The Latest Small Business Payroll Statistics You Need to Know

As a small business owner, you are aware of the importance of having employees on your team. However, equally as important is understanding how payroll factors into running your business.

Payroll is an essential component of running any type of business, no matter what size. To help shed some light on the subject, we’re here to share some in-depth small business payroll statistics on topics like employee wages, hours worked, and tax compliance.

Prepare to dive deep into everything there is to know about payroll for small businesses.

Small Business Payroll Statistics

  • 33% of small businesses pay weekly, while 42% pay bi-weekly.
  • Approximately 40% of small businesses spend more than 80 hours per year on payroll tax compliance.
  • 25% of small businesses were fined for payroll tax mistakes.
  • Some 20% of small businesses outsource their payroll processing.
  • 18% of small businesses utilize a payroll software
  • Small businesses spend $2,000 annually on payroll processing.
  • 60% of small businesses handle payroll in-house.
  • 20% of small businesses use a PEO for payroll processing.
  • 70% of small businesses under 20 employees outsource payroll.
  • 30% of small businesses with less than 20 employees process payroll in-house.
  • A notable 40% of small business owners personally manage their payroll.
  • A considerable 60% of small business owners allocate at least 5 hours monthly to handle payroll tasks.
  • 1 in 3  small business owners admits to having made payroll errors.
  • 1 in 5  small business owners has encountered penalties for late payroll tax payments.

Source: ( FitSmallBusiness, Netsuite, Census, Census)

Payroll Error Statistics

According to the IRS, 33% of employers make payroll errors that cost billions of dollars annually.

  • Manual data entry account for the most errors (35% of all payroll errors).
  • On average, approximately 40% of small businesses accrue $845 in IRS penalties every year due to irregularities in their payroll processes.
  • 33% of employers make payroll errors that cost billions of dollars annually, according to the IRS.
  • 25% of all workers have had paycheck errors. (Intuit)
  • 49% of all workers would start looking for a new job if they received two incorrect paychecks. (Kronos)
  • Nearly 5 million penalties were related to payroll taxes, costing 13.7 billion dollars according to the IRS.
  • The second most common reason for payroll inquiries is related to missing pay, at 22%.

Startling Payroll Outsourcing Statistics

  • The Payroll Outsourcing Services market is estimated to increase by USD 6.15 billion.
  • From last year, payroll outsourcing increased by 5.47%.
  • The basic service costs between $0.80 and $2.00 per check, plus a base account fee.
  • 15% of organizations with 2,500 or fewer employees fully outsource their payroll services.

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