Whether you’re a startup or an enterprise-level business, efficient payroll software is essential. Yet it isn’t always cost-effective to hire an in-house team to manage payroll, especially for businesses with a small headcount.
Subscribing to a specialist payroll process not only ensures that you pay employees accurately and on time, but also allows your business to stay compliant with an ever-changing tax code. So, out of the numerous payroll services on the market that boast different features, integrations, and pricing structures, it can be a challenge to find the best payroll for small business.
In this blog, we’re going to explore the essential factors to consider when selecting a payroll software and list the ten best payroll software for small businesses’ needs.
TL;DR
- Small businesses have specific payroll needs thanks to challenges such as growing headcount, limited resources, and a lack of internal payroll expertise.
- Businesses should look for ease of use, cost-effectiveness, scalability, compliance, and integration capabilities in potential payroll systems.
- Factors to consider when choosing a payroll software include headcount, budget, and tax compliance.
What to Look for in a Payroll Process
Ease of use
Payroll software shouldn’t add more time to tasks like invoicing, payroll reports, or benefits management. Look for a user-friendly interface that streamlines common payroll services, in addition to self-service capabilities for onboarding and customer support.
Cost-effectiveness
Not every payroll service provider is alike in terms of pricing. A full-service payroll software will cost more than a basic solution, but may be overkill for a small business payroll processing. It’s important to assess what features you require, whether that’s processing paper checks or time tracking, so you don’t pay for tools you aren’t using.
Scalability
A common pain point for growing businesses is switching systems regularly as you outgrow solutions. Look for a scalable small business payroll software that allows you to upgrade plans for more capacity or subscribe to add-on services, like benefits administration or HR support.
Compliance and tax features
A payroll service should offer automatic payroll tax calculations for federal taxes, state taxes, and local taxes and be regularly updated to keep pace with regulation changes. It may be helpful to look for a payroll process that also includes year-end tax filing services.
Integration capabilities with other business tools
Payroll services are more valuable when they integrate seamlessly with accounting software or HR tools. This allows for the easy sharing of information between systems so small business owners and human resources personnel have access to important payroll data.
10 Best Payroll Software Options For Small Businesses
ADP
Founded in 1949, Automatic Data Processing (ADP) is one of the oldest payroll software companies. Offering services in over 140 countries, ADP has a well-deserved reputation for reliability and expertise.
Businesses using ADP RUN payroll have a choice of four plans; Essential, Enhanced, Complete, and HR Pro. While Startup covers only basic payroll features such as direct deposit and the calculation of payroll taxes, the Complete plan also includes comprehensive HR software.
Pricing starts at $79 per month + $4 per month for the Startup plan, with all other plans available at a customizable quote. The lack of transparency over pricing is a common critique of ADP, as well as core payroll features such as employee benefits management only being available as add-ons. However, it receives praise for ease of use and customizable payroll reports.
Paychex
Founded in 1971, Paychex is a trusted name in the payroll and HR space. Paychex Flex is their online payroll software solution designed specifically for small businesses. With three pricing plans, it’s straightforward for business owners to find the right payroll service for their needs.
All plans automate the payroll process and tax filing services for employee and contractor payments, as well as employee self-service for access to tax forms and pay stubs.
The Essentials plan starts at $39 per month, followed by $44 per month for Select and $89 per month for Pro. The price jump for the Pro plan is due to additional HR tools and wage garnishment capabilities. Reviews praise the mobile app and new hire reporting but mention poor customer support.
Gusto
Gusto is cited as one of the best payroll software systems, thanks to its transparent pricing and ease of switching plans. Launched in 2012 as ZenPayroll, Gusto’s automatic payroll solution currently serves more than 300,000 businesses.
Gusto offers multiple payroll plans tailored to different team sizes:
- Simple: $40/month base price, plus $6/month per person.
- Plus: $80/month base price, plus $12/month per person.
- Premium: Quote-based pricing.
- Contractor: $35/month base price; $6/month per person
After choosing a plan, businesses can build out a custom benefits package for their employees, including PTO, health benefits, and retirement plans. Employees can view personal payroll data via an intuitive employee portal. Additionally, all plans offer unlimited payroll runs and customizable payroll reports.
User testimonials cite flexible payroll options for processing paychecks for independent contractors, both domestically and internationally. Customer support is available via phone, chat, or email, with priority support available for an additional fee.
Intuit QuickBooks Payroll
Businesses already using QuickBooks Online for bookkeeping should consider using the companion QuickBooks Payroll software, which integrates seamlessly for a streamlined, all-in-one solution.
Attractive offerings from QuickBooks include next-day and same-day direct deposit into employee bank accounts, as well as tax penalty protection against the IRS for up to $25,000 on the Elite plan. QuickBooks Payroll also partners with SimplyInsured to offer health insurance benefits.
All plans have a base fee for accounting features, with the payroll feature available for an additional cost. QuickBooks offers one of the cheapest payroll plans on the market at $15 per month, which includes basic features including tax deductions and general reporting. Cost-effectiveness will vary depending on the number of employees a business has.
Wave Payroll
Wave Payroll is a cloud-based, small business payroll provider offered by Wave Financial Inc. Wave offers one of the simplest ways for small businesses to file payroll taxes and manage worker’s compensation.
Unlike the bundled plans offered by most small business payroll providers, Wave offers plans for individual services, including accounting and payment processing in addition to payroll. Their payroll plan costs $40 per month for tax service states, and $20 per month for self-service states, + $6 per active employee.
Key features include three-day direct deposit, time tracking, a self-service portal, and a free payroll trial. However, Wave doesn’t offer automated payroll in all 50 states.
SurePayroll
SurePayroll was established in 2000 and became a subsidiary of Paychex, Inc. in 2011. It offers an alternative to Paychex Flex for businesses that require a full-service solution with HR features. SurePayroll has built a reputation for keeping on top of regulation changes and reliable tax payment automation.
SurePayroll offers two payroll plans: Full Service and Self Service. Full Service costs $29.99 per month and enables SurePayroll to file returns on your behalf. At $19.99 a month, Self Service calculates payroll taxes, but businesses will need to prepare and file taxes themselves.
Ease of use and customer support are commonly cited perks of SurePayroll, but the downsides are the lack of software integrations and difficulty handling multi-state employees.
Patriot Payroll
Patriot Payroll is a low-priced payroll software offered by Patriot Software, a company specializing in cloud-based payroll and accounting software.
The advantages of Patriot include no long-term contracts and unlimited payroll runs. The simple pricing structure makes it a solid option for companies with few employees. Patriot gets high reviews for its user-friendliness and customer support.
Businesses have a choice of two payroll plans; The Basic plan is $17 per month (+ $4 per person) and covers basic business needs such as two-day direct deposit, as well as an integration with QuickBooks Online. For federal, state, and local tax filings, businesses need to upgrade to the Full Service plan at $37 per month. The full plan also guarantees tax filing accuracy, offering businesses another layer of protection. However, a downside is that Patriot doesn’t offer any HR and benefits services.
OnPay
OnPay is a cloud-based payroll and HR solution founded in 2007. OnPay offers one of the simplest payroll processes on the market, with a single plan retailing at $40 per month + $6 per person. This includes automated payroll and accounting management, in addition to benefits management.
However, this one-size-fits-all approach means the platform lacks advanced features such as time tracking. User reviews cite the strength of the reporting feature, but a lengthy onboarding and set-up process.
Zenefits Payroll
Zenefits is a comprehensive platform for managing onboarding, benefits, and HR as well as payroll. Payroll can be integrated fully into Zenefits plans as an add-on for $6 per employee per month or comes included in the highest-tier Zen plan, which costs $27 per employee per month. Zenefits also connects with a variety of third-party tools, including Xero and QuickBooks.
The Zenefits payroll software is a comprehensive plan that includes unlimited pay runs, multiple pay schedules, and benefits deductions. Pricing by headcount makes Zenefits very flexible for businesses, as it isn’t possible to outgrow your plan. But at present, there is no option to just subscribe to the payroll feature.
Xero Payroll
Founded in New Zealand in 2006, Xero has become globally recognized as a business management platform that covers accounting, invoicing, project tracking, reporting, and more.
Similarly to Zenefits, Xero is a comprehensive system that does much more than process payroll. The payroll feature is an optional add-on costing $10 per month except for the Ultimate plan, which covers up to 5 people and then $1 for each person thereafter.
A common criticism of Xero Payroll is that unlike full-fledged payroll management, payroll isn’t automated and business owners are responsible for their tax filing. However, it’s a convenient option for those who are already using the rest of the Xero ecosystem.
Final Words
Payroll software may not be the most exciting topic, but it is vital for any business with employees. By choosing a payroll service provider that aligns with key business needs and goals, you can turn away from tax documents and spreadsheets and instead focus on growing your business. Another way to streamline and save time, energy, and money in your business is to ensure you are getting the best credit card processing rates for your business needs. This is where Stax comes in. Contact us today for a customized quote.
FAQs about Payroll
Q: What factors should I consider when choosing a payroll system for my small business?
A prospective buyer should consider the ease of use, cost-effectiveness, scalability, compliance with legal regulations, integration capabilities with other business tools, headcount, budget, and tax compliance.
Q: Who are the leading providers of payroll systems for small businesses?
The top ten payroll services dedicated to the needs of small businesses include ADP, Paychex, Gusto, Intuit QuickBooks Payroll, Wave Payroll, SurePayroll, Patriot Payroll, OnPay, Zenefits Payroll, and Xero Payroll.
Q: What are the main features I should look for in a payroll system?
Key features to look for in a payroll system include a user-friendly interface for invoicing or benefits management, self-service capabilities for onboarding and customer support, scalability to grow with your business needs, automatic tax calculations for federal, state, and local taxes, and seamless integration with accounting software or HR tools.
Q: Why is cost-effectiveness important when selecting a payroll system?
Not every payroll solution offers the same pricing structure. It’s essential to assess what specific features you require so you don’t pay for tools you aren’t using. A full-service payroll system may cost more, but it might be overkill for many small businesses.
Q: What does a scalable payroll system mean?
A scalable payroll system allows you to upgrade plans for more capacity or subscribe to add-on services as your business grows. It essentially grows with your business, ensuring that you and your employees are always covered.
Q: How can a payroll system help with compliance and taxes?
A good payroll solution offers automatic tax calculations for all levels of taxes and stays updated with regulation changes. It is beneficial to opt for a payroll provider that also includes year-end tax filing services.
Q: Why is it crucial for a payroll system to integrate with other business tools?
Integration capabilities allow for the easy sharing of information between systems. This ensures business owners and human resources personnel have access to important data when they need it.
Q: How does Ease of use feature aid in handling payroll tasks in a small business?
A user-friendly payroll system simplifies what can often be complex payroll tasks, streamlining processes like invoicing or benefits management. Additionally, self-service capabilities aid in onboarding and customer support, making the entire process more manageable for businesses.
Q: What are some of the potential drawbacks of payroll systems?
Some common critiques can include a lack of transparency over pricing, core features such as employee benefits management only being available as add-ons, and poor customer support. Other possible issues could include limited functionality for filling multistate taxes or a lack of HR and benefits services.
Q: What are the benefits of implementing a payroll system for a small business?
Implementing a payroll system ensures accurate and timely payment of salaries, helps with tax calculations and compliance, can integrate with other systems for smooth data sharing, and contributes to overall cost savings. Small businesses can then focus more on growth and less on administrative tasks.
