Is it cheaper to contract with employees or just get a payroll system?

Im opening a retail store in March and I was wondering is it cheaper to just contract with my employees or just sign up with Ceridian, a payroll company, that will do everything for me?

If you have your employees on contract then you just pay them their hourly rate and at the end of the year give them a 1099 for tax purposes. They pay all of the taxes on that amount (14%). If you have an employee on payroll then you pay them their hourly rate and then at the end of the year give them a W2 for tax purposes. Then you pay for 7% of their taxes and they pay for the other 7%. So if you are looking for cheaper than contract is the way to go.

Before you even consider engaging in 'contract work' with employees, you are advised to check IRS rules concerning your ability to do so. It's not a choice as you seem to think it is. You probably cannot legally pay these people as independent contractors unless they meet certain criteria for being qualified as such.