients:

  • Law firm using QuickBooks for payroll. Processing was done by one of the firm’s partners until he lost a full calendar quarter’s worth of work from a bad QuickBooks update that caused him to recreate the entire quarter. Imagine how much legal revenue he could have billed his clients instead of recreating lost data!
  • Another law firm using QuickBooks for payroll where the primary partner stated their tax payments were 100% accurate! During the conversion, our implementation team discovered a $1,000 error resulting in an IRS penalty notice being sent months later.
  • A small non-profit start-up with a handful of employees in 3 states and a 1099 contractor in Japan (15-hour time difference) who will be processing the payroll and submitting it to our payroll service. Fortunately, we convinced them to outsource to us from the start to avoid any of the multi-state issues that could happen.

Outsourcing your payroll to professionals at a payroll service like Connect & Simplify ensures you don’t lose time (or money!) having to correct mistakes and deal with the IRS.

Can I do payroll myself?

While you can do payroll yourself, the cost of making mistakes far outweighs initial savings. Let’s look at what doing their own payroll could have cost these businesses. I googled average hourly rates for a Wisconsin attorney and here’s what I found:

  • $100-$400 per hour for a Reasonable Attorney in Wisconsin
  • $255-$520 per hour for a Top Lawyer in Wisconsin
  • $2,000 per hour & up for an Elite Lawyer in Wisconsin

In the 1st example, how much time in billable attorney fees would it have cost the partner to recreate and re-key the entire quarter? If his fees were moderate, say $200 per hour and it took him 4 hours, that’s $800 revenue lost!

The small expense of outsourcing to a payroll service will be money well spent! Let’s look at a general range of costs for a small business to use our payroll service.

First we need to know your payroll frequency:

(How often will you need us to process your payroll).

  • Weekly   (52 payrolls per year)
  • Bi-Weekly   (26 payrolls per year)
  • Semi-Monthly   (24 payrolls per year)
  • Monthly   (12 payrolls per year)

How much does it cost to outsource payroll for a Wisconsin small business?

For a small employer with 20 employees we’re talking a rough fee estimate of $98 per payroll.

Should I speak to a small business payroll consultant if I have 50 employees?

Yes, while you may be happy with your current payroll system and think your payroll is done 100% correct, outsourcing your company’s payroll will save you time and money wasted from fixing errors or dealing with the IRS.

Should I speak to a small business payroll consultant if I have 100 employees?

Yes, even if you think your current payroll system or provider is efficient, you might be unaware of the added time and money it takes to process the payroll of your growing business. Outsourcing your payroll helps you get back to working for your business, not in it.

Do small business owners really have time to research and study all of the above? Let’s get back to business. Don’t’ do your own payroll. Let the experts handle it.

Get Payroll Solutions

 

About The Author —

Barb Schnoll is a Subject Matter Consultant in Payroll, Time Labor Management, HR, and HCM systems. Her prior history also includes many years of business-to-business consulting, sales, implementation, and training in technology. She has seen payroll evolve from writing checks, paying taxes, and producing W2s to a full-fledged, cloud-based HCM system offering mobile access from smartphones to employees and new hires.

In her spare time, she loves traveling, motorcycling, and new this summer, discovering the endless trails of UTVs.

She has represented The Benefit Companies for 20 years.

Connect & Simplify™ partners with UKG (Ultimate Kronos Group) to offer best-in-class Payroll Software, Kronos Time Clocks, HR, and HCM solutions.

Call Barb at 262-207-1999 ext. 217 and visit www.connectandsimplify.com