Many small businesses hesitate to hire employees who will work in different states. That’s because generally, this will cause their payroll costs to go up.
Why does multi-state payroll cost more, though? Let’s dig into what goes on with your payroll provider behind the scenes.
At CSI Accounting & Payroll, we’ve provided financial services to small businesses for nearly 60 years. That means we’ve talked to thousands of prospective clients about multi-state payroll, answering questions like:
- Why does CSI charge more for multi-state payroll?
- Do other payroll providers charge more for multi-state payroll?
- How much more does multi-state payroll cost?
Why CSI Charges More for Multi-State Payroll
Why charge more for multi-state payroll? Long story short, your payroll specialist will have more work to do and more compliance to focus on.
More states mean more registrations and filings. This can look like:
- Registering, withholding, and remitting taxes for each state.
- Staying in payroll compliance.
- Year-end Form W-2 reporting.
Registering, Withholding, & Remitting Taxes
An initial registration is needed per state that you’ll have employees working in. Your payroll specialist will set up accounts for state income tax withholding and unemployment. They’ll also keep an eye out for potential nexus tax obligations.
Then, when it comes to withholding and remitting payroll taxes, there may be quarterly and/or annual filings – schedules may vary per state. That means logging into each state’s website and uploading or manually entering data, which can be a lot of administrative work for multiple states.
Payroll Compliance
Each state may abide by different compliance laws, and your payroll specialist will need to know and ensure your business can follow all of them. It takes time and effort to stay studied up on these laws!
Compliance for each state can include things like minimum wage laws, retirement plan mandates, special leave time (like ESST), and so much more.
Year-End Form W-2 Reporting
Forms W-2 must be filed separately with each state where all of your employees have worked throughout the year. This requires extra administrative steps for your payroll specialist, so it’s an additional cost.
What Other Companies Charge for Multi-State Payroll
When you hear that CSI charges extra to run multi-state payroll, you’ll probably wonder if other payroll companies do the same thing. They do! It’s the industry norm to charge more for multi-state payroll.
Since it takes your payroll specialist so much more time and effort to complete multi-state payroll, they need to charge more for it. Otherwise, payroll companies (who already have small profit margins) wouldn’t be able to stay in business.
What about their pricing? It’s very similar to ours at CSI. Learn about our general payroll pricing here! We’ll get into specifics about multi-state pricing in the next section.
How Much More Multi-State Costs
Since payroll is very customizable to your wants and needs, our pricing varies quite a bit. When we hone in on just the extra costs associated with multi-state payroll, it will vary by:
- The number of states your employees work in. This will be the number of states you’ll have payroll tax obligations in.
- The number of state taxes for those states. The number of payroll taxes in each state can vary. Most states have state income taxes and unemployment taxes, but not all of them do, and the rates vary a lot. Some states have cities, counties, and other jurisdictions that collect income taxes, so that is something that we all have to be mindful of.
- Your payroll frequency. Weekly, bi-weekly, semi-monthly, or monthly. More frequent payrolls cost less per run but increase the number of filings, resulting in a higher total cost over time.
How much more can these cost you? Depending on all of these factors, you can be looking at between $10 and $120 per additional state, per payroll run.
As for your year-end Forms W-2, you’ll also be looking at a charge of $50 per additional state, plus an extra per-employee charge of $4.95 per additional state. This charge occurs only once per year.
These costs are typical for payroll providers, and we feel that they reflect the extra time, effort, and compliance that multi-state payroll requires.
Get the Multi-State Compliance You Need!
Now that you know why CSI and other payroll providers charge more for multi-state payroll and how much more it costs, are you ready to check out multi-state payroll services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about the differences between small and big-name payroll providers here.
