5 Best Payroll Software for Small Business [2023]

Professional payroll software provides assistance for payroll processing and other, similar HR-related tasks. It includes compensating employees for their work and keeping an accurate record of their attendance, salaries, tax withheld, wage garnishments, tax filings, etc. With the help of these services, employers are also able to run a detailed account of hours worked by each employee, manage their withholdings, and even update an employee’s personal information without needing managerial assistance.

The Best Payroll Software for Most Businesses

Gusto – flexible payroll with the option for automated or manual payroll in all 50 states
OnPay – straightforward payroll software with a simpler pricing structure; affordable for small businesses
Paychex – automates payrolls and assists HR in managing and organizing employee records and critical data
Zenefits – well-rounded, customizable service with automating payroll and employee dashboard
ADP – comprehensive payroll software to fully support HR

Gusto

Gusto is among the best payroll software to automate payrolls for salaried employees, direct deposits, tax fillings, unlimited payroll across 50 states, W-2s and 1099s, and more. Its 3-tier pricing plans come with time tracking and bonus HR-administrative features. It offers health insurance across 36 states. Hence, perfect for building Benefit Packages for your employees.

At $39/month plus $6/employee, its Core Plan offers everything you need to run a payroll. Its usability and top-tier payroll setup are perfect for both new and experienced payroll administrators. Businesses without W-2 employees will find Gusto’s Contractor Plan most beneficial at $6 per payee.

OnPay

OnPay is a fast, cloud-based payroll software with the capacity for unlimited payrolls and customized forms and fields. It runs according to a set schedule, calculates and withholds taxes, fills in tax forms, and automatically disburses wages. On top of that, this online payroll software offers HR features to keep your employees organized. OnPay easily integrates with other existing HR, time-tracking, and accounting software.

A simple price structure with added one-month free trial allows businesses to test OnPay and decide whether it is their ideal choice. After the free trial, it charges $36 per month, $4 per employee.

Paychex

Paychex comes jam-packed with features created to serve a single self-employed person, small, medium-sized, and even MNCs with thousands of employees. You get everything from payroll and HR services to employee benefits, time-attendance tracking, and business insurance. Not only is the software easy to use and integrate, but it also comes with a personalized demo that you can schedule at your time. It is a go-to for businesses that wish to keep an in-house HR team but want more features.

The highlight features of Paychex payroll software include multiple payment methods, automated tax calculations, self-administer payroll, and free payroll-based podcasts and articles. The basic Go plan costs $59 plus $4/employee per month.

Zenefits

Zenefits is SaaS cloud-based HR and payroll management software that may have started recently in 2013. Still, it has gained a massive (loyal) user base in a short time. It bundles HR, payroll, and performance tools with advisory services to become one of the most comprehensive payroll software. With its ability to custom add services, the software is ideal for startups and small businesses.

Zenefits boasts tightly-integrated partner apps that simplify HR administration by reducing paperwork, manual form-filling, etc. The software follows 3-tier monthly pricing that costs $8 per employee for Essentials, $14 per employee for Growth, and $21 per employee for Zen.

ADP

ADP payroll software is a popstar equivalent among all payroll software. It is well-known among small, mid-sized, and large businesses – a fitting choice for those who want to outsource payroll and HR fully. It is a PEO, professional employer organization that will handle the HR side of your business, which includes recruiting, hiring, and onboarding. ADP team will be responsible for any tax filings and deductions problems, freeing your business from any liability for payroll and tax errors.

ADP has a 4-tier, quote-based pricing plan.

What are the Benefits of Payroll Software?

Handling time, attendance, and workers’ compensation can be difficult for even the most experienced business leaders. That’s where payroll software and professional payroll services come into the picture. They take away the stress out of payroll by taking care of managing and processing every single step.

Both big and small businesses can reap the benefits of using payroll software. For some, it can mean saving time; for others, it ensures immaculate records of everything and anything related to employees. To weigh the usefulness of hiring these services, take a look at the most important payroll benefits:

Saves Time and Efforts

Even the best-run businesses can lose precious time under a pile of papers. Hiring payroll services save that time and effort to focus on more strategic objectives with increased efficiency instead of spending hours calculating employee pay and taxes. It, in return, boosts organizational productivity.

Streamlines Records

When in business, maintaining records is everything, be it the attendance chart of your employees or their benefit distribution. Payroll records help you document every pay-deciding detail of each individual employee and more. They can document more than just hours worked and tax deductions by keeping records of employee personal information, direct deposit information, reimbursement forms, and payment information.

Payroll records also include important legal papers like state and local jurisdiction tax documents. With hundreds of personal, financial, and legal records streamlined, you are able to focus on running the business clutter-free. Automating payments also becomes more manageable.

Enhances Accuracy

Accuracy, is perhaps, the most important benefit of using a professional payroll company! When it comes to payroll, it is imperative that employers get their numbers right otherwise they risk landing in trouble with the IRS. With varying pay scales, timesheets, tax rates, coverage, benefits, and voluntary withholdings, payroll can be daunting. That’s where hiring professional payroll services can benefit your company by guaranteeing accuracy so you can ensure that your employees get paid correctly and promptly every time.

Minimizes Regulatory Risks

When it comes to regulatory changes and compliance, payroll processing and tax regulation can be complicated, tedious, and nuanced – remember that payroll processes are subject to several federal, state, and in some instances, local laws.

Some of the many significant laws that an employer has to contend with include the Fair Labor Standards Act (FLSA), Federal Unemployment Tax Act (FUTA), Federal Insurance Contributions Act (FICA), and Equal Pay Act (EPA). Even the simplest mistakes or errors like misclassifying workers (exempt or non-exempt) can lead to steep penalties.

Even the changes that can affect payroll can happen at lightning speed, which makes staying updated and compliant challenging. That’s another reason why hiring payroll experts pays off for small businesses. Their services ensure compliance with regulations and data security against breaches to keep regulatory risks at bay.

Ensures Tax Compliance

One of the most challenging parts of running payroll is accounting for the tax withholdings of each individual employee, depending on their classifications, wage, and other calculations. Before each payday, deductions need to be made for taxes. These include payroll taxes, federal taxes, local taxes, Medicare, Social Security, state unemployment taxes, etc. Failing to account for them can land a company in serious trouble with the IRS. Payroll services make all the necessary tax deductions and garnishments, so the company stays compliant.

Allows Scalability

Businesses are every-changing with old employees leaving and new employees joining. Either way, the complexities of running a business only grow. The companies can also relocate, which means new state and local laws to deal with. National payroll services add scalability to your business by keeping your numbers updated and maintaining multi-state compliance.

Reduces Stress for Business Owners

When experts take care of documentation, a neat, orderly organization of those documents, numbers, regulatory compliance, and even scalability, you feel free to work stress-free. It can translate into better productivity, efficient strategies, new creative ideas, and overall business growth in general. You get to focus on the growth of your business!

Boosts Employee Satisfaction

When hired experts take care of your employee’s wages, they rest assured that the next paycheck will come on time and without any miscalculations. To be absolutely sure that payday is definite, all bills will pay out in time, and there will be no hiccups regarding timely rent boosts satisfaction and confidence in the employee. It can also help build trust for the company and increase the retention rate.

Perfect for New Employers

With their limited experience, new business owners are not expected to the ins and outs of running payroll. These services provide guidance while setting up the payroll system and getting the complicated part of the system smoothly out of the way.

How Does Payroll Software Work?

Payroll software is used by Human Resources in their work but is a lot more than just writing checks or setting up payments via direct deposit. They work by undertaking a variety of tasks and handling varied duties, focused on:

Creating a payroll system, processes, and policies
Collecting necessary employee personal information
Setting up and making adjustments to direct deposit
Implementing a time-tracking system
Review time and attendance sheets of each employee
Approving payroll submissions
Creating and saving payroll records

Running payroll includes several comprehensive steps that make it a complex task in the beginning. But once the upfront work of setting up the payroll finishes, the process becomes more straightforward and somewhat automated using software that many payroll service companies provide.

Most payroll software today is Internet-based, and when a company hires these software providers, the companies provide onboarding and training to show you how to access their platform online. For example, your employees will be shown how to log into the online payroll system each day to clock in and out of their shift and keep accurate records that need to be reviewed and confirmed during the pay period.

What Features Should I Look for in Payroll Software?

Ease of Use

Managing a remote workforce and onboarding new employees is not easy. Therefore, it is best to use payroll software that is easy to set up, follow, and monitor remotely. Your payroll software should have a pleasant user interface (UI) with helpful information quickly and easily viewable in a dashboard.

Payroll Processing Time

It is best to know beforehand how quickly your payroll service process the payroll, after all this is their main function. Most require a two to three-day funding period. This means your payroll needs to be submitted that number of days before the funds arrive in your employee’s bank accounts. Less often, there are some services that offer next-day funding. The difference can depend on the company location, bank, and also employer’s specific business.

Features

The features that must be included in the payroll services include:

Tracking employee time and attendance
Tax deposits and filings
Employee portal for each individual’s personal information
Reporting/analytics (W-2s, W-3s, 941, etc.)
Bank account synchronization

Cost

Depending on the number of features they offer, some payroll services can be more expensive than others. You might also need to pay for setup, customer support, custom development, and data migration. The payments can also vary from being a monthly paycheck or per employee. Usually, there are different pricing tiers to choose from, based on the features and services included in your plan.

Customer Service

We recommend choosing a payroll service that offers 24/7 customer support, with multiple methods of communication available (like email, phone calls, and live chat).

Service Level Agreement

Some payroll services offer a service level agreement that guarantees they will be able to always process your payroll. This type of service is one of the most important functions of your employer-employee relationship, which is why it’s important to understand how reliable your payroll service provider is before committing to them long-term.

How Much Does Payroll Software Cost?

Generally, payroll software providers charge a flat fee per month or payroll run. Standard processing is usually priced on a per-employee or per-check basis, plus the base account fee. Base account fees can vary between $20–$100 per month, depending on the provider. Some payroll services providers also charge a one-time account setup fee.