Best Payroll Vendors (2024)

There are a few apparent use cases for payroll and benefits software. However, we also wanted to explain some of the benefits that may not be quite as self-evident. Here is the “why” behind buying new payroll and benefits software:

• Pain-free payroll: All of these solutions will handle running payroll for you in a streamlined way that reduces your time and effort. To teams using outdated systems or completing operations manually, this could mean hours or even days saved per pay period.
• ‍Simplify health benefits: These solutions guide you through the benefits selection process, sometimes with a trusted consultant who recommends packages that are a good fit for your company. Your employees are then able to choose which option is right for them during open enrollment, qualifying events, or onboarding. ‍
• Access to experts: Managing benefits and payroll internally can be complicated, especially if this is not the focus of your day to day. There are a wide range of regulations and requirements that you must be aware of and keep up-to-date with, as they can change frequently! To assist with this, the best benefits and payroll solutions not only offer day-to-day customer support, but also will work closely with you when making strategic decisions and throughout regulatory updates. ‍
• Access to better health plans: The best payroll and benefits solutions provide you with greater access to competitive benefits plans so that you can create a package that makes the most sense for your employees. You will also be able to more easily compare plans from different providers and therefore ensure you have selected the best package for your business’s needs. ‍
• Cost effective: Using an external vendor for payroll and benefits will help decrease the number of employees you need dedicated to this function, and help save on costs in technology, support, and training.‍
• Save time: On average, over 20% of small businesses spend 120+ hours on dealing with federal employee taxes alone. And there are only so many hours in the day. Small and medium businesses that arm themselves with the right solution to handle payroll and efficiently manage benefits save a lot of time, resulting in their ability to better allocate time to their core business and product. ‍
• Ease of use: Software solutions today are serious about their product experience. They have built their platforms with their various end users in mind and provide them with a simple to use, mobile friendly and feature rich experience.  Your employees can now look up co-pays on mobile when at the doctor, or request time off in given pay period.‍
• Increase employee retention: Benefits and payroll are paramount to retaining your employees. With greater access to a wide range of health, dental, and vision insurance, plus retirement plans such as 401k and 529 savings plans, you will be able to assure that your employees are taken care of when in need which influences employee retention. ‍
• Aids in your talent strategy: Attract talent by offering the best and most comprehensive benefits packages. In a recent survey, AICPA found that 80% of those surveyed would choose a role with a comprehensive benefits package versus a position with a much higher salary but no benefits.‍
• Enhanced security benefits: Most top payroll and benefits vendors will have high levels of security that contemplate HIPPA and have varying levels of SOC compliance.‍
• Compliance guarantee: The IRS has stated that an estimated 40% of small and medium businesses are fined for late or incorrect filings and payments. Payroll and benefits software have access to the most up-to-date information which means that you never have to worry about missing tax notices and other regulatory notices. This is a huge benefit as you will help protect your company and reduce your risk of compliance related expenditures.

There are pitfalls that we’ve identified to help you avoid during the entire decision making process and implementation:

• Choose a payroll service that has a track record for serving companies of your size.
• Remember, change management requires a team effort. You may need to involve a few different teams during the buying and implementation process including your operations, HR/recruiting, information technology, and communications teams.
• Core features that you probably already have and that employees/HR are used to, like direct deposit, automated pay stub distribution, and payroll taxes need to be in any future offering you use.
• Don’t forget about integrations! We’ve mentioned a few that you may want to consider in our demo questions.
• Make sure the vendor that you choose can operate in all of your office locations (don’t forget your remote employees).
• Documentation is paramount - get your ducks in a row in advance to help streamline implementation and prevent any delays or impact on employees.
• Choose a vendor that is compliant with the most recent regulations and that takes data privacy very seriously. HIPAA and tax payment violations can be extremely costly.
• If you already have your own insurance broker with whom you like to work, make sure that your new vendor allows for this - not all of them do and those that do may charge an additional fee.
• If you are moving to benefits with a provider, do not forget to report any employees who are on COBRA to the new provider and make sure to ask if they assist in COBRA administration.
• Lastly, choose a vendor that you can grow with. Make sure that the vendor is confident in their ability to work with you based on your targeted employee growth rates as a company.

While there are costs associated with these tools, the rationale for partnering with the right vendor is pretty clear.  The average salary for a benefits administrator is ~$50,000 per year and a payroll administrator’s average salary is also about $50,000 per year.  The ability to remove one to two FTEs from your headcount at these rates will pay for your solution several times over.

At some point you may want to move more of your payroll and HR in house, but this doesn’t happen for most organizations until they hit 500 employees.  When you hit a milestone like this, it’s best to re-evaluate where you are and what makes sense for your human resource function.

Pricing for payroll and benefits providers is typically priced per employee per month. Therefore, larger organizations should expect to pay more. Pricing also depends on the feature set you are looking for. Only running payroll and benefits is far more affordable than adding on employee onboarding, and other feature sets typically found in a more robust HRIS including an employee directory, performance management, etc. So, there is typically a base price that grows with more features.

See below for an example pricing chart that includes a base monthly price for a few company sizes. Most providers have multiple base plans with add-on options. Contracts are typically monthly or annual (annual contracts will include a discount on pricing). Please note that this is an example only and you should consult with each vendor as there are many factors that go into pricing for your specific use (*These examples do not include benefits premiums.) Two last points, you can many times negotiate away the initial setup fee, and some vendors will be beyond these ranges (PEOs, full HCM suite) - but you get what you pay for so don’t be turned off initially by much larger price ranges for a given vendor.

*Note: Some vendors charge a base monthly rate plus a monthly rate per employee. Others charge only a monthly rate per employee. As you grow, the per employee rate may decrease depending on vendor.

Lastly, make sure you ask about any other fees that will come up during the course of the year.  Some vendors charge for filing W-9s and 1099s - and these costs can add up!

The majority of the top rated benefits and payroll vendors provide feature-rich offerings that are wrapped into an intuitive user experience. Business owners and HR teams alike need to be aware of these key features. While we’ve focused on payroll and benefits, there are additional add-ons that you may also be interested in, especially if you do not currently have another solution in place. Many of these also map to the demo questions we have suggested below:

Payroll Features:

• Automated and Unlimited Payroll Runs (plus contractor & vendor payments, tips reporting)
• Off-Schedule Payroll Runs
• All Tax Filing/Payments
• Multiple Pay-Rates and Schedules
• Reporting including Year-end Payroll Reporting
• Direct deposit

Employee Benefits Features:

• Employee Self-Service (including self-service benefits enrollment and changes)
• Benefits Administration & COBRA administration (Health, Dental, Vision)
• Additional Benefits Options including 401k/retirement, life insurance & disability, FSA, HSA, commuter and additional supplemental benefits

Other Important Features:

• Time Tracking & Paid Time Off
• HR Documentation & PTO Policies
• Employee Directory & Surveys
• Workers’ Compensation & Risk Mitigation
• New Hire Onboarding
• HR Expertise (varied based on level)
• Online Resource Center (best practices, FAQs, and more)
• Mobile Friendly and/or Mobile App

Once you have chosen a few vendors to demo, it is imperative to ask pertinent questions. Here is a list of questions we think you should ask on demos.

Support:

• Who will be on my support team during implementation, how will that change after I’m setup?
• What the the specific steps our company will have to go through to get this setup and how long does each take?
• What internal stakeholders do I need to bring into this?
• What are the support SLAs?
• How big is your biggest customer and how small is your smallest customer? What is the size of your average customer?
• What are the most common reasons that companies don’t succeed?
• How will our pricing change as we scale?

Tech & Security:

• Can you walk me through the typical workflows that HR would go through?  Employees?
• What is the mobile experience for HR and employees?
• What’s on your product roadmap?
• Do you support multi-factor authentication?
• Do you support single-sign-on?
• Are you SOC 2 compliant?
• What is your security audit process?
• How do you keep our data safe?

Regulatory & Compliance:

• Do you have a regulatory compliance team?
• Who handles regulatory updates for taxes, HR, or benefits?
• How will I get updated on regulatory changes relevant to my business?
• Do you handle payroll in my state (within U.S.)?
• Do you handle international payroll (if you operate internationally)?
• Are you GDPR compliant?
• How are tax filings handled?  Is there an extra charge for this?
• Do you handle new hire onboarding reporting and forms?
• Are you ACA compliant? What about HIPAA and ERISA?
• How will you handle benefits for my employees in different states and, if applicable, remote employees?
• How can my accountant or finance team access the relevant files?

Integrations and Process:

• Is your offering full-service payroll or a tool that I will use to run my own payroll?
• How are payroll taxes handled? How are tax forms generated?
• What standard integrations do you support? Do you integrate to my existing technologies (accounting software, HRIS, ATS)?  
• How will direct deposit work with our employee bank accounts?

The great part about moving forward with one of our top picks is that they make it quite simple for you to get up and running (especially for small businesses). If you are switching from one software to another, or if this is your first time, you will have slightly different implementation processes.

Timelines will depend on how readily available your relevant documents may be (such as employee information like names, departments, positions, salary information, etc.) and how many employees you have. The smaller the company, the quicker the implementation.

Sample documentation that will be required can include:

• Basic company information such as your EIN (employer identification number)
• Basic employee information such as employees’ names, SSNs (social security numbers), mailing addresses, and salaries
• Payroll and taxes information that you’ve already paid for the year (if you are switching providers mid-year)

Thus, implementation could take as little as one day for small businesses, or for larger companies, a couple of weeks.

The identified vendors all include implementation services and can assist in guiding you through this process. Once you’re a customer, they have a very strong incentive to make sure you are successful and will do whatever it takes to get you through the process expeditiously.

What is payroll software?

Payroll software is a solution designed to manage, automate, record and organize payment of a company’s employees. 

What is benefits software?

Benefits software is a solution designed to take over all administrative benefits tasks, including managing and organizing health insurance, retirement programs, time off and leave. 

Can my company do payroll and benefits without software?

Yes, your company can process payroll and benefits without the assistance of software. However, manually taking care of payroll and benefits requires a lot of time and effort. On average, over 20% of small businesses spend 120+ hours dealing just with federal employee taxes. That’s before even considering benefits management. That time is better spent perfecting your business or product, therefore automating payroll is a worthy investment. ‍

Do software providers offer both payroll and benefits software together?

Yes, many payroll vendors offer a benefits solution and vice versa.

For most HR teams, it’s a matter of who to partner with, not if it should be explored in the first place.  Partnering with a top payroll and benefits solution can save your team a lot of time and money.  Our hope is that this page will arm you with the information you need to make the right decision, and guide you towards the top vendors in the space.

From here, we’d then advise that you jump into demos with 2-3 vendors to get started.  Remember to stay organized as you tick through the feature sets that matter to you on demos.  Good luck and let us know how it goes!