Best Payroll Software for Small Businesses

Payroll has always been an important part of owning a business, but modern payroll software helps simplify this essential task. Instead of spending countless hours each week calculating each employee’s earnings and distributing paper checks, you can implement a solution that will cut down on manual tasks and ensure your employees are paid the correct amount on time.

There are many software products on the market that can help with these challenges. You may be wondering how to determine which one is best for you, so we’ve rounded up our top picks for small businesses to help narrow it down.

Jump to:

Top payroll software comparison

 

Gusto Paychex OnPay QuickBooks Payroll Square Payroll

Tax filing

Yes Yes Yes Yes Yes

Same-day direct deposit

No Yes No Yes

Yes

Time tracking

Yes Yes No Yes

Yes

Tip/commission calculations

Yes Yes Yes Yes

Yes

Unlimited monthly pay runs

Yes Yes Yes Yes

Yes

Payroll automation

Yes Yes No Yes

Yes

Mobile app Yes Yes No Yes

Yes

Employee self-service Yes Yes Yes Yes

Yes

 

Gusto: Best payroll software for HR needs

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Screenshot of Gusto payroll dashboard.

Pros

Not only is Gusto a full-service payroll tool, but it also offers robust HR capabilities. That’s why we included it in our top HR software comparison as well. Gusto makes running payroll a breeze without skimping on other HR functions like benefits administration, time tracking, and new hire onboarding. With all of this information in one place, you can be confident that you’re paying your employees correctly and on time while also addressing other HR needs.

Cons

Some users have noted that Gusto is somewhat limited in the scope of integrations with third-party applications. It’s a versatile tool, but it doesn’t cover every area of human resources. If you need a solution for learning management, performance management, or employee engagement, you may have a hard time integrating Gusto with the solution you choose. This may not be a deal breaker, but it’s definitely important to keep in mind.

Pricing

Gusto is available in four different editions:

  • Core: $39/month + $6/person/month
  • Complete: $39/month + $12/person/month
  • Concierge: $149/month + $12/person/month
  • Contractor: $6/person/month

Paychex: Best payroll software for reporting

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Screenshot of Paychex payroll dashboard.

Pros

Paychex rises above its competitors when it comes to its reporting capabilities. You can use the analytics and reports dashboard to run basic Quick Reports, then tailor them to your needs by adding custom fields for the data that’s important to you. Paychex also offers a wide range of HR features for Flex Select and Flex Enterprise customers. These include employee screening, learning management, and benefit administration.

Cons

User experience is one area where Paychex gets knocked by some users, especially with the most affordable edition. Paychex Go users don’t get access to the Paychex mobile app or third party integrations. This forces many customers to upgrade to the more expensive editions. Keep this in mind when evaluating the ultimate cost of the payroll software you choose.

Pricing

Paychex is available in three different editions:

  • Go: $39/month + $5/employee/month
  • Flex Select: Contact sales
  • Flex Enterprise: Contact sales

OnPay: Best payroll software for flexibility

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Screenshot of OnPay payroll dashboard.

Pros

OnPay was purpose-built for small businesses, and one of the biggest areas where the software shines is its flexibility. It’s the only solution that offers one flat rate for all of the available features, so you don’t have to pay more to get features like third-party integrations, custom reporting, or niche tax filings. In fact, OnPay offers the widest range of tax filings and payments across all 50 United States. There are also dedicated services for specific industries, including restaurants, agriculture, nonprofits, and religious organizations.

Cons

OnPay may offer the best value for a payroll solution, but it’s missing some noteworthy features that are consistent across competitors. Specifically, OnPay doesn’t offer payroll automation or same-day direct deposit. You also won’t find a mobile app with this vendor, so you should look elsewhere if these are features you’ll be frustrated without.

Pricing

OnPay is available in a single edition:

  • $36/month + $4/person/month

QuickBooks Payroll: Best payroll software for accounting integration

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Screenshot of QuickBooks Payroll dashboard.

Pros

Unlike a few of the other vendors on this list, QuickBooks Payroll was developed to support the accounting side of payroll rather than human resources. QuickBooks Online is one of the biggest names in accounting software, which is why we included it in our list of top vendors for 2021. The Payroll product attaches directly to QuickBooks Online so you can keep track of all your financials—everything that comes in and everything that goes out—from one central platform. It’s easy to set up and automate, so you can immediately get direct visibility into your business’s financial health from all angles.

Cons

QuickBooks Payroll is an enticing option if you’re already using QuickBooks Online, but you may find a better value for your money with a different tool. With this software, you’ll likely be paying more to get features that come standard with alternative solutions. For example, you can only get tax penalty protection and time tracking with the most expensive edition. You can find these features included in other solutions at a lower price, so QuickBooks Payroll might not be a good fit if budget is your main concern.

Pricing

QuickBooks Payroll is available in three different editions:

  • Core: starting at $22.50/month + $4/employee/month
  • Premium: starting at $37.50/month + $8/employee/month
  • Elite: starting at $62.50/month + $10/employee/month

Square Payroll: Best payroll software for POS integration

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Screenshot of Square Payroll dashboard.

Pros

You may remember Square from our list of top POS systems, and with good reason. It’s an extremely versatile suite of tools that includes an impressive payroll solution. Square Payroll connects your front of house and back office systems, which means you can take care of your customer information, employee records, and sales data from the same place. Hundreds of users have noted how easy the platform is to use and how well it takes care of all employer functions.

Cons

Some users have expressed disappointment by the lack of customer support they’re able to get from the Square team. You can get in touch by submitting a support ticket or using the chatbot on the support page, but there isn’t a phone number you can dial to speak to a human directly. There is also little continuity when working with multiple support agents, which can be extremely frustrating when there’s a bug or an urgent issue that requires immediate assistance.

Pricing

Square Payroll is available in two different editions:

  • Employees & Contractors: $29/month + $5/person paid/month
  • Contractors only: $5/person paid/month

Who needs payroll software?

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Virtually everyone should have some type of payroll system, with the narrow exception of freelancers and solopreneurs. Without it, you would be forced to deal with the monotony of cutting paper checks and the risk of making an error somewhere along the way.

Not only is this inefficient, but it’s also a sign your business may be slipping behind your competitors. According to the American Payroll Association’s 2019 “Getting Paid in America” study, more than 93 percent of U.S. workers receive their pay by direct deposit. This has become an expectation from employees in the business world, and the only way to automate direct deposit payments is by implementing payroll software. Otherwise, you risk losing valuable in-house talent to other businesses in your industry.

Payroll features may be included in a broader set of tools, like an HRMS platform, accounting suite, or POS system. If you could benefit from a versatile solution like these, then a separate payroll software won’t make sense. However, if you have basic payroll needs, a dedicated software like the options in this list will be more appropriate than a tool with features you won’t use.

What about free payroll tools?

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There are some free payroll tools on the market today that might pique your interest. The benefit for your bottom line may be appealing, but these tools come with significant risks that you should consider before making your decision.

Perhaps most significantly, free tools can often come with security risks. Most free software providers don’t put as much effort into protecting your data against hacks or breaches. Their systems are also less reliable, which means they may be susceptible to bugs or vulnerabilities in the code. You may need to invest in additional security measures to ensure your data is safe, so the amount you save by using a free payroll tool will be replaced by additional security expenses.

Aside from security concerns, free payroll tools are also often limited in features and scalability. A free application may not have automation or reporting capabilities, and you may be limited by the number of individuals you can pay. Free payroll software could hold you back in the long run, so it may be better to invest in a solution that can keep up with you every step of the way.

Payroll software considerations

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The vendors on this list are our top picks for payroll software, but you’ll likely encounter many others in your search. Keep these considerations in mind to help determine which solutions will work best for you.

Features

Not all payroll tools are built the same, and the features they offer make it easy to narrow down your list. These features likely include tax filing, benefit deductions, direct deposit, and an employee self-service portal. You may also want a payroll software that can handle unique situations, like tip/commision calculations, wage garnishments, bonus payments, or holiday pay.

Regulation compliance

Compliance is a key part of any payroll function. Common payroll compliance mistakes include missing tax deadlines, misclassifying employee types, incorrectly calculating payments or tax withholdings, and failing to maintain tax paperwork.

It’s easy to lose track of all the various forms you’re supposed to be filing to meet specific federal, state, and local compliance requirements. Most payroll software can help you make sure you’re paying your staff the correct amount and filing the correct forms on time. Some solutions can file your forms for you automatically for an additional fee.

Integrations

Payroll touches many corners of your business, so your payroll software should integrate with other systems you’re already using. For example, you may already be using an accounting suite or HR management system (HRMS) to support your finance or HR operations. The payroll software you choose should be able to write or read data to or from these systems and coordinate efforts across all of your software solutions.

How to choose the right payroll software

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After comparing the software vendors on this list, you should spend some time evaluating payroll solutions for yourself. Get a list of priority features from all of the stakeholders involved in this decision and look at customer testimonials and reviews with these thoughts in mind. Once you’ve narrowed it down, test drive your top options by requesting a live demo or free trial to figure out which payroll software is the best fit for you.

Kaiti Norton
Kaiti Norton is a Nashville-based Content Writer for eSecurity Planet, Webopedia, and Small Business Computing. She is passionate about creating relatable, research-based content that helps small businesses thrive. When she's not writing about small business technology, she's sharing her musings about fashion, cats, books, and skincare on her blog.

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