The Cost to Outsource Payroll in 2025-26 depends on many factors which CPA firms should seek clarity in order to obtain the best value and appropriate fit for their needs. These include the specific payroll practices common in the industry, the country or region where payroll is outsourced, the total number of employees, the selected outsourcing model, and the complexity and frequency of payroll runs. In addition, tax compliance requirements and the provider’s level of advisory and specialized services also impact pricing.
One possible way forward is to work with a payroll outsourcing provider that also provides advisory support in implementation services, which can help guide the business on selecting the right payroll service model for it, whether it will be a fully outsourced team managing all aspects or payroll software with partial self-management by your organization, depending on its size, complexity, and regulatory environment.
This blog is designed to help CPA and accounting firms understand and get a clear view of the costs they should expect from outsourcing payroll, and what causes the cost of outsourcing payroll in 2025-26 to fluctuate.
How Much Does It Cost to Outsource Payroll?
This table outlines the typical costs associated with outsourcing payroll services for businesses of various sizes in 2025–26. It breaks down the various cost components one might encounter, providing pricing ranges and details on what each fee covers.
| Cost Component | Typical Pricing (2025–26) | What’s Included / Notes |
|---|---|---|
| Base Monthly Fee | • Small business: $30–$100/mo • Mid-size: $150–$500/mo • Complex/large: $1,000+/mo | Covers standard payroll runs, basic calculations, data management, and paystubs. |
| Per-Employee-Per-Month (PEPM) | • Basic: $2–$8 PEPM • With tax filing: $8–$15 PEPM • Fully managed: $15–$25+ PEPM | Main cost driver; varies based on service depth and automation. |
| Tax Filing & Compliance Fees | • Federal/state/local: $50–$200/yr • Year-end filings (W-2/1099): $5–$10 per employee • Multi-state: Additional charges | Includes payroll tax filing, annual forms, and compliance support. |
| Setup & Implementation Fees | • Small: $150–$500 • Mid-size: $500–$2,000+ • Complex integrations: Custom pricing | Covers data migration, system setup, and onboarding. |
| Time & Attendance Add-Ons | $20–$100/mo + $2–$5 PEPM | Time tracking, scheduling, attendance reporting. |
| HR Support Add-Ons | $50–$300/mo | HR advisory, employee relations, onboarding support. |
| Benefits Administration | $5–$10 PEPM | Managing health benefits, retirement plans, and deductions. |
| Direct Deposit | Usually included; sometimes $1–$3 per employee | Varies by provider. |
| International Payroll Services | $30–$50+ PEPM | Country-specific compliance, multi-currency, regulations. |
| Offshore Payroll Outsourcing (India, Philippines, LATAM) | $150–$500/mo | Lower-cost processing with optional advisory upgrades. |
| Onshore Payroll Outsourcing (US, UK, Canada) | $300–$1,500+/mo | Higher cost with localized expertise and faster support. |
| Fully Outsourced Payroll Model | Typically 20–40% higher than software-only models | Provider manages all payroll operations end-to-end. |
| Payroll Software + Partial Self-Service | Costs 30–60% less than full outsourcing | Lower fees but requires internal payroll involvement. |
| Average Total Cost by Business Size | • 1–10 employees: $40–$150/mo •10–50 employees: $150–$600/mo •50–200 employees: $600–$2,500/mo •200+ employees: $2,000–$10,000+/mo | Typical ranges CPA firms can expect across different organization sizes. |
What Factors Affect the Cost of Outsourcing Payroll in 2025-26
1. Number of Employees
For CPA firms, the total number of employees that a client has is the major cost determinant since most of the payroll outsourcing providers have PEPM pricing. The cost to Outsource Payroll will increase linearly with the growing employee base. However, when CPA firms manage payroll for more clients or keep higher processing volumes, they can get bulk or tiered pricing discounts, which improves the cost efficiency across their client portfolio.
2. Payroll Frequency
Payroll frequency directly impacts processing workload and related pricing. A client operating on a weekly, bi-weekly, semi-monthly, or monthly payroll cycle involves different levels of provider effort. Weekly and bi-weekly payroll cycles normally carry a premium due to the higher frequency of calculations, compliance checks, and file submissions required. CPA firms that support businesses with hourly staff or other variable pay cycles should expect increased costs to Outsource Payroll due to these heightened requirements.
3. Payroll Complexity
More time, expertise, and compliance oversight are required in complex payroll environments; these same elements drive up the costs of outsourcing. Multiple pay rates, overtime rules, shift differentials, bonuses, commissions, union payroll, certified payroll reporting requirements-the list of elements generating complexity goes on. For CPA firms serving industries with such complexities, like construction, hospitality, or healthcare, for example, these complexities normally translate into higher per-client costs.
4. Tax Compliance Requirements
Tax compliance is a big cost driver, particularly for accounting firms with multi-state or multi-jurisdiction clients. Multi-state tax-registered payroll, local taxes, annual filings of W-2, W-3, 1099, amended returns, or audit responses will require additional work from the provider. The more employees a client has spread across multiple tax jurisdictions or states, the higher the client will typically pay in fees because of additional complexity and risk.
5. Onshore versus Offshore Outsourcing
Pricing largely depends on geographic location. Offshore providers from places like India, the Philippines, or Latin America have significantly lower costs and are ideal for CPA firms seeking scalable back-office support for high-volume processing. Onshore U.S., U.K., or Canadian providers typically charge higher rates for their services but offer local compliance expertise, faster turnaround times, and real-time communication. Many CPA firms adopt a hybrid model that balances cost-effectiveness with regulatory accuracy.
6. Service Model Selected
The level of involvement by the CPA firm is determined by the payroll outsourcing model employed. Fully outsourced payroll involves the processing and compliance activities handled by the provider at an increased Cost to Outsource Payroll but further reduces operational burden for the CPA firm. A combination of payroll software and support, or a co-managed situation, is more affordable but requires internal involvement by the CPA firm or its clients. The appropriate model will be based on the firm’s internal capabilities and staffing levels, among other requirements, and the desired level of control.
7. Integration & Technology Requirements
Most payroll systems must interface with a CPA firm’s accounting platform, like QuickBooks, NetSuite, Sage, Xero, or tax preparation software. This often brings in additional charges for setup and ongoing maintenance due to work associated with API configuration, system mapping, data synchronization, and custom reporting. The Cost to Outsource Payroll could also be higher for firms that have complicated technology environments or provide integrated dashboards to their clients.
8. Additional HR & Administrative Services
Many payroll service providers now include additional, optional HR services that add value but also increase total costs. These may include time and attendance systems, employee onboarding workflows, HR documentation support, benefits administration, and employee self-service portals. For CPA firms looking to provide expanded payroll and HR support as a bundled service, such add-ons will add value but need to be considered in pricing models.
9. Level of Advisory & Compliance Support Required
With the evolution of regulatory requirements for some clients, advisory-level support may be needed for payroll service providers. Advisory services such as payroll compliance reviews, tax strategy consultation, workforce classification analysis, and audit assistance can add to the cost of outsourcing payroll. Providers with deeper advisory capabilities generally have higher costs; however, these advisory services help the CPA firm and its clients reduce risk and improve accuracy.
10. Country or Region of Operation
Payroll outsourcing costs can vary significantly depending on the jurisdiction of client operations. The Cost to Outsource Payroll tends to be higher in locations with a complex labor law environment, detailed documentation requirements, and multi-tiered systems of taxation. CPA firms that serve clients in more than one region, particularly those with staff in other countries, should expect to pay a premium for global payroll expertise and regulatory management.
Conclusion
For CPA firms, managing payroll for clients requires the right balance of accuracy, compliance, and efficiency as regulatory environments are increasingly becoming complex and working structures also evolve. Payroll outsourcing in 2025-26 offers a practical and affordable way to reduce operational burdens, while the service provided to clients is reliable, compliant, and of high quality.
Understanding the major drivers is a significant basis on which CPA firms will select their outsourcing partners. Based on an analysis of these factors, the firm has to determine its ideal choice that fits its needs and financial limits, considering its long-term growth strategies. Thus, this careful consideration builds a cost-effective and sustainable outsourcing relationship that supports operational efficiency and strategic objectives.
