2020’s Best Payroll Software for Small Businesses
Hiring a full-time bookkeeper could cost you more than $40K a year1—so save some cash and work with one of these payroll software companies instead.
Best OverallAutomatic tax filing with every planUnlimited payroll runs in all 50 states
Best for Payroll with HRAll-in-one payroll and HR softwareUnlimited payroll runs
Most AffordableAffordable $20 base feeWorkers compensation coverage
Simplest SetupFree professional setupFree multi-state payroll
Best Customer ServiceExtended customer service hoursAffordable starting price
If your business recently started hiring employees, you might be facing a creeping worry: Am I doing this right?
Sure, you may be tallying up employee hours and cutting checks with the right amounts, but are you certain you’re calculating payroll taxes correctly? Are you in compliance with state and federal employment regulations?
Getting this stuff wrong can be more than a hassle—it can result in penalties or lawsuits. But you’re a small-business owner on a budget. You probably can’t afford the $40,000 or more to pay a full-time bookkeeper, let alone a whole team of accountants.
Fortunately, several payroll software providers can help you do the work at a fraction of the traditional bookkeeping cost. Take a look at our top picks for the best small-business payroll software to find one that works for you.
|Provider||Starting monthly base price||Fee per employee per month||Automatic tax filing||Free trial||Learn more|
|Gusto||$39||$6/payee||Yes||1 mo.||View Plans|
|RUN Powered by ADP||Contact for quote||Contact for quote||Yes||3 mos.||View Plans|
|Wave Payroll||$20||$6/payee||No*||30 days||View Plans|
|OnPay||$36||$4/payee||Yes||1 mo.||View Plans|
|SurePayroll||$19.99||$4/payee||No†||1 mo.||View Plans|
|QuickBooks Payroll||$45||$4/payee||Yes||30 days‡||View Plans|
|Paychex Flex||Contact for quote||Contact for quote||Yes||2 mos.||View Plans|
|Square Payroll||$29||$5/payee||Yes||Unclear||View Plans|
|Patriot Software||$10||$4/payee||No§||30 days||View Plans|
|Wagepoint||$20||$2/payee||Yes||Free until first payroll run||View Plans|
Best overall: Gusto
The heartily named Gusto is a beautifully designed, full-service payroll service with plenty of features and a healthy reputation.
Gusto’s cloud-based payroll plans start at $39 per month plus another $6 per month for each managed employee. Every plan—including Core, the cheapest Gusto plan—includes these impressive services:
- Automatic local, state, and federal income tax filing
- Automatic state and federal unemployment insurance tax filing
- Automatically generated and distributed W-2 and 1099 tax forms
- Automatic new hire filing with your state government
- Wage garnishment deductions plus child support payment distribution in every state but South Carolina
- PTO (paid time off) tracking
- Integration with popular accounting software like Xero, QuickBooks Online, and FreshBooks
- Automatic workers compensation billing
- Paystub and W-2 access for employees
Pay particular attention to Gusto’s automatic tax filing, wage garnishment, and workers compensation features—most online payroll providers charge extra for these.
Do you hire contractors on an individual basis instead of working with a full-time team of employees? Gusto’s new Contractor plan has no monthly base cost; you pay only $5 per month per payee.
If you get all of those features with Gusto’s most basic plan, what do you get with the more expensive ones? Mainly, you get more HR and administration services, not more payroll services. Most importantly, you can approve time-off requests instead of just tracking PTO. And approved PTO is automatically synced to an employee’s pay schedule so you don’t have to make any manual adjustments.
Honestly, it kinda sucks that you don’t get automatic PTO integration with the cheapest plan. But it does explain why Gusto’s next-highest plan, Complete, costs the same monthly base price as Core but double the amount per employee ($12 instead of $6).
Our research on Gusto turned up mostly glowing reviews from customers and rating groups. Customers tend to love Gusto’s design, functionality, and features: on the consumer review site Trustpilot, Gusto has a 4.5 out of 5 from 1.1K reviews.2 But the feedback isn’t all positive.
Unlike some payroll software providers, Gusto doesn’t provide 24/7 customer support. You can only reach a representative on weekdays between 8 a.m. and 5 p.m. Pacific standard time. And email support requests could take up to two days for a response.
- Automatic local, state, and federal payroll tax filing
- Unlimited payroll runs in every state
- Impressively positive online ratings
- Limited PTO and holiday pay features with the cheapest plan
- Support limited to daytime hours on weekdays
Basic for payroll + HR: RUN Powered by ADP
ADP is the biggest name in the PEO (professional employer organization) business. PEOs are basically HR companies that partner with small businesses to deal with all of their personnel issues, and they’re most useful for large businesses that want to totally outsource HR so they can focus on operations.
But what if you aren’t big enough to need a PEO and still need comprehensive, affordable HR help? RUN Powered by ADP distills ADP’s decades of HR expertise into an easy software service, complete with payroll.
All four RUN plans take care of full-service payroll basics like direct deposit, automatic payroll tax filing, and W-2 submissions. Even the cheapest plan, Essential Payroll, includes HR perks like employee onboarding, health care compliance forms, and a regular HR checkup.
Need more than the HR basics? ADP’s more expensive plans include employee background checks and ZipRecruiter assistance plus more comprehensive payroll help, like wage garnishments and state unemployment tax deductions.
Unfortunately, ADP doesn’t list its full-service software pricing online—you have to enter your business’s information or contact the company directly to get a quote (which makes sense for PEOs but not so much for software). Based on the fact that ADP’s self-service payroll plan costs $59 a month plus $4 per employee, we’re guessing the HR and payroll plans don’t exactly come cheap.
For that reason alone, we think RUN Powered by ADP is a better choice for midsize businesses rather than micro businesses. If your small chain of jewelry stores is big enough to need HR help but not big enough to warrant a PEO, RUN Powered by ADP may be a happy medium.
- Unlimited payroll runs
- Basic HR features in every package
- No-penalty guarantee
- No online pricing
- No wage garnishment with cheapest plan
Most affordable: Wave Payroll
Wave is among our top picks for best accounting software and best accounting apps because it offers a fantastic range of accounting services while being absolutely free. While Wave’s payroll software isn’t free, it’s among the cheapest out there while still providing an excellent range of payroll services.
Wave offers two plans: a self-service plan and a full-service plan. But the plan you sign up for doesn’t depend on the features you want—it depends on where you live. In most states, Wave offers only a self-service payroll plan, which costs $20 plus $6 per employee per month.
Even with its cheaper self-service plan, Wave’s includes workers compensation coverage options, W-2 and 1099 tax form preparation, and good customer service (though it’s only available online, not over the phone). That’s quite a load of features for just a $20 base fee.
Wave’s full-service plan is available in only 14 states. Earlier last year, though, it was limited to 8, so Wave’s clearly working on expanded its tax filing option. Full-service payroll costs $15 more than self-service, but that’s still a low price to file your local, state, and federal income taxes with a 100% accuracy guarantee.
- Low base cost of $20 per month
- Easy integration with Wave’s free accounting software
- Employee W-2 and paystub access
- Limited automatic tax filing (14 states only)
- Fewer customization options
- No contracts or commitments
- Full-picture visibility into your business’s finances
- Results-oriented approach to support growth
Simplest setup: OnPay
OnPay covers the payroll basics that some major players charge more for, such as garnishing wages, withholding state unemployment insurance, and giving employees multiple payment options (including paper checks). We particularly like that they’ll tailor their payroll services to specific industries—nonprofits, restaurants, and agricultural businesses, to name a few—at no extra cost.
But the main area where OnPay stands out is its setup. OnPay’s experts will set up your software for you for free, so if you’re looking for custom help at the reasonable starting price of $36, OnPay is a great place to start.
Looking for more reasons to try OnPay? Here are a few more perks of its cloud-based payroll software:
- Multi-state payroll at no extra cost
- Time-tracking and accounting software integration
- Tax filing accuracy guarantee
- Employee onboarding
- Employee self-service portal (available even if employees leave your company—they can still access tax documents and pay stubs for tax purposes)
- Free professional account setup
- Easy PTO tracking
- Low base cost
- No mobile app
- One plan only
Best customer service: SurePayroll
With self-service plans starting at $19.99 a month and full-service plans starting at $29.99 a month, SurePayroll is one of the cheapest picks on our list. If you go with self service, SurePayroll includes a tax-calculation guarantee, verifying that they’ve accurately assessed your taxes. If you opt for full service, SurePayroll’s 100% tax-filing guarantee means they’ll deal with the IRS if they make a mistake with your payroll taxes—including paying all associated fines.
Unfortunately, SurePayroll charges extra for services most payroll companies include at no extra cost, including accounting software integration. The integration fee is just an extra $4 a month, but it’s an odd thing to charge for.
Still, SurePayroll’s $19.99 full-service plan is basically a steal. And we’re impressed that SurePayroll transformed itself from one of the more expensive payroll providers to one of the most affordable at the end of last year.
- Tax accuracy guarantees
- Affordable monthly starting prices
- Customer service available 6 days a week
- 4-day payroll processing with self-service plan
- Extra costs for accounting software integration
We gave you our top five recommendations above, but the payroll software market is a crowded one. Here are five more small-business payroll solutions worth considering.
Best interface: QuickBooks Payroll
QuickBooks, long known for providing high-quality accounting software, offers three full-service payroll plans. The cheapest is pretty similar to Gusto; it starts at $45 a month and includes automatic payroll runs, health care options for your employees, and next-day direct deposit. QuickBooks’ best feature is its ease of use—the interface requires next to no learning curve, and the mobile app makes on-the-go payroll easier.
A word to the wise, though: QuickBooks Payroll includes a no-tax-penalty guarantee with only its most expensive plan. Even though QuickBooks pays taxes on your behalf with every plan, the company won’t accept responsibility for any filing errors unless you’re paying a ridiculously high $125 a month. We can’t think of any other payroll software that requires such a high fee for such a reasonable, industry-standard guarantee.
Best reporting: Paychex
Paychex Flex offers cloud-based payroll and human resources software to small businesses that really need the help but don’t want to deal with full-on HR outsourcing. Each Paychex plan includes new-hire state reporting, automatic payroll tax filing, and even an employee financial wellness program. And while most of the software options we’ve listed include a report or two, Paychex Flex blows everyone else out of the water by offering a whopping 160+ reports with its payroll and HR packages.
Of course, there’s a catch: the full 160+ reports (including a workers compensation report) and general ledger service come with only the two priciest plans. That’s one reason we recommend Paychex primarily to midsize and large businesses. Paychex will work best for you if cost doesn’t matter as much as robust reporting, hefty HR help, and dedicated experts to help with the messes payroll can leave behind.
Best for contract work: Square Payroll
If you need help paying contractors or freelancers, Square offers a bare-bones plan for only $5 per person per month—no base monthly fee required. The contractors log in to a Square portal, enter their information, and then you can pay them. It’s simple and affordable.
Although you can purchase Square Payroll as a stand-alone service, it’s designed to work in tandem with Square’s point of sale solution. Employees can use Square terminals or the mobile app to clock in and out, and POS data is seamlessly synced with the payroll service.
FYI, as of this month, Gusto also has a contractors plan with no monthly base fee in a clear bid to compete with Square; we’re excited to see which plan comes out on top in the contractor-verse.
Most affordable alternative: Patriot Software
With a monthly base price of just $10 plus $4 per employee, Patriot Payroll’s Basic plan for self-service payroll is actually cheaper than Wave’s self-service plan—but since Patriot comes without the perk of free accounting software, we rank Wave higher for its overall affordability. Still, if pricing is your top priority, regardless of your accounting software needs, we can’t recommend Patriot Software highly enough.
On top of its $10 price, Patriot Software offers super affordable add-ons, including HR assistance for $4 per month and time and attendance tracking for $5 per month. If you want the full-service option, the cost bumps up to a $30 base price, which still makes Patriot Payroll one of our cheapest recommendations.
Most user-friendly: Wagepoint
It might seem weird to describe a payroll company’s software as “cute and friendly,” but Wagepoint’s software is just . . . so cute and friendly. Based on the smiley face in its logo and the little cartoons on the payroll dashboard, Wagepoint’s thing is clearly friendliness, ease of use, and simple payroll help. Even better, Wagepoint backs that friendliness up with their price: at $20 a month plus just $2 per employee, Wagepoint’s cutesy software is a steal.
How can payroll software help small businesses?
Once you have employees, you’ll quickly learn how important it is for payroll to be accurate and efficient. Paying your employees, managing benefits, and filing payroll taxes can be difficult and time-consuming. And payroll-related mistakes and delays are potentially costly and damaging to your business.
Both full-service and self-service payroll help ease the burden of having to handle the minutiae of payroll yourself. And although you have to pay for payroll software, the return on your investment is worth it. By freeing up resources and avoiding legal pitfalls, you can focus your time and energy on growing your business and hiring great employees.
Average Salaries Across the US in 2019
Ever been curious about which states have the best pay? Us too. So we compared the average salary in each state to the housing costs to find where salaries go furthest.
(Plus, we thought the median wages could help business owners see the amount of payroll taxes they’ll need to handle properly in each state. See why we recommend payroll software?)
Top 10 states with the best pay
|Rank||State||Median yearly wage||Median monthly rent for 1 BR apartment||Hours of work to afford apartment|
You might have to give up on big-city living to really stretch your salary—all the 10 best states can easily be described as “rural.” But once you know how much further your pay is taking you in these states, will you really miss walking to the corner bodega?
Bottom 10 states with the worst pay
|Rank||State||Median yearly wage||Median monthly rent for 1 BR apartment||Hours of work to afford apartment|
You’re probably not surprised by the bottom 10. After all, cities like Seattle, Boston, and New York City have notoriously high housing prices. Oh, and all of Hawaii too.
In fact, the only surprise is that California didn’t come dead last. In San Francisco, it takes 100 hours to afford a one-bedroom apartment. You’ll do slightly better in San Diego (91 hours), and even better in Riverside (85 hours), but let’s just say it’s no Wyoming.
Look, salaries matter. But they’re not all that matters. Because sure, you might earn more in some states—but you’re not getting more for the money.
To create our ranking, we calculated how many hours at the median hourly wage it took to afford the median one-bedroom apartment in each state. Median wage data comes from the Bureau of Labor Statistics. Median one-bedroom cost was sourced from Zillow.com. Each data point is from 05/2018.
Unless you’re willing—and can afford—to pay an in-house bookkeeper, we recommend most small businesses outsource at least some of their payroll tasks to a third party. Payroll software providers remove much of the hassle, cost, and risk from managing payroll and free you to do what you’re meant to be doing: growing a successful business.
Looking for great accounting software to complement your payroll software? Read through our list of the year’s best accounting software for small businesses.
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.