Great Small Business Payroll Software

Most people don’t like to do detailed, repetitive math. And payroll math is nothing but detailed and repetitive. It’s too easy to get things wrong and risk being fined. Traditionally, your accountant could handle payroll calculations for you. But, these days, there are a lot of small business payroll software you can use too. Some of them even integrate very smoothly with your accounting software. In this article, we’ll survey some popular small business payroll software and give you some quick info on pricing and functionalities.

This article is a part of our series on how to hire your first employees. While picking a payroll software is important, it’s not the only thing you have to worry about when you hire employees. So, if you’re in the process of hiring your first workers, be sure to look through our intro article. This way, you won’t miss the other important information you should know.

Most of our readers are in the US, so the payroll software below follow US payroll rules. But some of the software are also available in other countries, following these other countries’ payroll rules. So, if you’re reading this article from outside the US, be sure to verify that the software also works in your country before moving forward.

How We Picked the Small Business Payroll Software for This Article

There are a lot of payroll software for small businesses. It’s pretty difficult to tell if the software is well-liked because users recommend it a lot, or because it advertises a lot on Google or Bing. So, to write this article, we used some common sensical criteria to help us make our picks.

Some Accounting Software Providers Also Make Payroll Software

To pick the payroll software to profile, we first looked at the accounting software we profiled in an earlier article. A lot of the accounting software makers also make their own payroll software. Other accounting software makers work closely with a payroll software specialist to ensure the two software will sync smoothly with each other. This is where we started our list of small business payroll software to review.

As a reminder, the accounting software we profiled are:

• QuickBooks Online and QuickBooks Desktop
• Wave Accounting
• Zoho Accounting
• Sage Accounting and Sage 50cloud
• FreshBooks
• Xero

Of the above, QuickBooks, Wave, Zoho, and Sage all have their own payroll software. FreshBooks and Xero work closely with Gusto, which is an independent payroll services provider.

There are Payroll Specialists Worth Considering

We believe in choices, so we didn’t want to limit our reviews to only the software recommended or made by the accounting software makers. There are a lot of excellent small business payroll software that will sync with any accounting software. In fact, most of these specialized payroll software offer more robust features. Some are even paired with additional HR functionalities.

We’ll profile some of these well-known and established payroll software too. To compile our list, we looked at the providers with the bigger market share that are also focused on small businesses. Here’s our list:

• Gusto
• ADP
• Patriot
• Paychex
• OnPay

We also include one special mention:

• Square Payroll

We include Square because they seem to be a very popular payment processor for the restaurant industry. Restaurants can usually pay a different minimum wage to their tipped workers. But doing so can make it tricky to calculate overtime, income tax, Social Security, and Medicare withholdings.

Square has conveniently integrated some of their time tracking and tip collection information into their point-of-sale software, which can then be synced to Square Payroll. So, we decided to profile Square Payroll for our readers who’re in the restaurant industry.

Our Recommendations Focus on Your Needs

As a reminder, we don’t do affiliate marketing. This means we have no incentive to steer you towards one or more of the small business payroll software in this article. You can rest assured that our recommendations here focus on your best interests.

But not doing affiliate marketing also means we cut off one of several ways this website makes money. Right now, we keep going by running a limited number of ads and by taking direct reader contributions. If you find this article useful, please consider making a contribution through Kofi or Patreon. You can find the links on the sidebar or the bottom of this page.

Must-Have Features in a Small Business Payroll Software

We think there are two main reasons you should use payroll software: to eliminate mistakes and to save time. So, we think there are a set of must-have functionalities in any payroll software.

Our Must-Have Features List

Sadly, not every payroll software profiled in this article includes all the features in our must-have list. Sometimes, you have to pay extra to get all the features.

When you read through the profiles, assume that the software does have every feature in our must-have list. We’ll point out the missing must-have features or the features you have to pay extra to get.

Our must-have payroll software features are:  

• Calculate employee federal, state, and local income tax withholdings
• Calculate employee and employer Social Security and Medicare withholdings (FICA)
• Calculate federal unemployment insurance (FUTA)
• Calculate state unemployment insurance (SUTA)
• Automatically file all of the above for you, according to their individual schedules
• Deduct garnishment payments and remit the payments to the proper authorities
• Automatically generate W2s and 1099s and file your portion of the paperwork
• Send out W2s and 1099s to your employees and contractors at year end
• Correctly calculate overtime pay
• Correctly calculate pay for tipped employees
• Track time
• Track vacation/paid time off
• Provide direct deposit for paychecks
• Record workers compensation insurance payments
• Employee benefits management (automatically deduct from paychecks and, as an option, send premiums to insurance companies and 401(k) administrators)
• Generate payroll reports

Additional Services Often Offered by Small Business Payroll Software Providers

We don’t consider the following services must-haves. But they’re available in many of the payroll software we cover. If these services are important to you, be sure to double check on the software maker’s website to make sure you’ll get them:

• Next day direct deposit. Direct deposit typically takes 2-5 days, but some payroll services providers offer next day deposit.
• New hire reporting. Typically, every time you hire a new employee, you have to tell your state. This way, your state will know you’ll be sending additional withholdings and taxes. Some payroll software offer automatic reporting as a basic service but others offer this as an add-on.

Payroll Software That Natively Integrate with Our Recommended Accounting Software

We start our profiles with the more obvious payroll software to look at—the ones that are built by the accounting software makers for their own accounting software. Payroll accounting isn’t a one-entry-and-you’re-done thing. It can take several entries under several categories. So, having a payroll software that automatically syncs to your accounting software can be a very nice thing.

If you’re thinking of making payroll accounting entries manually, we’re not going to explain how to do it here. But, for your convenience, we did find two excellent articles with easy-to-understand explanations. One comes from Wave Accounting and another from OnPay Payroll Services. We profile both payroll software later but give the links here.

Of the six accounting software we profiled in our accounting software article, four have their own payroll software. These are:

• QuickBooks Payroll
• Wave Payroll
• Zoho Payroll
• Sage Payroll

Of the above, Zoho and Sage seem to admit that their payroll software aren’t quite up-to-par. They both have a separate add on or integration that use a third-party payroll software provider. Zoho uses SurePayroll and Sage works closely with ADP. We’ll discuss whether Zoho’s and Sage’s home-grown payroll software are any good when we get to these sections.

We also profiled FreshBooks and Xero in our accounting software article. Both these software work closely with the small business payroll software provider Gusto. We’ll talk about Gusto’s offerings in its own section.

Let’s start by looking at the four payroll software listed above.

QuickBooks Payroll Integrates with QuickBooks Online and QuickBooks Desktop

QuickBooks Payroll works with both QuickBooks Online and QuickBooks Desktop. However, the services cost differently.

QuickBooks Payroll Costs

There are three tiers of payroll service for QuickBooks Online:

• Core: Starts at $45 per month plus $5 per employee per month. This plan includes basic payroll features such as automatic payroll tax calculations and filings.
• Premium: Starts at $75 per month plus $8 per employee per month. This plan includes all Core features, same day direct deposit, product support, time tracking, expert review, and workers’ compensation administration.
• Elite: Starts at $125 per month plus $10 per employee per month. This plan includes all Premium features, as well as expert setup review, time and project tracking, HR advisor, and tax penalty protection.

There is one tier of payroll service for QuickBooks Desktop. The service costs $500/year or $50/month plus $5/person. The Desktop payroll features are comparable to the Online Core features, but there’s no same day deposit.

QuickBooks Payroll Compared with Our Must-Have Features

Looking at QuickBooks Payroll’s features, the Core tier has many but not all of the features we consider to be must-haves for payroll software. To get almost everything you need, you have to get the Premium service.

Here are some of the QuickBooks Payroll’s features worth pointing out:

• Local payroll tax: No auto file. You have to do it yourself.
• Tips and tip credit: Seems to be included in the Core tier and Desktop versions. But it also seems that you have to take quite a few steps to set up this function.
• Worker’s compensation administration: Included in the Premium and Elite tiers, but costs $5/month for the Core tier. This is just software administration. You still have to pay for the actual insurance. Insurance is available from third parties working with QuickBooks.
• Setup help: Available on the Elite tier. QuickBooks will review your setup after you’re done. If the payroll is set up incorrectly, QuickBooks will pay up to $25k worth of penalties for you.
• Benefits administration: Available on the Premium and Elite tiers. QuickBooks has working relationships with third party providers that you can purchase health insurance and retirement benefits from. Payments automatically deducted from payroll.

Wave Supports its Free Accounting Software Through the Fee-Based Wave Payroll

Wave offers a very nicely designed and completely free accounting software. To make money, they offer a fee-based payroll software and credit card processing services.

Wave Payroll Costs

Wave Payroll offers two pricing. The price you pay depends on where your business is located. In some states, Wave Payroll offers full service, and they’ll automatically deposit your business’s withholdings and taxes for you. In other states, Wave isn’t yet fully featured. So, you’ll have to file and deposit the payments to the state yourself. Wave does prepare all the forms and makes all accounting entries for you. You just need to file the paperwork and pay.

Here’s Wave’s pricing structure:

• Full service payroll: $40/month and $6/person. As of this writing, Wave’s full service states include Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin. Given payroll is one of two ways Wave makes money, we suspect more states will come online as full service states soon.
• Self service payroll: $20/month and $6/person. All states that are not full service states are self service states.

Wave Payroll Compared to Our Must-Have Features List

Here’s Wave’s features compared to our must-have features list. Other than the full service/self service distinction in pricing, Wave’s software has most of the features we consider essential:

• Tips and tip credit. We couldn’t find any info on how Wave Payroll handles tipped employees. If you’re a business that pays tipped rates and is considering Wave Payroll, be sure to contact them to make sure their software can handle this issue.
• Worker’s compensation insurance: You can get worker’s compensation insurance through a third-party insurance company working with Wave. Wave will handle the payroll and accounting entries for you.
• Employee benefits. There’s no automatic entry for worker’s benefits like health insurance and 401(k). You have to manually enter these as deductions.
• Garnishment. Payroll garnishments like child support payments must be manually entered as deductions.

Zoho Accounting Natively Integrates with Zoho Payroll and SurePayroll

Zoho has its own payroll software, but they seem to still be in the middle of building it out. Ironically, Zoho Books—their accounting software—recommends SurePayroll for payroll services. We looked at both software for you.

We Do Not Recommend Zoho Payroll

Zoho Payroll works, but it falls very short of our must-have features list. Compared with the other payroll software profiled in this article, Zoho Payroll is simply not competitive.

Currently, Zoho Payroll only works in the following states: California, Florida, Illinois, Kansas, New Hampshire, New York, North Carolina, South Dakota, Tennessee, Texas, Utah, and Washington.

Zoho Payroll costs $19/month and $3/worker. If you pay for the full year, you get two months free, so the fee is $190/year and $30/employee.

If you’re still curious about Zoho Payroll’s features, here’s the link to their Payrolls page.

Zoho Accounting Recommends SurePayroll

If you go to Zoho’s accounting software pages, they recommend small businesses use SurePayroll instead of their own Zoho payroll.

SurePayroll is a subsidiary of Paychex (which we will profile later in this article). Its payroll software is suited for businesses with 10 employees or less. Since our how-to-hire-your-first-employees series focuses on businesses with 15 or less employees, SurePayroll fits this niche very well.

There are two tiers of services offered by SurePayroll—self service and full service. With self service, SurePayroll prepares all the paperwork, but you have to file the taxes and withholdings yourself. With full service, SurePayroll files the paperwork and sends the withholdings to the correct authorities for you.

SurePayroll’s website doesn’t disclose pricing. You have to contact them for the base price. They do have other pricing listed, but they’re for add-on services. According to other review sites, the self service tier costs $19.99/month and $4/person. The full service tier costs $29.99/month and $5/person.

Looking at SurePayroll’s features list, it covers our must-have features list fairly well. Here are some additional information about various features:

• Tips and tip credit: A special restaurant plan is available for tipped employees.
• Time and vacation/paid leave tracking: Must integrate with third party software, which costs extra.
• Worker’s compensation insurance: Available through third party provider. SurePayroll will handle the appropriate bookkeeping entries.
• Benefits management: Health insurance and 401(k) available through third party providers. SurePayroll will handle the bookkeeping entries.

In addition to Zoho, SurePayroll also integrates with QuickBooks, Sage 50cloud, FreshBooks, and Xero.

Sage’s Payroll Offerings Seem Unfocused

Sage is a very big company that seems to be mostly focused on doing business with other bigger companies. While Sage does have a branded payroll service, they don’t seem to emphasize this fact.

Despite trying for several hours, we couldn’t find much about Sage Payroll Service except for a few short paragraphs on their Sage 50cloud features page. Sage Payroll’s pricing depends on your number of employees, but you’ll have to contact them for a quote.

We did find an old pricing and features page that hasn’t been updated for several years. Sage’s current payroll service might be similar to what’s on this page, but this is only a guess. If you’re interested in looking at the information, here’s the page. Our advice is that you do not rely on the information.

Sage does offer a very robust payroll service called Sage People. The payroll specialist ADP (which we profile later) powers the functionalities behind Sage People. But this product seems to be designed for large companies. So, it’s not suitable for our readership.

Given this lack of information on Sage’s payroll service, we don’t recommend you use Sage Payroll. If you use Sage Accounting or Sage 50cloud for accounting software, SurePayroll and Gusto will integrate with Sage. We recommend these software instead.

Gusto is a Newer Payroll Software Specialist Highly Recommended by Many Small Businesses

Gusto’s payroll software is very popular among small businesses. It often gets random endorsements on business-related internet chat forums whenever someone asks for a payroll software recommendation. Looking at Gusto’s standard features and pricing, we agree that it is an excellent choice.

Gusto offers four pricing tiers:

• Simple: $40/month and $6/person; for single state employers
• Plus: $80/month and $12/person; everything in Simple; multi-state payroll for W2 and 1099; next day direct deposit
• Premium: tailored pricing; additional HR-related functionalities and support
• Contractors Only: $30/month and $6/contractor; will handle year-end 1099s

Of all the small business payroll software we profile in this article, Gusto is one of only two that gives you every one of our must-have features at their starter tier. (The other is OnPay, which we profile later.)

Gusto connects you with third party providers for worker’s compensation insurance and retirement benefits. You can get group health insurance too. For this, Gusto is the administrator. Gusto’s software automatically deducts these payments from payroll and makes the entries in your accounting software.

Gusto can integrate with QuickBooks Online, QuickBooks Desktop, Zoho Books, Sage, Freshbooks, and Xero. They also make a general ledger mapper, so you can integrate with other accounting software like Wave Accounting.

ADP is a Payroll Services Provider with a Huge Market Share

ADP has been providing payroll services since 1949. They’ve been processing payroll data with a computer (mainframe) since the early 1960’s. ADP has so many clients that business reporters use their jobs report to supplement government jobs data.

ADP focuses mostly on big businesses, but they also do work with small to mid-sized businesses. (Back when our family owned a small food manufacturing business, we used ADP to process our payroll.)

ADP RUN Costs

The ADP payroll software designed for small businesses with 1-49 employees is called ADP RUN. This is the service we’ll profile here. If you have a mid-sized or even large business, be sure to visit the ADP website to see their other offerings.

ADP RUN has four tiers of service:

• Essential: New hire reporting to state and federal, multi state tax filings, single county background checks
• Enhanced: Everything in Essential, state unemployment insurance management (i.e. oversee and periodically audit your rate to make sure you’re not overpaying); ZipRecruiter account;
• Complete: Everything in Enhanced plus some additional HR functions
• HR Pro: Everything in Complete plus more HR functions

ADP doesn’t disclose pricing on its website. According to other online sources, Essential appears to start at $79/month plus $4/person. Also from other online sources, ADP tends to be more expensive than other payroll service providers.

ADP RUN Features List Compared to Our Must-Have Features List

Overall, the Essential tier has most of what we consider to be must-haves in a payroll software. However, some of these extra features seem to require additional fees or even a different service altogether.

Here are the differences you should be aware of:

• Tips and tip credit: Seems to be available only in their product especially tailored for restaurants, so is not a part of ADP RUN
• Year end W2s and 1099s: Available to all tiers but for an extra fee
• Garnishments: Seems to be available but for an extra fee
• Worker’s compensation insurance, health insurance, and retirement benefits: available through third-party providers but ADP will correctly book this in your accounting system

ADP RUN data can be exported directly into QuickBooks, Xero, Wave, or a generic output file for upload into other accounting software.

Patriot Makes both Accounting Software and Payroll Software

Patriot is another software provider that makes both an accounting software and a payroll software. Their accounting software didn’t make our article profiling accounting software, but their payroll software has a bigger market presence.

Patriot Payroll Costs

Patriot offers its payroll software at two pricing tiers:

• Basic: $17/month and $4/person; multiple locations; contractors included
• Full Service: $37/month and $4/person; they file the payroll taxes for you

They will help you set up their software for free.

One curious thing to note: One of Patriot’s articles meticulously explains “payroll taxes” doesn’t include state unemployment insurance filings. However, looking at their Full Service features list where they say they’ll handle filing all “payroll taxes,” it seems that they do include state unemployment insurance. If you’re interested in Patriot’s payroll services, be sure to ask about state unemployment insurance to make sure this is clear.

Patriot’s Features List Compared to Our Must-Haves Features List

Patriot’s payroll software offers most of our must-have features list. Here are the exceptions or items to note:

• Tax filings: The Basic tier only prints out the various withholdings and tax forms for you. You must file them yourself. The Full Service tier will automatically file the withholdings and taxes for you.
• Year end W2s and 1099s: Available for an extra fee with the Basic plan. Included in the Full Service plan.
• Tips and tip credit: Might not be a straightforward process, but it seems the software can handle the calculations.
• Garnishments: Automation not available. Must manually enter as a deduction and manually send the amount to the appropriate agency.
• Worker’s compensation insurance: available from third party and must manually enter amount
• Retirement and healthcare benefits: Available through third parties and must manually enter amount

Patriot Payroll integrates with QuickBooks Online, QuickBooks Desktop, and Patriot Accounting.

Paychex is Another Established Payroll Software Provider at the Higher End of Pricing

Paychex is pretty big and pretty old—though not as big or old as ADP. They focus mostly on small to mid-sized businesses, but we’re sure they’ll be happy to take on large multi-national businesses too.

Paychex seems to have grown by mergers and acquisitions. We already profiled one of their subsidiaries—SurePayroll—because Zoho’s accounting software is closely integrated with them. But Paychex also offers another product under its flagship brand. This service is called Paychex Flex, and it’s designed for businesses with 1-19 employees.

Paychex Flex Costs

There are three tiers of pricing under Paychex Flex:

• Essentials: $39/month and $5/person
• Select: Customized; more hiring, onboarding, and HR functions;
• Pro: Customized; garnishment service included (add ons for the other 2 tiers); additional HR functions

We’re not a fan of the “call for a quote” sales technique, but it seems that the two big, established payroll services providers both use it. Other than the Essentials tier, you have to call Paychex for pricing. (With ADP, you have to call them for pricing, period.)

Paychex Features List Compared with Our Must-Haves List

A lot of Paychex’s services we consider essential are ad-ons that you must pay extra for. Some of these include:

• General ledger integration: Not available for Essentials tier but available for Select and Pro tiers (Essentials must use manual entry)
• Year end W2s and 1099s: Add-on service
• Overtime pay: Part of time tracking service, which is an add-on
• Tip and tip credit: Part of time tracking service, which is an add-on
• Time and vacation (PTO) tracking: add-on
• Garnishment: Included in Pro but add-on for Essentials and Select
• Worker’s compensation, healthcare, retirement benefits: All add-ons

We think that Paychex lowered the price of their Essentials tier to seem competitive with other payroll software. But, if you add all the extra services we think you’ll need, their pricing is closer to ADPs price—i.e. at the higher end of the payroll software spectrum.

Paychex Flex integrates with QuickBooks Online, Sage, Xero, and “hundreds of accounting software packages.”

OnPay Has Simple Pricing that Gives a Small Business Everything it Needs

OnPay, along with Gusto, is one of the younger companies we profile in this article. And, like Gusto, it has attacked the older payroll software providers by giving you lots of the services you need, at an excellent price point.

OnPay has one price: $40/month and $6/person.

For this price, you get everything on our must-have features list. You also get multi-state payroll processing, which is often only available for an added fee from OnPay’s competitors. You’ll also get automatic new hire reporting to your state (which isn’t on our must-have list but which many other payroll software include in their basic service).

A couple of things to note:

• Worker’s compensation, healthcare, and retirement benefits: Available from third-party providers. OnPay will make automatic deductions from payroll.
• Vacation/PTO and time tracking: OnPay does provide vacation/paid time off tracking. But if you wish to track employees’ time, you’ll have to pay for a third party software that integrates with OnPay.

Probably the only issue with OnPay is that it doesn’t seem to integrate with too many accounting software. It’ll integrate with QuickBooks Online, QuickBooks Desktop, and Xero Accounting. With other accounting software, you’ll have to make manual bookkeeping entries.

One Specialist Payroll Software Worth Mentioning: Square Payroll

Square is probably best known for its credit and debit card processing software and hardware. One of Square’s industry of specialization is the restaurant industry. Square has built a lot of restaurant-specific software functions for taking orders, tracking employees’ time—and, yes, payroll.

So, we thought we’d include Square Payroll for our readers who run restaurants with tipped employees. The rules for tipped employees are pretty specialized, so it seems good to include a payroll software maker that makes several restaurant industry specific software. Other types of businesses can use Square Payroll too, of course.

Square Payroll offers two service tiers:

• Full Service: $35/month and $5/worker. Handles employees and contractors.
• Contractors only: $5/worker, direct deposit, file 1099s and send to contractor at end of year.

A couple of items of note:

• Time tracking: if you have Square POS, tips data can be imported directly into payroll
• Worker’s compensation insurance: Available from third party providers and automatically processed.
• Healthcare and retirement benefits: Available from third party providers and can be automatically deducted from employee paycheck.

Square Payroll integrates with QuickBooks Online and Xero Accounting. For anything else, you’ll have to make manual entries.

Which Service You Pick Depends on Your Business’s Specific Needs

Payroll processing, with all the taxes and withholdings, can get pretty complicated. We profiled a lot of the leading small business payroll software in this article, and, of course, too many choices can get confusing.

If your accounting software makes a payroll software, we recommend you seriously think about using that payroll software. A great integration between accounting and payroll software can be very important.

If you wish to consider other software, we think you should look at Gusto and OnPay next. These two services seem to provide the best value for your money. But if you wish to go with a more established service, ADP and Paychex are good choices too.

At the end of the day, payroll depends very much on your specific business’s needs. After all, if you only operate in one state, the payroll services offering multi-state processing for free won’t do you any good. And, if you run a restaurant and use the special minimum wage rules to pay your servers, you’ll definitely need a payroll software that can handle this special calculation.

So, to pick a payroll software, first consider what you need. Then, look at your available choices. Make a price comparison last.

Interested in starting and running a small business? Here’s the beginning of our step-by-step guide: What to do right after getting that great business idea.