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Choosing the right payroll software for small business can be nerve wracking, but we can help! Our research uncovered three great choices for payroll programs for small business: Patriot, Gusto, and Remote are our top picks for the best payroll software for small business. We’d love to tell you why, and help you research what’s right for you.
This guide teaches you everything you need to know about payroll services for small businesses. Read on for tips on how to align your business needs with payroll solutions that will help you streamline and save time in your operational overhead.
Hand picked by our HR Technology experts after product testing, user research, and much debate - enjoy!
As a small business owner, having a system that helps you manage and administrate your employee’s payroll is a necessity. It saves you time you would otherwise spend on manually processing your payroll –time you simply cannot afford to spare.
Payroll services also save you fines you could incur as a result of incorrect payroll fillings. According to an Internal Revenue Service (IRS) report, 40% of small to medium-sized businesses in the United States pay payroll penalties each year. This can be avoided with payroll software. Not just any payroll system, but one suited to the delicate needs of a small business. That is why, in this article, we set out to review some of the best payroll providers on the market for small businesses.
Our Criteria: Here's how we chose who made the cut
We take research seriously. To make sure we’re offering our readers the very best solutions in a given software category, we are methodical, rigorous, and expansive in our research. We consult with HR professionals, vendors, and industry experts. We cut through the noise to bring you a carefully curated list of vendors, along with other essential information, to help you find the right software platform for your business.
Here’s how we chose who makes the cut:
Product: We believe in gaining a comprehensive understanding of a product before we recommend it, so we start by getting to know the software. Whenever possible, we meet with a senior executive (CEO or Head of Product) for a demo and Q&A. We also test the product ourselves to make sure it has a solid UI, intuitive workflows, and the features to make it a best-in-class offering.
User feedback: We go straight to the source and compile feedback on user experience. Real-world input supports our commitment to diligence in our software evaluation methods and the products we recommend. Keeping up with the everyday experience of HR pros also puts new vendors on our radar, and it keeps us close to our community so we can better connect the right products to the right people.
Financial metrics: We are certified finance nerds, so we use all the data we can get our hands on to make selections for our guides. We comb through data for concrete statistics like retention rates, growth, profitability, and scalability. We evaluate the bottom line of each product because we know making a software purchase can put your reputation on the line.
Best for a use case: Software is never a one-size-fits-all product. Sometimes the best solution is free or cheap. Other times it’s the one that is best for global companies or the one that’s sized right for early-stage startups. Keeping this in mind, we include solutions across the spectrum so our readers can find the best fit for their unique needs.
Here's more detail if you want to read more about how we research vendors. Our dedicated staff writers rely on hard data, impartial experts, and user feedback to ensure our reviews are helpful, truthful, and hopefully a pleasure to read!
Top Payroll Software for Small Businesses
We assessed and evaluated thousands of HRTech solutions based on the four key attributes that payroll software for small businesses should have - functionality, ease of use, value for money, and customer support. Based on our research and expert council, these are the best payroll software options available for small companies as of January 2022.
Why we love it
:
Patriot is the most affordable full-service payroll for small businesses
Patriot
Review:
Of all the full-service payroll software on this list, Patriot is the most affordable. It offers basic payroll and tax management with an intuitive interface that is easy to navigate.
It is designed with the small business owner in mind, providing free payroll setup and expert support from US-based professionals to make the experience a lot easier.
Patriot
Customers:
Patriot
Pricing:
Patriot’s basic payroll service goes for $10 per month plus $4 per employee. Their full-service payroll is tagged at $30 per month plus $4 per employee.
Patriot's basic payroll service goes for $10 per month plus $4 per employee. Their full-service payroll is tagged at $30 per month plus $4 per employee.
Best For
Small businesses with very basic payroll needs.
Why we love it
:
Gusto recently an ATS to its features. It can handle job posting, syndication to job boards, interview notes, and basic scheduling – all within the Gusto platform. It is currently optimized for employers with “moderate” hiring needs, but they can help you determine whether their new native ATS or another within their ecosystem is right for you. The tool is promising and it operates well within the environment it, and, like the platform itself, has the uncanny feel of a product that is sound in its inception and sturdy in its architecture.
- The dashboard feature keeps tabs on compliance tasks
- The hiring and onboarding sequence is nicely streamlined between HR and the new hire
- Post-offer, pre-start tasks are made easy with integrations like CorpNet (state tax set up) Checkr (background checks)
- Easy payroll for U.S.-based W-2 folks, domestic, and international contractors
- Person-to-person phone support, email, and other customer service resources.
- The business model is responsive to customer needs
- The dashboard feature keeps tabs on compliance tasks
- The hiring and onboarding sequence is nicely streamlined between HR and the new hire
- Post-offer, pre-start tasks are made easy with integrations like CorpNet (state tax set up) Checkr (background checks)
- Easy payroll for U.S.-based W-2 folks, domestic, and international contractors
- Person-to-person phone support, email, and other customer service resources
- The business model is responsive to customer needs
- Gusto can support payments for international contractors, but not employees
- No native accounting feature to keep earning and spending under the same roof
- Analytics dashboard is simplistic
- Gusto can support payments for international contractors, but not employees
- No native accounting feature to keep earning and spending under the same roof
- Analytics dashboard is simplistic
Gusto
Review:
Gusto has done a great job avoiding a common software pitfall. Many good tech teams have fallen under the spell of the Shiny New Thing, and, in allowing themselves to be distracted and diluted, their core products and loyal customs suffer from neglect. Gusto has kept a steady pace through the years and their primary focus on payroll and benefits has not been clouded by impulsive building more features into their stack. Instead, they work with numerous integrated partners who take the wheel on new initiatives, letting Gusto stay in its lane.
Gusto
Pricing:
- Simple: $40/month +$6/month/person
- Plus: $60/month +$9/month/person (limited time sale)
- Premium: call sales for customized plan options
- Contractor only (no W-2 employees): $6/month/person
- Simple: $40/month +$6/month/person
- Plus: $60/month +$9 / month/person (limited-time sale)
- Premium: call sales for customized plan options
- Contractor only (no W-2 employees): $6/month/person
Best For
Even budget-strapped startups can afford Gusto’s basic plan, and for companies who have some bank capital to invest in human capital, the top-tier Premium plan is a great choice, especially if they have an HR department of one person.
Why we love it
:
There are flexible options and add-ons designed with small businesses in mind.
PayChex
Review:
Paychex Flex offers HR functionality, retirement packages, online payroll services, and benefits for businesses ranging from solopreneurs to SMBs. It is user-friendly and has numerous plans that cater to the needs of any company size.
Unlike Gusto, which provides health insurance in just 39 states, Paychex Flex covers all 50 states in the US.
PayChex
Customers:
ESET, Funnelbox Inc., Smile Cafe, H.Y.P.E. Counseling Services, ASG, Pet Partners
PayChex
Pricing:
Paychex Flex offers a variety of plans depending on your specific needs. There are three curated packages readily available on their website - Paychex Flex Essentials, Paychex Flex Select, and Paychex Flex Pro.
Their Essentials plan is available for a $39 monthly base rate plus $5 per employee per month. Select and Pro are custom plans and you would need to call to get a quote.
PayChex's pricing is not provided on their website, but the process to get a quote is pretty quick and simple.
Best For
Small companies with basic payroll needs and solopreneurs that want HR software with payroll features.
Why we love it
:
Zenefits is a great option for small businesses looking for a robust, all-in-one HR, payroll, and benefits management system without breaking the bank.
- It’s one of the top names in HR tech and payroll software for American small businesses.
- Their platform is one of the best-looking and easiest to figure out among the sector.
- Zenefits can grow with you. Its pricing plans allow you to pay and tweak as you go, add certain modules when you need them, or get rid of them if you don’t.
- As oriented to small businesses as the tool is, it doesn’t give you the chance to create a custom bundle of the services and/or modules you’d like to have. For instance, Zenefits does not offer a standalone ACA module. Therefore, you will need to purchase an entire HRIS plan if you want to access that offering.
- In addition, Zenefits focuses on small to mid sized companies. If you're an enterprise organization, you may want to consider another option.
- Zenefits is also rather focused on the US market at this point. So, if your team is mostly in another country and you need more of a local know-how, it might not be the best bet for certain modules like payroll and benefits.
Zenefits
Review:
Unlike other small business payroll software in this guide, Zenefits offers a robust package by default, integrating HR, benefits, time management, compliance, and payroll in every single plan; with subtle variations depending on the extent of your needs.
Zenefits is famed for its intuitive user interface. It provides a lot of reports for SMBs to keep track of their business growth metrics.
Zenefits
Customers:
Since they focus on the small business sector, you likely won’t see huge brands among Zenefits’ customer list. You might see one of the local brands you interact with, however! Their “Customer Success Stories” page is frequently updated with profiles of their customers and how they’re making good use of the product. Rather than name drop several companies this time, we’d suggest checking that out.
Zenefits
Pricing:
Zenefits has three plans. The Essentials plan goes for $10/month per employee, the Growth plan for $18/month per employee, and the Zen plan for $27/month per employee.
Zenefits starts with the following plans:
- Essentials: This plan costs $8 per employee per month and packs all of Zenefits’ core HR features, employee time and scheduling tools, 3rd party integrations, as well as access to Zenefits’ mobile app.
- Growth: This plan costs $14 per employee per month and includes all of the features under the Essentials plan, plus compensation and performance management tools.
- Zen: This plan costs $21 per employee per month and includes all of the features under the Growth plan, plus tools and services for employee well-being tracking, employee engagement surveys, as well as access to Zenefits’ People Hub, where employees and admins can communicate and collaborate directly in their HR system of record.
In addition to the above, Zenefits offers the following add‑ons that can go on top of any of its base plans:
- Payroll: $6 per employee per month.
- Advisory services: $8 per employee per month.
- Benefits administration (with your own broker): $5 per employee per month.
The Essentials plan features ACA compliance. If you have 50 employees, the ACA minimum, it will cost $400 per month at its least expensive. However, if you use your own insurance broker, it's an extra $5 per employee per month. They offer a free two week trial before you have to buy.
Lastly, for larger businesses looking into Zenefits, Enterprise pricing is available upon request.
Best For
SMBs that require HR services and employee management functions together with payroll. The platform’s tips reporting is also a good feature that could be especially beneficial to those in the restaurant business.
Why we love it
:
Easily integrates with other Quickbooks products and has the fastest direct deposit.
QuickBooks
Review:
Most small businesses use Intuit Quickbooks accounting software for their lightweight bookkeeping. It is effective, simple, and affordable. The same is true for their online payroll software. Quickbooks payroll processes employee pay stubs and automatically files taxes in a simple, intuitive interface.
Quickbooks online stands out as having the fastest direct deposit amongst its competitors, processing same-day and next-day payments.
QuickBooks
Customers:
QuickBooks
Pricing:
Quickbooks pricing is as follows:
- Core Plan: $22 per month plus $4 per employee
- Premium Plan: $37.50 per month plus $8 per employee
- Elite Plan: $62.50 per month plus $10 per employee
For payroll, Quickbooks has three plans:
- Core: The basics to pay your team and have payroll taxes done for you at $22.50 per month
- Premium: Manage your team's payroll with HR support and some employee services for $37.50 per month
- Elite: This plan provides access to on-demand experts in order to simplify payroll to the max. It starts at $62.50 per month.
QuickBooks often offers discounts for its plans. They currently have a 50% discount on all plans for the first three months of subscription.
Best For
Small businesses that are already using Quickbooks accounting.
We use QuickBooks on a weekly basis for all of our AP and AR needs. We send client invoices through QB, and we pay vendor invoices through a QB integration with Bill.com. We also use QuickBooks to distribute team payroll on a bi-monthly payroll. All of these features are directly tied to our management of the company's P&L and Balance Sheet.
- QuickBooks is very affordable and reasonably intuitive.
- Out-of-box, it comes with a generous offering of features, and you are able to add more through its ability to connect with third-party applications (Bill.com).
- The online version allows us to access our financials from any computer, and there is a mobile app available for quick views and expense tracking.
- QuickBooks also has a fairly extensive self-help library if you are unfamiliar with certain features or processes.
- Unfortunately, QuickBooks has terrible customer service. In most cases, it is extremely difficult to contact a human customer service representative, and their support ticket system is very slow.
- QuickBooks also has issues connecting with smaller banks, so some features may not be available if you use a local bank or credit union.
- There are also a number of CSS and UX issues that hide certain Call To Action buttons or make them altogether unusable.
My company was in the market for a new accounting software to handle AR, AP, and payroll. The software we used before QuickBooks Online was too complex and more robust than what we needed, and the pricing structure was simply unaffordable. We've been using QuickBooks Online for 3+ years. It handles all of our invoices and vendor payments, and also helps us manage and distribute our payroll.
QuickBooks stands out from its competitors through its offering of a robust set of features at an affordable price. The price structure allows for affordable scalability, as you only need one license for each business entity. The interface is user-friendly and does not require a lot of details steps in order to customize your experience.
Before purchasing a license, you should think about how businesses you want to connect to the application. Other platforms may accommodate more elaborate business structures. You should also think about the total feature set you are looking to obtain. QuickBooks is great for general accounting, but its reporting capabilities are somewhat limited compared to other more customizable platforms.
QuickBooks continues to add integrations that increase the number of available features without directly altering the platform. Connections to third-party services like Bill.com allow you to do more than what is offered out of the box.
QuickBooks is great for small businesses and business owners that handle all of their own accounting needs.
QuickBooks is not ideal for companies that are looking for advanced accounting reports or performance metrics. Larger organizations that have dedicated implementation teams would be better suited for a more customizable platform.
Why we love it
:
This service makes it easy for businesses to hire and pay employees remotely across the globe.
Remote
Review:
As the name suggests, Remote helps employers and business owners hire and manage their workforce across the globe. The software combines benefits, tax, HR, and compliance services to give you a well-rounded solution to onboard employees from any part of the world without getting into trouble with local labor laws in respective countries.
Remote functions as an employer of records (EOR) with local entities in over 50 countries and counting. They plan to set up in 130 more countries this year.
Remote
Customers:
- Arduino
- GitLab
- Paystack
- Loom
- cargo.one
- Secureframe
- Phaidra
Remote
Pricing:
Remote offers three pricing packages:
- Contractor Management: Free
- Employer of Record: Starts at $299
- Global Payroll: Call to get a quote
Remote has four plans. "Contractors" lets you manage and pay global contract workers for free; you only pay for payment processing fees. Then, they have their "Global Employment" plan, which starts at $299 per employee per month. For the other two plans, "Payroll & Benefits" and "Global Employment Plus", they offer customized pricing.
Best For
An excellent choice for remote-first companies wanting to run payroll internationally.
Why we love it
:
Seamlessly integrates with Square POS and other Square labor management tools.
Square
Review:
Square is known for its retail payment-processing tools such as Square reader and Square POS. In 2015, they introduced Square payroll to cater to the payroll needs of SMBs.
The platform provides basic tools for you to automatically file taxes, manage employee work hours, and run payroll. For small businesses using Square POS, this software integrates seamlessly to provide a labor-sales ecosystem.
Square
Customers:
Blueprint Lightning, Fun Unlimited, Social Thinkking, Grace Records, Whisk Bakeshop
Square
Pricing:
Square payroll gives a $35 per month flat rate plus $5 per employee. They also offer a contractors-only plan for $5 per contractor.
Square's payroll pricing depends on who you want to pay. If you want to pay employees & contractors, it starts at a $29 monthly subscription fee + $5 a month per person paid. If you'd like to pay contractors only, then it's just the $5 per month per each of them.
None of their plans require an annual commitment, so you can cancel at any time or freeze billing if you're not using the tool.
Best For
Square is an incredible option for retailers, especially store owners and restaurants. These small businesses will find the combination of Square POS and Square payroll useful in many ways.
Why we love it
:
It is fast, easy to use, and does not require a steep learning curve.
OnPay
Review:
Like all of the cloud-based software mentioned in this list, OnPay performs basic payroll, HR, and benefits management functions. It is the fastest among the software mentioned, saving businesses up to 15 hours a month. It is also extremely easy to use with very intuitive functions and it has a responsive chat feature operated by helpful professionals.
OnPay has curated solutions for businesses in several business niches ranging from agriculture to NGOs, franchise to healthcare, and more. It also integrates with Xero accounting software.
OnPay
Customers:
OnPay
Pricing:
OnPay starts at $36 per month plus an additional monthly fee of $4 per employee. Your first month is free.
OnPay charges a base fee of $36, plus $4 per employee per month. They also offer a one month free trial.
Best For
OnPay is best for small business owners that have no prior background knowledge on anything payroll.
Payroll Software Benefits and ROI for Small Businesses
For small businesses, time is money. You don’t want to spend time on repetitive tasks that can be easily automated. It is estimated that an hour wasted per employee amounts to $3,750 per year, and that figure can be as high as $11,250! For a small business, this is too high of a cost to bear. It affects your profitability and growth.
On the other end of the spectrum, automated payroll management saves you a lot of time (up to 40 hours a month) and money. Money lost due to human error during payroll preparation proves to be a huge problem. The American Payroll Association estimates that human error can reach 8% while processing payroll manually. To give an example of what this means in hard numbers, an 8% human error rate on a $15,000 payroll equals $1,200 lost in erroneous wage calculation.
With payroll software solutions, you are protected from compliance issues. Small businesses do not have the time nor resources to be at the front of the ever-changing tax policy landscape.
It is especially complicated when you have employees in different states or beyond US borders. Each state and country has differing tax policies (deduction rates, compulsory contributions, etc.). If you default in filing correct tax returns, you will be penalized. In 2019 alone, the IRS levied $13.7 billion in tax penalties relating to payroll. As a small business looking to grow and expand, losing money to tax penalties will grossly affect your bottom line. All these can be avoided with a simple automated payroll solution.
Pricing Models for Small Business Payroll Service
For small businesses, payroll softwares mostly offer two kinds of pricing models:
- Flat rate per month/year
- Base rate plus per employee per month/year
The majority of the payroll software companies mentioned in this article use a base rate model. That is a good choice for small businesses, especially those with few employees. If you are a rapidly-growing business or you already have a sizable number of employees (say > 50) then a flat-rate pricing model might be best.
FAQs
Which payroll company is best for small businesses?
It depends on your business needs and the price you are willing to pay. If you want an affordable, stand-alone full-service payroll, you can go for the more affordable options like Patriot, Quickbooks, and Zenefits. If you want HR solutions too, Gusto, and Paychex Flex, are a good fit.
What is the most used payroll software?
Quickbooks is the most used payroll software due to their accounting suite. Paychex and Gusto are close runner ups.
What is the best international small business payroll service?
Amongst the payroll software providers on our list, Remote offers the best international options.
Final Advice on Buying a Small Business Payroll Solution
For small businesses, the process of choosing a payroll service provider can be cumbersome. The extreme dynamicity of small businesses requires you to choose one that fits your exact needs. We advise you to highlight your needs using these questions:
- How big is my business? Are you a solopreneur, a microbusiness with fewer than 10 employees, or maybe a small enterprise with over 100 staff?
- Who are my employees? Are your employees salaried workers or contractors? If they are salaried, do you pay an hourly wage or monthly salary?
- What is my budget? How much can you spend per employee/per month?
Answering these questions satisfactorily will streamline your payroll options. If, for example, you have employees that get paid per hour, you will likely opt for a payroll software that has time tracking to calculate and sync employee hours with payroll.
In the end, make sure to take your time and ask a lot of questions before you choose the best payroll software for your small company.
Please note that the services mentioned in this article are for small companies in the United States. If you are a global business looking to compensate your remote employees while staying compliant with international labor laws, check out our roundup of the best international payroll companies.
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