For better or worse, paying employees is a lot harder than simply handing them a check at the end of the pay period. Luckily, a whole host of full-service payroll companies—including PEO services, outsourced payroll, and payroll software—can help you through the trickiest parts of payroll. Interested? Keep reading: Business.org reviews the year's best payroll companies for small to midsize businesses like yours.
The Best Payroll Companies for Small Businesses in 2020
We recently updated this page to make sure our pricing information is accurate. While most companies have rolled back their COVID-19 discounts for the month of June, they're still offering at least one month (like Gusto) or three months (like Paychex) free for new customers.
To help small-business owners during the ongoing COVID-19 crisis, Gusto has lowered its starting price by 50%. Now, Gusto's Core plan starts at $19 a month (plus $6 per payee per month) for the first six months. And if you work with 1099 contractors instead of W-2 employees, Gusto's Contractor plan has a $0 base cost—you'll just pay $6 per month per contractor paid.
We recently reviewed this piece to make sure all pricing and plan information was still correct. Good news: it is! Which means we feel confident standing by our picks for the year’s best payroll companies for small businesses.
Luckily for the user, accounting software is consistent and reliable—including when it comes to pricing. We recently reviewed this piece to make sure none of the prices or offers have changed (they haven’t) and that our rankings are the same (they are). We still think Xero gives users the most value with its unlimited users and comparatively affordable plans.
We’ve updated this article to include the most up-to-date pricing and plans for each piece of accounting software we reviewed. We also added Zoho Books to our top five recommendations thanks to its comprehensive features, helpful automation services, and easy integration with customer relationship management software. Meanwhile, we moved GoDaddy Online Bookkeeping to our runner-up position, not because the software isn’t affordable and effective but because it focuses solely on bookkeeping, not on comprehensive accounting services.
The best payroll companies for small businesses
- : Best overall
- : Best for midsize businesses
- : Best PEO
- : Most affordable self-service
- : Best for contractor-only plans
Best payroll companies for small businesses
Type of payroll
Starting monthly cost
Additional cost per payee
|Gusto||Full-service payroll software||$19.00/mo.||$6.00/mo.||1 mo.||View Plans|
|Paychex||Full-service payroll software or PEO||$59.00/mo.||$4.00/payee||3 mos.||View Plans|
|Contact for quote||Contact for quote||3 mos.||View Plans|
|OnPay||Full-service payroll software||$36.00/mo.||$4.00/payee||1 mo.||View Plans|
|Square Payroll||Full-service payroll software||$0.00/mo.*||$5.00/payee||Not listed||View Plans|
Data effective 10/16/20. At publishing time, pricing and features are current but are subject to change. Offers may not be available in all areas.
*$0 base price for contractor plan only. Base price for employees and contractors starts at $29.00.
Gusto: Best overall
Gusto comes close to proving that in the world of online payroll software, you really can have it all—a free trial, a beautiful interface, and a reasonable price for full-service payroll. All of Gusto’s plans include these crucial features:
- Unlimited payroll runs in all 50 states
- Automated payroll tax filings
- Direct deposit
- PTO policies
- W-2 employee and 1099 contractor management
- Employee pay stubs and tax forms
- Workers compensation administration
All four Gusto plans are full-service, meaning Gusto calculates and files payroll taxes for you. And thanks to its new Basic plan, Gusto is more affordable than ever: its payroll solutions now start at $19 per month, a full $20 cheaper than its former cheapest plan. (For more information about Gusto, check out our in-depth Gusto review, which covers all of the payroll provider's plans, features, and benefits.)
Like all good things, Gusto has a few flaws, but they're few and far between. For one, only the pricier plans offer two-day payroll processing and free accounting software integration—the cheapest plan doesn't integrate with accounting software and has a four-day payroll turnaround time. And customer service isn't available on weekends, so if you run into a payroll problem on Saturday, it won't be resolved until Monday at the earliest.
Best for midsize businesses: Paychex
Paychex recognizes that payroll solutions for small businesses are different from those with over a thousand employees. That’s why they tailor their payroll plans by business size: they offer solutions for 1 to 9 employees, 10 to 49 employees, and 50 to 1,000+ employees.
Every plan includes payroll processing and payroll tax help, and most plans include some HR basics too, including these:
- Benefits administration
- Retirement management
- Health insurance
- Time tracking
Since most midsize businesses need payroll and at least one of the HR perks listed above, it makes sense to pick a provider that offers two for the price of one—why go through the hassle of integrating one brand’s HR software with another brand’s payroll software when you can easily purchase them both through the same experienced company?
Additionally, Paychex has a few PEO plans, which work best for midsize or large businesses. If you’re not sure if a PEO (Professional Employer Organization) will work for you, check out our piece “What Is a PEO?”—or just keep reading to see our top pick for best PEO.
Best PEO: ADP TotalSource
If you’re familiar with PEOs, or Professional Employer Organizations, you’re not surprised that ADP TotalSource is our top recommendation for PEO payroll services.
If you’re not familiar with PEOs, here’s the rundown. You and the PEO split ownership of your small business fifty-fifty. While that sentence sounds scary, it really means you “lease” your employees to the PEO, which then files your taxes under its own company, accepts payroll liability, distributes paychecks, and handles benefits. Check out our PEO payroll article for a more in-depth analysis.
A few key things set ADP TotalSource apart. For one, its format is easy enough that employees shouldn’t run into trouble using any self-service features. With ADP’s app, they can choose benefits, track time, and request leave or paid time off.
ADP also takes over issues like recruiting, hiring, and onboarding. If you have questions about payroll, you can reach out to your dedicated payroll specialist—but know that when ADP runs your payroll, its payroll team is responsible for any problems with tax deductions. In terms of liability, you should be off the hook.
With unlimited payroll runs and automatic tax filing, Gusto helps small-business owners worry less about payroll and put more time into growing their business.
- Get automatic payroll tax filing, including end-of-year tax forms
- Manage workers compensation insurance
- Track paid time off, sick leave, and holiday pay
Best for budget: OnPay
As an online payroll service, OnPay focuses on one thing: simplicity. Instead of offering multiple plans, OnPay charges you one monthly base fee plus a cheap user fee—and at $36 per month plus $4 per user, OnPay's full-service plan is honestly one of the lowest out there.
The OnPay team will also add employee information on your behalf at no extra cost so you can skip the hours of manual data entry. And like the best payroll service companies, OnPay guarantees their accuracy for payroll processing and year-end tax form filing, promising to cover any IRS fines if OnPay’s experts make a mistake.
Square Payroll: Best contractor-only plans
If your graphic design company mostly employs freelancers or your construction business works exclusively with roofing contractors, you don't need a full-fledged online payroll plan, much less a PEO. After all, contractors pay their own taxes, so you don't need to worry about quarterly filing fees. You just need a basic payroll plan that lets you quickly, affordably pay your contractors and send them their tax forms at the end of the year.
In other words, you need Square Payroll's contractor plan, which has no base fee. Instead, you pay just $5 a month per contractor—even if you pay that same contractor multiple times a month. Contractors can clock in and out using Square's point of sale app, which then automatically syncs with Square Payroll to make running payroll a breeze. Square even sends out 1099 forms to your contractors at the end of the year and files your 1099-MISC tax form with the IRS too.
Square Payroll's simplicity is also its main downside. While you can use it to easily, affordably pay contractors, that's pretty much all you can do. For instance, you won't get the in-depth reports and analysis you would with, say, Paychex. But if you're just paying contractors, you don't necessarily need that much reporting; you need a cheap online payroll service, and that's what you'll get with Square.
Payroll services FAQ
What’s the difference between self-service and full-service payroll?
Self-service payroll means in-house payroll. You might use software to run the numbers and simplify direct deposit, but in the end, you’re responsible for tax compliance and making sure employees get paid the right amount. In contrast, if you run full-service payroll, you outsource at least some parts of your payroll process to another company.
Full-service payroll usually costs more than self-service payroll, but it saves you time, which could translate to saved money. Most importantly, a full-service payroll company takes on the responsibility for withdrawing the right amount of taxes. If there’s an issue with federal or local taxes, it’s the payroll company’s problem, not yours.
Should you use a payroll service or hire an accountant?
In general, payroll services are cheaper, especially if you go the self-service rather than full-service route. Many payroll companies also combine payroll with features like HR administration, time tracking, and employee benefits that are outside the scope of an accountant’s job.
A full-time in-house accountant costs substantially more than payroll software and can’t juggle as many tasks as payroll software can. However, accountants can help analyze your business’s finances, file taxes easily and accurately, draw up financial statements, and help you understand your business’s future.
Also, remember that the question isn’t necessarily either/or. You can use self-service payroll most of the year and hire an accountant for a few hours a week during tax season.
Now that you know how many types of payroll processing services are out there, take the reins: whatever your number of employees or day-to-day tasks, there’s a payroll company and service out there for you.
Want more small-business payroll options than the five listed here? Our piece on the best payroll software for small businesses overviews 10 of the best payroll software options for businesses like yours.
At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.
1. U.S. Small Business Administration, “2018 Small Business Profile”