6 Best Payroll Services for Small Businesses
Check out these top-rated payroll services.
- March 18, 2020
- Small Business Finances
- 11 min read
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Payroll is one of the most fundamental aspects of any business with employees. Even if you’re a sole proprietor with no employees, having a functioning payroll that tracks your wages and the taxes you owe is extremely important when running your business.
Not surprisingly — since payroll is a basic need of most businesses — many payroll services, platforms and software are available. Free payroll services are available, but if you’re a serious small-business owner, you should consider shelling out the money for a paid payroll service.
To help you choose a payroll service, Seek Capital analyzed several of the most popular paid payroll services available based on the following factors:
- Pricing: Including any base fees and per employee fees charged
- Mobile accessibility and functionality: Including what payroll tasks can be done on a mobile device and ease of use
- Customer service: Including 24/7 support and available channels, such as phone, chat or email
- Added value services: Including the capability for HR support, workers’ compensation plans, 401(k) plans, health insurance and similar
- Tax administration: Including automatically tracking, filing, withholding and making deductions, plus the management of relevant documents like W-2s and 1099s
Some important points and patterns emerged from Seek Capital’s analysis of the best payroll services. One of the basic points of distinction among payroll services is if they charge per month or per payroll you run.
The providers that have monthly charges allow unlimited payroll runs each month. Among the best payroll services in this study, OnPay, Square Payroll, Intuit QuickBooks Payroll and Gusto all have monthly fees, whereas ADP and Paychex are structured on a per payroll basis.
Another important difference between various payroll services are the types and levels of plans. Some payroll services, such as OnPay and Square Payroll, have only one standard payroll service plan. Gusto offers three plans for employees, plus one for contractors. And Intuit QuickBooks has three payroll plans. ADP and Paychex have multiple levels of payroll service plans, with substantially more services and infrastructure available, as well as customized pricing for each business.
Besides the monthly or per-payroll costs, some payroll companies charge for services like setting up the system and completing tax filings. Fortunately, all the best payroll services in the study offer full, automated tax administration at no additional charge.
Here is a breakdown of the costs of each of the best payroll services:
- OnPay: Costs are $36 per month, plus $4 per employee.
- Square Payroll: Costs are $29 per month, plus $5.
- Intuit QuickBooks Payroll: Costs are $45 to $125 per month base fee, plus $4 to $10 per employee per month; this is a standalone payroll service, not including QuickBooks accounting.
- Gusto: Costs range from $39 to $149 per month, plus $6 to $12 per employee.
- Paychex: Costs are customized for each business.
- ADP: Costs are customized for each business.
With the pricing covered, read on to find out what category each payroll service ranked the best for. Keep in mind that there’s no hard-and-fast “best” service. Instead, there are payroll services that may fit the needs of some businesses better than others.
For example, a super affordable payroll service might be ideal for a very small business. However, medium-to-larger-sized businesses might want to opt for a payroll service that can provide a full suite of options, including health benefits and HR support.
OnPay is an excellent choice for small businesses because it can manage all payroll and payroll tax needs. You have the ability to run payroll an unlimited number of times a month, something which many other payroll services will charge you for each time.
Through OnPay, you can pay by direct deposit, debit cards or print your own checks and automatically file W-2s and 1099s. The software handles unemployment insurance withholding and payroll across multiple states. It also can integrate with accounting and time-tracking features. What’s more, OnPay can manage special payroll services depending on your type of business, such as for restaurants, farms, nonprofits and 500-plus employee companies.
OnPay has one price plan for its payroll software: $36 base fee plus $4 per month per person. Based on calculating out the cost of having nine, 20 and 100 employees for OnPay and each other payroll service’s basic plan, OnPay is the most affordable payroll service per month across the board. No hidden fees apply, and what’s included in the base fee is extensive, such as unlimited payroll runs, tax filings and payments in all 50 states. Additionally it offers live customer support by phone, chat or email.
To set up your OnPay account, you’ll go through their self-enrollment process. Over the course of seven steps, you’ll fill out basic company information, including owner or officer information. You’ll also complete Form 8655 to give OnPay authorization to report and file all your payroll taxes. Additionally, you’ll provide information about company bank accounts, pay schedules, work locations and authorize bank account verification.
OnPay has one of the most useful and organized help pages on its website, out of all the best payroll services. As a new user to OnPay, it walks you through every step of the setup process, as well as general use of the service.
OnPay also provides a convenient Onboarding Checklist, which lays out all the information you need — such as federal employer ID number, state withholding and unemployment tax IDs, IRS Form 8655 — plus detailed steps for setting up pay schedules, adding employees, preparing your first payroll and additional items.
Square Payroll is brought to you by the same company that was one of the trailblazers of mobile payment acceptance, Square. Square Payroll only has one pricing plan, which includes a $29 per month subscription cost, plus $5 per person per month. If you’re paying contractors, then there’s no subscription fee, just a $5 per contractor per month charge.
Square offers a full-service payroll service that is very easy to set up. You enter your company’s information, add each team members’ information or invite them to set up their own accounts and then run payroll. Square Payroll handles all tax filings and withholdings. Plus, you get unlimited payroll runs per month at no additional cost.
Square Payroll is especially useful for small businesses who are already using a Square point-of-sale system. When you have the Square POS app, you can integrate with Square Payroll to automatically import employee time cards. It can also calculate and pay out credit card tips processed through Square. Through the Square Payroll app, you can run payroll on your mobile phone or tablet, either through iOS or Android.
As with other payroll services, you can get add-ons to manage critical employee-related benefits like health insurance, workers’ comp plans, 401(k) retirement plans and pretax benefits. These services come at an extra cost, but you can conveniently activate them through the Square Payroll platform.
For instance, you can get a health insurance quote for your business from Square’s partner SimplyInsured right through the Square Payroll dashboard. For establishing 401(k) plans, you can set up retirement plans via Square’s partner Guideline, at a base cost of $39, plus $8 per employee monthly.
Intuit QuickBooks Payroll provides businesses of all sizes with payroll and related tax services. With this payroll service, you won’t need to install any software since it is a cloud-hosted service. You can get QuickBooks Payroll as a standalone service, or you can add it on to QuickBooks if you already are using it for accounting.
With QuickBooks Payroll, employers log in to the system to run payroll, calculate paychecks and taxes and view payroll reports. Meanwhile, employees can view their pay stubs, pay history and the amount of paid time off accrued.
QuickBooks Payroll allows you to run unlimited payrolls, automatically handle tax filings and withholdings, as well as manage garnishments and deductions. Here are the payroll plans Intuit Quickbooks offers and their prices:
- Core: $45 per month base fee plus $4 per employee per month
- Premium: $75 per month base fee plus $8 per employee per month
- Elite: $125 per month base fee plus $10 per employee per month
According to the Quickbooks website, the Premium plan is the most popular. The Core plan has full-service payroll, including automated tax and forms, as well as next-day direct deposit. The Premium plan adds on same-day direct deposit, worker’s comp administration, HR support center and mobile time tracking. Elite adds a few more features that are useful — but perhaps not worth the additional $50 a month. The Core plan covers most things employers need, but it doesn’t include workers’ comp administration. You’ll need to go up to the Premium plan for that.
QuickBooks Payroll offers extra services you can add on to your plan, but some of the extras feel like they should be covered by a plan. For instance, to do 1099 e-Filing, you’ll have to pay at least $14.99 to file up to three 1099 forms. To add workers’ comp, you can get a free quote from Intuit QuickBooks’ partner AP Intego for pay-as-you-go workers’ comp insurance. A $5 fee monthly fee applies if you decide to use Intuit Workers’ Comp Payment Service.
Gusto is a great choice for small businesses with its variety of plans, with even the most basic plan covering all the essential payroll services you’ll need. Sole proprietors who use independent contractors might especially like Gusto. Gusto’s Contractor plan allows you to run payroll at only $6 per person with no base price.
With Gusto, it’s very easy to add on additional, useful benefits like pay-as-you-go workers’ comp plans and health benefits. These benefits require no administration fees, and you pay only for premiums. You can also add on 401(k) plans and 529 college savings with no setup fees.
To run payroll with Gusto, you can log in to the system anywhere where you have internet access, enter the amount of hours employees worked, plus any paid time off and bonuses or commissions earned, and then click the “Submit Payroll” button. It’s a straightforward platform to use that you can try out for free for one month. Below are the Gusto plans and pricing:
- Concierge: $12 per person plus $149 per month base price
- Complete: $12 per person plus $39 per month base price
- Core: $6 per person plus $39 per month base price
- Contractor: $6 per person and no base price
One thing that’s great about Gusto is that its Core plan really does cover all the essentials you need, rather than being used to upsell. The Core plan includes full-service payroll — including unlimited payrolls, tax filings and payments, state and federal unemployment insurance and direct deposit — plus health benefits administration and workers’ compensation administration.
The higher-level plans come with useful additions, like e-sign custom documents, time management tools, employee directories and employee surveys. But if you really want just a full-service payroll plan, then Core is excellent.
Paychex is one of the best payroll services available for larger businesses and organizations. With Paychex, businesses can enter and submit payroll information online, and pay their employees by direct deposit, check or pay card. If you choose paper checks, Paychex can print and mail them to you, or you can print them yourself. Paychex is one of the largest payroll providers in the nation.
Paychex offers four different payroll service plans. Since Paychex pricing is customized for each business, there’s no concrete figure for plan prices. The way it works with Paychex is that you send it the number of employees you’ll need payroll service for, and Paychex provides a custom quote. Here’s a look at the four different plans and what they offer:
- Express Payroll: This is the most basic plan and includes all payroll tax administration, new-hire reporting, a free mobile app, 24/7 phone and chat customer support, an employee financial wellness program, direct deposit or paycards, and employment and income verification services.
- Paychex Flex Select: This is the most popular payroll plan for small businesses. It includes everything in Express Payroll plus you get a dedicated payroll specialist, labor compliance poster kit, additional employee pay options and the Paychex Learning Management System to keep your employees educated and engaged with your business.
- Paychex Flex Pro: This plan includes everything in Paychex Flex Select plus general ledger service, workers’ compensation reporting, state unemployment insurance services, analytics and reporting, wage garnishment service, Paychex Flex Onboarding Essentials (to enable employees to complete their new-hire documentation on their own) and Paychex Employee Screening Essentials.
- Paychex Flex Enterprise: This is the most popular payroll plan for enterprise-level businesses. It includes everything in Paychex Flex Pro, plus custom analytics and reporting and Paychex Flex HR Administration.
Since Paychex offers so many services and customized pricing, it is arguably best suited for larger businesses. Also, some of the basic or standard plans from other payroll services include functions like state unemployment insurance tax services. With Paychex, however, Paychex Flex Pro is the first plan level that offers this service.
ADP is one of the most widely used payroll and HR platforms in the country and around the world. ADP is also one of the oldest names in the industry for handling company payrolls, tax filings and HR needs. ADP offers specified payroll platforms for small, midsize and large businesses. As such, its pricing is customized based on each business, so there’s no clear base or per-person price unless you get a quote.
ADP payroll services are designed based on your small business’ size. For businesses with one to 49 employees, ADP offers Small Business Payroll. For businesses of 50 or more employees, ADP offers Full-Service Payroll. ADP has four different payroll packages for Small Business Payroll.
- Essential Payroll: This plan includes full-service payroll and tax administration, including direct deposit, general ledger interface, new-hire reporting, W-2s and 1099s, tax filing, ADP employee access, new-hire onboarding and employee discounts.
- Enhanced Payroll: This plan includes everything in Essential, plus check signing, state unemployment insurance, ZipRecruiter and background checking.
- Complete Payroll and HR Plus: This plan includes everything in Enhanced, plus HR HelpDesk, employee Handbook Wizard, HR tracking, HR forms and documents.
- HR Pro Payroll and HR: This plan includes everything in Complete Payroll and HR Plus, as well as enhanced HR HelpDesk support, enhanced employee handbook support, employer and employee trainings, sexual harassment prevention training and legal assistance from LegalShield.
ADP’s Full Service Payroll for mid-to-large-sized businesses includes all the features found in Small Business Payroll plus the capability for much more, including software integration and ADP Comprehensive Services.
Perhaps the biggest draw of using ADP for payroll is the HR services you can get access to. These HR services will cost you more to activate, but ADP’s HR services are extensive and well-respected. This makes ADP payroll services ideal for businesses who may want more than just payroll.
Choosing the payroll service for your business depends most heavily on the number of people you employ and your specific business needs, which can vary significantly from business to business. And really, your business needs can easily trump considerations about the size of your business. For example, if your business only employees 10 people, but you want substantial, built-out HR support, then ADP might make the most sense. Your business could also already be using QuickBooks accounting, so Intuit QuickBooks Payroll may be the logical choice. Or perhaps you want your payroll integrated with your POS system because you own a coffee shop, which could make Square Payroll the best choice. The key to choosing the best payroll service is to evaluate your business needs first, identify which services satisfy them and then determine if those services are worth the cost.
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