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
Most User-FriendlyNo-penalty guaranteeEasy accounting software integration
Most AffordableAffordable $20 base feeWorkers compensation coverage
Best for Payroll with HRAll-in-one payroll and HR softwareUnlimited payroll runs
Best ReportingOver 160 custom reports with some plansNew-hire reporting
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||Yes||1 mo.||View Plans|
|QuickBooks Payroll||$35||$4||No||30 days*||View Plans|
|Payroll by Wave||$20||$4||No**||30 days||View Plans|
|RUN Powered by ADP||Contact for quote||Contact for quote||Yes||No||View Plans|
|Paychex Flex||Contact for quote||Contact for quote||Yes||2 mos.||View Plans|
Best overall: Gusto
- 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
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.
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 9.5 out of 10 from 1,122 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.
Best interface: QuickBooks Payroll
- No-penalty guarantee
- Seamless QuickBooks Online integration
- Easy-to-use interface with low learning curve
- Expensive payroll plans
- Limited mobile app capabilities
QuickBooks, long known for providing high-quality accounting software, offers two payroll plans. Although its payroll software isn’t the cheapest and has some rough edges, we still think it’s a solid choice.
First, a word of warning: QuickBooks’ Self Service Payroll plan—a monthly subscription starting at $35 plus $4 per employee—gives you only the most basic payroll features, including direct deposit and unlimited payroll runs. You don’t get automatic tax filing, W-2 access, or a no-penalty guarantee (more on that below).
Self Service Payroll can work for very small businesses with two or three employees. But if you want a better bang for your buck, we recommend the QuickBooks Full Service Payroll plan, which starts at $80 plus $4 per employee per month.
Self-service payroll refers to software that lets you run payroll yourself. You enter all the employee payroll information, the software crunches the numbers, and you distribute employee paychecks and file payroll taxes yourself.
Full-service payroll refers to payroll software supplemented by a team of off-site professionals who calculate and file your payroll taxes, distribute W-2s, deposit employee paychecks, and tackle other payroll-related services.
With the Full Service Payroll plan, you get the self-service features plus automatic W-2 and payroll tax filing, assisted setup, and a no-penalty guarantee, which means QuickBooks accepts responsibility for any tax-related issues or errors. If a problem arises, you won’t have to deal directly with the IRS or pay penalties—QuickBooks does it all for you.
No matter which plan you choose, you can look forward to a super intuitive interface. The QuickBooks Payroll dashboard is clean, simple, and easy to use with a low learning curve. And the easy integration between payroll and the larger QuickBooks Online makes QuickBooks Payroll a good choice if you already use QuickBooks’ cloud-based accounting software.
Unfortunately, QuickBooks has a dreadful customer service reputation. Thanks to the smooth interface, you hopefully won’t have to contact customer care very often—but if you do, just know you could be waiting a while for some less-than-helpful advice.
- No contracts or commitments
- Full-picture visibility into your business’s finances
- Results-oriented approach to support growth
Most affordable: Payroll by Wave
- 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 (8 states only)
- Fewer customization options
Wave is also among our top picks for best accounting software and best accounting apps—because it offers a fantastic range of accounting services while still being absolutely free. And 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 its self-service payroll plan, which costs $20 plus $4 per employee per month.
Like QuickBooks’ self-service plan, Wave’s plan includes quick and simple employee payments. Unlike QuickBooks’ self-service plan, Wave’s includes workers compensation coverage, W-2 and 1099 tax form preparation, and (it’s harsh but so true) actually good customer service. That’s quite a load of features for just a $20 base fee.
Wave’s full-service plan is available in only eight states (California, Florida, Illinois, New York, North Carolina, Texas, Virginia, and Washington). Full-service payroll from Wave costs $15 more than self-service, but that’s a pretty low price for a team to file your local, state, and federal income taxes with a 100% accuracy guarantee. Plus, both plans keep your cost-per-employee fee low at $4 per employee and $4 per contractor—two bucks cheaper than Gusto.
Basic for payroll + HR: RUN Powered by ADP
- Unlimited payroll runs
- Basic HR features in every package
- No-penalty guarantee
- No online pricing
- No wage garnishment with cheapest plan
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.
Best reporting: Paychex Flex
- Thorough payroll and HR features
- 160*& custom reports with top plans
- New-hire reporting with every plan
- No online pricing
- No paper check payments with cheapest plan
Paychex Flex offers cloud-based payroll and human resources software to small businesses who really need the help but don’t want to deal with full-on HR outsourcing. That sounds a lot like some of the other options we’ve listed here, so what sets Paychex apart?
For one thing, new-hire state reporting, automatic payroll tax filing, and even an employee financial wellness program come with every plan, even the cheapest.
For another, most of the software options we’ve listed include a report or two—or even a few dozen—for easy export. But 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. Custom analytics and reports are available with only the most expensive plan.
How expensive is expensive? Great question—one we wish we could answer. Like RUN Powered by ADP, Paychex Flex doesn’t list its prices online, so it’s a good bet that Paychex costs more than some of our other payroll recs.
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.
More payroll software solutions for small businesses
We gave you our top five recommendations above, but we know the payroll software and service market is a crowded one. After sifting through myriad providers, we found five more small-business payroll solutions worth considering.
We’ve reviewed Square’s mobile credit card readers and retail point-of-sale (POS) system, and they both got top marks from us. Square’s payroll services also deserve high marks, in big part thanks to a super cheap starter plan for contractor payrolls.
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 POS solutions. Employees can use Square terminals or the mobile app to clock in and out, and POS data is seamlessly synced with the payroll service.
With a monthly base price of just $10 plus $4 per employee, Patriot Payroll’s Basic plan for self-service payroll comes in as the cheapest on our list of providers. More software choices, including HR assistance and time and attendance, make for easy, affordable add-ons ($4 per month for HR and $5 per month for time and attendance).
Want the full-service option? The cost bumps up to a $30 base price, which still makes Patriot Payroll one of our cheapest recommendations.
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.
From here, you’ll need to decide which more advanced features you need—and are willing to pay for:
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, so if you’re looking for custom help at the reasonable starting price of $36, OnPay is a great place to start.
Heartland offers a range of payroll features to small and midsize businesses, and it packages these features with its accounting and payment processing services—which makes Heartland great for businesses that want accounting and POS and payroll help. However, despite claiming to be “transparent” with its pricing, Heartland doesn’t list any pricing information online.
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.