Estimated reading time: 3 minutes
Table of contents
When you think about payroll, you probably focus on the basics of employee count, compensation, benefits, and taxes. But each of these areas keeps shifting as the economy changes, employee expectations evolve, and new technology becomes available.
All of that impacts how you run payroll and what it ultimately costs you.
If you are wondering whether you are keeping up with the latest payroll trends, let’s walk through the data that shapes today’s small business payroll landscape. I want you to feel confident in how you pay your team, what it costs, and what your employees expect from you.
Employee pay trends
Wages continue to rise, and many employers are adjusting their compensation plans to stay competitive. Here are a few key points from the US Bureau of Labor Statistics (these rates may sound high, and your industry may be significantly different):
- Average hourly earnings for all industries included are hovering a little above thirty-six dollars.
- Average weekly earnings are just over twelve hundred dollars.
- Compensation increased by more than three percent year over year, outpacing the cost-of-living adjustment.
- Two-thirds of employers expect their salary budgets to remain similar to the previous year.
Employee count in small businesses
Small businesses continue to expand their teams, though growth remains steady rather than dramatic.
- The number of workers added to payroll in the year-to-date 2025 increased by just over two percent.
- Nearly half of small businesses employ between one and four workers.
The importance of employee benefits
If you want to attract and keep quality talent, benefits matter, often more than many business owners realize.
- More than sixty percent of job seekers look for benefits right in the job ad.
- Over eighty percent of employees say benefits strongly influence whether they accept a role.
The most common benefits employees have access to include:
- Employer-sponsored health insurance
- Paid holidays, vacations, and sick leave
- Defined contribution retirement plans
If you are building or revisiting your benefits package, these numbers can guide you toward what employees value most.
How small businesses handle payroll
Payroll administration continues to be a time-consuming part of running a business.
- About one in five small businesses uses software to process payroll.
- Roughly one-third use an external provider.
- Nearly half spend one to two hours each month just on payroll taxes, while the other half spend more than three hours.
- Most small businesses spend between one hundred and five hundred dollars per month on payroll services.
Payroll tax, unsurprisingly, remains one of the most burdensome administrative requirements for small business owners.
Payroll frequency
Biweekly payroll (every other week) continues to be the most commonly used pay frequency, followed by weekly, semimonthly (twice a month), and monthly schedules. Most employers choose a cycle based on cash flow, administrative workload, and employee preference.
How employees are paid
Direct deposit continues to dominate the way employees receive their pay, with well over ninety percent of workers using it. It’s fast, reliable, and reduces manual work for both you and your team.
Payroll penalties
Payroll penalties can be costly if taxes are not filed, paid, or deposited correctly.
- Failure-to-file penalties can reach a maximum of twenty-five percent.
- Failure-to-pay penalties can reach up to fifteen percent.
- The IRS has issued billions of dollars in civil penalties tied directly to employment tax issues.
This is a strong reminder of why accurate and timely payroll tax reporting is so important.
If you want help navigating any of these trends or easing the administrative load of payroll and payroll taxes, we are always here to support you. Reach out to us at 310-534-5577 or contact@abandp.com for a quote and get set up now to be ready for 2026 processing with a smooth transition. We’re eager to assist you!
https://www.patriotsoftware.com/blog/payroll/latest-payroll-trends/?utm_source=chatgpt.com
