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The Best Payroll Companies for Small Businesses in 2021

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.

 

Gusto: Best overall

Gusto’s intuitive, comprehensive software lets you run payroll in minutes and automate payroll tax filing. It also offers a full range of workers comp, benefits, and PTO assistance, and it pairs easily with the biggest names in accounting software like Xero and QuickBooks.

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 breaks down its payroll solutions by business size and seamlessly combines payroll and HR. If your business is big enough for a dedicated payroll specialist and full HR support, Paychex might work for you.

Paychex recognizes that payroll solutions for small businesses are different from those with over 1,000 employees. That’s why Paychex tailors its payroll plans by business size: it offers 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 “

 

Best PEO: ADP TotalSource

If you’re looking for a Professional Employer Organization or PEO, to make payroll and HR off your hands, ADP is the best-known brand in the business. In particular, ADP TotalSource takes on all the trickiest, most time-consuming tasks, from filing payroll taxes to managing employees’ 401(k)s.

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 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.

 

Best for budget: OnPay

OnPay is a cheap payroll service provider that still manages to do it all including setting up the service and inputting all your data so you don’t have to. Save time and hassle with OnPay’s automated payroll tax calculation, withholding, and filing services.

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 play 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.

Source: business.org

Square Payroll: Best contractor-only plans

Do you employ contractors only? You can skip the bells and whistles of PEOs and other payroll outsourcing options: Square Payroll doesn’t charge a monthly base fee as long as you’re only paying contractors.

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 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.

 

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.

 

Best Payroll Companies for Small Businesses 2021

Want to spend less time on payroll? A small-business payroll company can help. Read Business.org’s review of the best payroll services, like Gusto.

Outline:

  • The Best Payroll Companies for Small Businesses in 2021
  • Gusto: Best overall
  • Best for midsize businesses: Paychex
  • Best PEO: ADP TotalSource
  • Best for budget: OnPay
  • Square Payroll: Best contractor-only plans
  • What’s the difference between self-service and full-service payroll?
  • Should you use a payroll service or hire an accountant?
  • The takeaway

The 53 Best Payroll Services for Small Business Owners

Managing payroll can be tough for a busy small business owner. Every time you hire someone, there are forms to fill, checks to sign, taxes to pay, regulations to comply with, paid time off to track, and so many more human resources tasks. And if you make a mistake, you could wind up having to pay fines and fees.

Thankfully, there are plenty of payroll companies for small businesses that will take payroll management off your hands. From intuitive apps to accounting firms, you’ve got a huge selection of payroll solutions to pick from.

To help you decide, we’ve compiled a comprehensive guide to the best payroll solutions for small business owners. Here’s our list of the 53 best payroll services for small businesses. We’ll also give you some tips on what to look out for when shopping for a payroll solution.

 

The Best Payroll Services for Small Business

Since there are hundreds of payroll services for small businesses, name recognition and reputation are particularly important. If a fellow small business owner has used a service with good results, then it’s worth looking into for your own company.

That’s why we began our list of payroll companies by speaking to small business owners to find out which payroll companies they use and like. If you don’t want to spend too much time researching and comparing products, purchase one of these payroll solutions:

 

1. Gusto

A popular all-in-one payroll/HR/benefits system, Gusto (previously known as ZenPayroll) is a user-friendly, intuitive package that automates many of the boring, repetitive, and error-prone tasks that HR and payroll management often come with. From basic payroll to 401(k) and workers’ compensation, Gusto gives you everything in one plus, they probably integrate with the software you already use for accounting, time tracking, and benefits administration.

You can try a free demo of Gusto for one month, and afterward, it starts at a flat rate of $39, plus $6 per employee per month. Pretty good for a comprehensive payroll system! Gusto also has a new option for contractor-only employers, who simply pay the $6/employee rate and no base price.

What Small Business Owners Like About Gusto

We have well over 150 clients using Gusto and highly recommend it. Our firm, Kruze Consulting, runs HR and accounting for over 175 venture-backed startups, and we recommend Gusto for several reasons. Federal and state payroll taxes are a BIG deal – Gusto automatically takes care of payroll taxes, so you don’t have to worry. Gusto also has an autopilot feature, so it runs payroll automatically. You want to be busy running your business, not your payroll! Finally, the cost is pretty reasonable; you can get going for $45 per month ($39 base fee plus $6 per employee).

 

2. Intuit QuickBooks Payroll

Most people know Intuit as a provider of accounting software, but they also have payroll solutions for small businesses, Intuit QuickBooks Payroll. They offer three different small business payroll plans ranging from the payroll basics to white glove automated payroll and tax management and a host of combination packages with their popular accounting software, QuickBooks Online Depending on the plan you choose, you will pay either $45, $75, and $125 per month respectively, plus a smaller amount per employee per month. The good news is that you can try any plan for free for 30 days first to make sure it’s what you need (though you won’t get the promotional pricing after the trial). There’s also a payroll option that links up with QuickBooks Desktop for businesses that alread7y use that as their accounting software.

 

3. Square Payroll

If you’re looking for a fast, easy, intuitive, and tech-friendly solution to payroll processing it’s hard to beat Square Payroll, available in all 50 states. This is especially effective for retail businesses that already use Square’s point of sale and hire contractors or hourly employees. Your hourly employees can clock in and out from the Square app, wherever they are, and taxes are taken care of for you. All in all, Square Payroll will run you $29 per month, plus $5 per employee less expensive than many competitors. The price is especially reasonable, given that Square Payroll integrates with a full suite of benefits providers so you and your employees can access health insurance, 401(k), and more.

 

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.

Source: business.org

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.

Source: business.org

What Small Business Owners Like About Gusto

We have well over 150 clients using Gusto and highly recommend it. Our firm, Kruze Consulting, runs HR and accounting for over 175 venture-backed startups, and we recommend Gusto for several reasons. Federal and state payroll taxes are a BIG deal – Gusto automatically takes care of payroll taxes, so you don’t have to worry. Gusto also has an autopilot feature, so it runs payroll automatically. You want to be busy running your business, not your payroll! Finally, the cost is pretty reasonable; you can get going for $45 per month ($39 base fee plus $6 per employee).

Source: fundera.com

What Small Business Owners Like About Intuit Payroll

“I use Intuit Payroll to process payroll weekly. I operate a growing salon with 17 employees and chose Intuit based on ease of use and cost. Ease of use was one of the top deciding factors. I like that I can access and run payroll from anywhere in the world in less than 15 minutes for 17 employees.

QuickBooks Online comes [with the payroll product] at an attractive price, which was my second determining factor when selecting a platform. One downside of the QuickBooks Online version I have is that I need to submit tax forms manually via e-file. There are sometimes issues with this, and I have to manually print and mail documents. But overall, I am very happy with Intuit Payroll / QuickBooks Online and have been using it for over two years now.” – Lucas Renfroe, partner, Roots Southern Salon

 

What Small Business Owners Like About Square Payroll

I researched several options before choosing Square, and they were the most transparent about their pricing and services. Square published all the information we needed on their website. They offer all the services we needed and at a much more affordable cost to us than their competitors. Square won our business by not being painful to get the necessary information and have kept it by making it easy to automate payroll and taxes.

My only complaint about their service is that I can’t schedule my employees to receive their paychecks on the 1st and 15th of each month. Payroll runs on those dates, but the money doesn’t get put into their accounts until a few days later. My employees rent apartments, and their rent is due on the 1st of each month. It would be slightly more convenient for them to know that they’re receiving the money they need for rent precisely as they need it each month.

-Adam Moore, CEO, Training Studio LLC

 

What Small Business Owners Like About Paychex

I started a marketing and branding firm 17 years ago and have used Paychex from the start. The main benefits are convenience and cost. Like many small business owners, I run payroll sporadically (not every other Friday or last Monday of a month). There have been times I needed to do it every few weeks and other periods when I am chasing down checks and need a few more days. They have been flexible and easy to work with over the years.

It is cheaper to pay their fee than hire someone to run my payroll. Also, I have dozens of people all over the place and Paychex gets the tax paperwork out right away in January. Everyone always tells me my tax info is the first one to arrive (thanks to Paychex). Knowing I can depend on them and do not need to manage the situation is great. One less thing on my to-do list.

-Paige Arnof-Fenn, founder and CEO, Mavens & Moguls For a limited time only, Paychex is offering 3 months of free payroll; so if you’re thinking of refreshing your payroll services, now is a great time to get Paychex.

 

What Small Business Owners Like About ADP

We have been with ADP since day one. The real benefit comes from their ability to grow with our small business, a true turnkey solution. They offer payroll, retirement services (401K, IRA, and more), company benefit plans (medical, dental, and vision), and company insurance plans (workers comp, liability, and others). ADP has a user-friendly dashboard and interface. On top of all of this, their customer support is five stars. Over the last ten years, they’ve always gone the extra yard to make sure we’re happy.

-Greg Cruikshank, founder, and CEO, LabRoots

 

The Best Payroll Services for Small Business: What Should You Look For?

There are thousands of payroll services, and choosing the right one for your company can be difficult. But one thing is clear: Even if you have just a handful of employees, it’s better to use a payroll solution than to try to do things yourself. The price for messing up is often much higher than the price of your payroll provider, so this is one situation where a small upfront investment can save you money and time down the line.

While every business is different, and you need to pick the right solution for your particular needs, there are a few factors to keep an eye out for when shopping around for the best payroll service for your business.

 

How Do Payroll Services Work?

Payroll services handle all of your payroll processing and payroll tax needs. An online payroll service calculates how much each employee should be paid based on their pay rate and required deductions.

Most employees have a choice to be paid by direct deposit, paper check, or prepaid debit card; based on each employee’s chosen method, the payroll service makes the appropriate payments. It is important to note that the money the payroll service uses to pay the employees comes out of the employer’s bank account. Typically, the money is withdrawn from the business’s account on selected days before the final payments are made to employees.

The other critical task payroll services handle is ensuring adherence to payroll tax requirements. Payroll services withhold the proper amounts from each employee’s paycheck and determine how much payroll tax the employer is responsible for. Besides, the payroll service fills out the necessary paperwork. Finally, the payroll service files the required paperwork and makes the payroll tax payments directly to the proper federal, state, and local agencies.

Payroll services can also handle other tasks, such as filing new-hire reports with the state, managing PTO, and overseeing benefits administration.

Key takeaway:

Payroll services handle all payroll calculations, payments, and tax requirements.

 

What other benefits does payroll software provide?

There are several big benefits of using comprehensive online payroll solutions. One major plus is its efficiency. You don’t have to hire someone to handle all of your payroll needs, because pretty much anyone can use the software. In most cases, all you need to do when running payroll for each pay period is to enter the hours each employee worked and any bonuses or commissions they earned. The software does the rest for you: It calculates the pay amounts, withholds the proper deductions, and automatically deposits the money into each employee’s bank account.

Another benefit is that the payroll company takes care of the tax filings and payments for you. Most offer a tax guarantee, so if the payroll service makes a mistake when filing or paying your taxes, the company will fix the problem and pay any fines you incur.

 

What is online payroll software?

Online payroll software and online payroll services are essentially the same things. The payroll software is the cloud-based solution provided by the online payroll service provider; the software is what you technically interface with to run the payroll and add new employees to the system. Most online payroll software is easy to use and allows you to process payroll in minutes.

 

How long does payroll take to process?

This varies by payroll provider, but many payroll services complete the process within two days. This means that payroll administrators need to submit the final payroll numbers two days before payday.

How can you save money on the payroll?

To save money on payroll, consider outsourcing your payroll tasks. When managing it yourself, you may not do it correctly or on time – and mistakes or late processing can result in hefty penalties and fines. You may also consider looking for a free payroll service. However, most free payroll services don’t offer all of the features and tools paid offerings to do.

Using a time-and-attendance system is also a way to save money on your payroll because it helps ensure you aren’t paying employees for time they didn’t work. When using a paper timesheet, employees can easily add a few minutes that they didn’t work. Paying employees for a few minutes they didn’t work might not seem like a big deal, but if this becomes a habit, the costs can add up. A digital time-and-attendance system forces your team to input exact times, which keeps you from overpaying your staff.

Source: businessnewsdaily.com

How We Evaluated the Best Payroll Services

We reviewed pricing, payroll processing support, HR tools, and employee benefit options to help you find the right payroll solution. We also researched customer reviews to help ensure our results were reliable.

Lower cost and/or high value for the price options considered Ease of use:

Easy to understand how the service works and who can assist you Time import:

Able to import hours from a timekeeping system or has one built-in Payment options:

Can pay using direct deposit or pay cards in addition to checks Taxes:

Processes all federal, state, and local payroll taxes and generates year-end tax reports Year-end:

Issues year-end W-2s and 1099s for free vs extra fees Benefits:

Ability to add on Affordable Care Act (ACA)-compliant benefits like health insurance HR consulting:

Has add-on HR consulting services with access to licensed experts Customer support:

Receives top reviews for setup, service, and ongoing support Software integration:

Can share data with accounting, HR, or other software programs If you don’t need all these features in your payroll service, consider free payroll software options instead. They’ll calculate earnings, deductions, and payments, but you’ll have to do payroll yourself–manage your own state new hire reporting, tax filings, and HR compliance.

Based on the features above, we recommend Gusto as the best payroll service for small businesses, because it automates your payroll process at no additional cost. Tax calculations and payments are handled on your behalf, and your employees can access a self-service portal to view and update their data as well as see their pay stubs online.

Source: fitsmallbusiness.com

What Gusto Is Missing

There’s not much missing from Gusto, except that it isn’t currently able to offer group health benefits in all 50 states like some of Gusto’s competitors. At last count, it offers benefits in 26 states plus Washington D.C., but it continues to work on adding more. Gusto also doesn’t offer a PEO option like ADP, and it doesn’t have features like an applicant tracking system (try Paycor if you need this feature). If you want those at some point, you may outgrow Gusto.

 

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