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The best payroll service provider or software will differ from business to business. Different solutions cater to different needs and the market offers enough variety for any business owner to find the right solution for their business.
However, searching for the right solution can be difficult considering the complexity of different software. We’ve selected a handful of payroll services for small businesses that could allow you to efficiently manage your payments.
What is a payroll service provider
Payroll can become one of your biggest responsibilities once your business begins hiring employees. Besides paying wages, you must calculate how much to collect from employees’ paychecks for insurance premiums, retirement contributions and tax withholdings.
Processing payroll can be complex, and it’s important that all components are accurate to comply with federal and state requirements. To make life easier for small business owners, payroll services are available to help you streamline the process. Best payroll services for small businesses Processing payroll requires you to collect documents from employees that indicate their preferred tax withholdings and other deductions. You would then rely on those documents to take the correct amount before paying employees, then send the deductions to the proper tax authorities, insurance companies and benefits providers.
We’ve chosen the best payroll services for small businesses, based on the following criteria:
- Payroll companies offer online services
- Payroll service providers list prices online
- Affordable options offered for small business payroll services
QuickBooks Online customers can add payroll services via the accounting software. You can choose self-service or full-service payroll depending on your budget and business needs. QuickBooks’ self-service payroll helps you calculate paychecks, pay employees, and calculate and file year-end forms. It also allows you to send custom invoices, track income and expenses, and create and manage estimates. With the full-service option, QuickBooks files payroll taxes on your behalf. It also provides same-day direct deposit and a guarantee of error-free paychecks and tax calculations. You can set up and run your first payroll in about an hour, with the option to run it through QuickBooks’ free mobile app.
QuickBooks Online with self-service payroll has an introductory rate of $27 a month, plus $4 per employee per month, for three months. After the promo period, it would cost $55 a month (plus the per-employee fee). If you choose QuickBooks Online with full-service payroll, you’ll pay $50 a month, plus $4 per employee per month, for three months. The price then rises to $100 a month (plus the per-employee fee). If you switch from another payroll service provider, QuickBooks will handle the data transfer on the full-service plan.
Gusto’s online payroll service automatically pays local, state and federal payroll taxes for you, and files IRS forms, such as W-2s and 1099s. It allows for flexible direct deposit payment schedules for employees, such as weekly, biweekly or monthly. You could set up automatic adjustments for child support garnishment or tips. You could pay employees different rates based on their work each pay period. For employees who want to make charitable donations, Gusto can directly deduct contributions.
Its payroll service starts at $39 a month, plus $6 per employee per month, for the Core package. A Complete package is available for $39 a month, but it costs $12 per employee per month. This comes with additional HR tools like employee onboarding and time-off requests. Gusto’s highest-tier package, the Concierge plan, costs $149 a month plus $12 per employee per month. It comes with an HR resource center and help from certified HR experts. You can try Gusto for free for a month.
Square’s online payroll service allows you to process payroll automatically for salaried and hourly employees. You can track employee hours and import time cards and tips using the free Square Point of Sale app or other partners. Square files and distributes W-2 and 1099 forms to employees, and handles tax withholdings and filings. You could choose to distribute employee paychecks manually or through direct deposit. You can run payroll from your phone with an app.
Its payroll service costs $29 a month, plus $5 per employee per month. If you’re only paying contractors, you’d pay $5 a month per contractor without the additional subscription cost. You could bundle payroll with other software from Square, such as an invoice service, to create a custom solution for your small business.
Wave’s online payroll service lets you pay employees and contract workers through direct deposit. It will also generate W-2 and 1099 forms for tax season. Wave can automatically file state and federal payroll taxes in six states: California, Florida, Illinois, New York, Texas and Washington. Business owners in the remaining 44 states have to file payroll taxes themselves.
In the six full-service states, Wave charges a monthly $35 fee for payroll service, plus $4 per employee or contractor per month. The service costs $20 a month in the other states, plus $4 per employee or contractor per month. Though Wave does not file payroll taxes in those states, it would provide guidance to show you what information to file and how much to pay. You can try Wave for free for up to 30 days.
Online payroll from OnPay allows you to automate tax payments and filings, process and distribute W-2 and 1099 forms, and pay employees through direct deposit, prepaid debit cards or checks. It would handle any payroll-related issues that arise with the IRS, including any resulting fines. OnPay also provides HR features, such as self-onboarding for new employees and time-tracking software.
After a one-month free trial, OnPay charges a fee of $36 a month plus $4 per person per month. It doesn’t charge a fee to cancel after the first month — or any other additional fees. OnPay does offer 401(k) plans for employees at an additional cost. And if you decide to have your W-2s printed and mailed to you, it would cost $5 per form plus shipping. The self-print option is free.
What to consider when choosing a payroll service
Your choice of payroll service provider would depend on your priorities as a business owner. Whether you want a service that’s affordable, fast or easy to use, consider these factors before making a purchase.
- Cost: Look beyond the advertised price to see if the company charges extra fees for things like setting up the service, generating tax forms, amending payroll errors, paying employees in multiple states or getting help with IRS issues. Understanding extra fees would give you a better sense of the total cost of the service.
- Features: Consider features outside of standard payroll tasks like paying your employees and filing taxes. Some payroll services may be able to onboard employees, administer benefits or handle reimbursements and other payments.
- Support: Check out how much support the company offers to customers. Be sure to choose a company that would provide help when you need it, whether that’s via phone, email or online chat.
- Functionality: Make sure the payroll service you select can track and maintain data in an efficient manner. You should be able to easily import and organize information in a way that works for you.
- Employee experience: Remember, the payroll service would be responsible for sending your employees’ paychecks and IRS forms. Consider the speed at which employees would get paid and how they would receive their checks.
As you expand your team of employees, your payroll responsibilities will increase. Making sure you simultaneously pay employees their wages, submit the accurate amount to the IRS and withhold contributions to benefit plans can be overwhelming and time-consuming. Consider purchasing a payroll service to make the process less cumbersome. You could spend less time processing payroll, freeing you up to focus more energy on other areas of your business.