Payroll is one of those jobs that stays quietly manageable until it isn't. I've watched owners cling to it well past the point of sense, usually because the first three years they did it themselves in about an hour every other Friday. At 8 employees, sure. At 17, with two states, a couple of contractors, and someone on FMLA, it's a different animal.
My rule: once you're past 12 W-2 employees, or the moment you cross a second state, stop running payroll yourself. The math isn't subtle. A full-servcie provider runs roughly $8-$12 per employee per month. For a 15-person team, that's about $150-$180 a month, all in. The owner or office manager doing it manually is spending 4-6 hours per pay period once you factor in reconciling hours, chasing timecards, filing the 941, remitting state withholding, and fixing the one thing that always breaks. At any honest valuation of that person's time, you're underwater by month two. And that's before the first penalty notice. The IRS penalty for a late 941 deposit starts at 2% and climbs to 15%. One miss pays for a year of Gusto.
I have opinions here. For a 10-30 person company, I'd use Gusto or Rippling before I'd use ADP or Paychex. The big incumbents are built for companies with a dedicated HR person to translate their interface. Gusto and Rippling are built for the owner who wants to click three buttons on Wednesday and be done. Rippling wins if you're also managing devices and app access. Gusto wins if you just want payroll, benefits, and a clean employee portal.
What you keep in-house: approving hours, approving the run, and reviewing the register before it goes out. That's it. The provider handles tax filings in every state you operate in, year-end W-2s and 1099s, new-hire reporting, and garnishments. If your provider isn't doing all of those, you picked the wrong tier.
Do the switch between quarters, not mid-quarter. January 1 or July 1 are the clean cutovers because you're not splitting a 941 filing between two systems. Budget one focused week for setup: employee data, prior-year YTD figures, direct deposit info, benefit deductions, and state tax IDs. Run one parallel cycle where you process it both ways and compare to the penny. If the numbers match, you're done. If they don't, you found a data problem you needed to know about anyway. Talk to your CPA before you switch — they may have a preferred provider that plays nicely with your books, and that's worth an extra $2 per employee to avoid a month-end reconciliation headache.
If payroll is eating an afternoon every other week and you're not sure whether it's time to outsource it, send us a note and we'll walk through the numbers with you. It usually takes about twenty minutes to know.
— Amanda @ SBATC
