The best payroll software for small business

Choosing the best payroll software for your small business is a critical decision that impacts not just your financial health but also your team’s morale and your compliance with various regulations. For many small businesses, Gusto consistently emerges as a top contender, offering a user-friendly interface, comprehensive features, and excellent customer support that make the complex world of payroll straightforward. However, the “best” truly depends on your specific needs, budget, and the complexity of your operations. This guide will walk you through what to look for and highlight leading options, ensuring you make an informed choice that aligns with your business’s values and operational efficiency.

Navigating the Payroll Landscape: Why Software is a Game-Changer

For small business owners, payroll can feel like a labyrinth of regulations, calculations, and deadlines. It’s not just about paying employees. it’s about withholding taxes, remitting to the right agencies, tracking benefits, and staying compliant with ever-changing laws. Manual payroll, while seemingly cost-effective initially, quickly becomes a time sink and a magnet for costly errors. Research by the American Payroll Association APA indicates that businesses with fewer than 50 employees spend, on average, 8 hours per payroll period on administrative tasks related to payroll. This time could be better spent on growth, innovation, or serving customers.

The Hidden Costs of Manual Payroll

Many entrepreneurs underestimate the true cost of doing payroll by hand or using outdated methods. It’s not just the hours spent.

It’s the potential for penalties, missed opportunities, and administrative headaches.

• Time Consumption: As mentioned, the sheer time commitment can be overwhelming. Every minute spent on manual calculations, double-checking entries, and generating reports is a minute not spent on core business activities. A 2023 survey by Xero found that small business owners spend an average of 12% of their workweek on administrative tasks, with payroll being a significant component.
• Error Proneness: Humans make mistakes. A misplaced decimal, a forgotten deduction, or an incorrect tax rate can lead to underpayments, overpayments, or non-compliance. The IRS imposes penalties for incorrect or late payroll tax filings, which can range from 2% to 15% of the unpaid tax, plus interest.
• Data Security Concerns: Manual record-keeping or reliance on spreadsheets can expose sensitive employee data to security risks. A single data breach could have devastating consequences, not just financially but also for your reputation.

The Benefits of Adopting Payroll Software

Automated payroll software eliminates these pitfalls, transforming a daunting task into a streamlined process.

• Accuracy and Compliance: Software automates calculations, applies the latest tax rates, and ensures deductions are correct. Many solutions offer built-in compliance checks and alerts, significantly reducing the risk of errors and penalties.
• Time Savings: What once took hours can now be completed in minutes. This frees up valuable time for strategic tasks, employee development, or even personal well-being. A study by ADP reported that small businesses using their payroll software saved an average of 4 hours per payroll cycle.
• Enhanced Employee Experience: Accurate and on-time payments, easy access to pay stubs, and clear benefit information contribute to higher employee satisfaction and retention. Employees value transparency and reliability when it comes to their earnings.
• Integration Capabilities: Many payroll software solutions integrate seamlessly with accounting software like QuickBooks or Xero, time tracking systems, and HR platforms, creating a unified ecosystem for managing your business operations. This eliminates duplicate data entry and provides a holistic view of your financials.
• Scalability: As your business grows, payroll software can scale with you. Whether you hire one new employee or a dozen, the system can easily accommodate the changes without a significant increase in administrative burden.

Key Features to Prioritize in Payroll Software

When evaluating payroll software, it’s crucial to look beyond the flashy marketing and focus on features that genuinely matter for your small business.

Think about your current needs and anticipate future growth.

Essential Payroll Processing

At its core, payroll software must execute the basics flawlessly.

This includes more than just calculating gross pay.

• Automated Tax Filing and Remittance: This is arguably the most critical feature. The software should automatically calculate, withhold, and submit federal, state, and local payroll taxes Social Security, Medicare, FUTA, SUTA, income tax. Look for solutions that handle Year-End W-2 and 1099 form generation and e-filing. This ensures compliance and removes a massive administrative burden. Data from the IRS shows that businesses with accurate and timely e-filings face significantly fewer audit flags.
• Direct Deposit: The vast majority of employees prefer direct deposit. The software should facilitate secure, timely direct deposits into employee bank accounts. Some providers offer multiple direct deposit accounts per employee, allowing them to split their paychecks for savings or other purposes.
• Garnishments and Deductions Management: Whether it’s child support, medical insurance premiums, 401k contributions, or other pre-tax and post-tax deductions, the software must handle these complex calculations and remittances accurately. The ability to manage various types of deductions, including flexible spending accounts FSAs and health savings accounts HSAs, is a significant plus.
• Multi-State Payroll Capability: If you have employees in different states, your payroll software needs to handle the varying tax laws and reporting requirements for each state. This becomes particularly important as remote work becomes more prevalent. According to the National Conference of State Legislatures NCSL, states regularly update their tax reciprocity agreements and withholding rules.
• Off-Cycle Payroll Runs: Life happens. You might need to issue bonuses, commissions, or correct an error with an off-cycle payment. The software should allow for easy, ad-hoc payroll runs without disrupting your regular schedule.

Employee Management and Self-Service

Empowering employees with self-service tools can drastically reduce inquiries to HR and improve the overall employee experience.

• Employee Portals: A secure online portal where employees can access their pay stubs, W-2s, update personal information, and view time-off balances is invaluable. This significantly reduces administrative overhead. Gusto, for example, reports that employee self-service portals cut down HR-related questions by up to 30%.
• Time Tracking Integration: While some payroll solutions have built-in time tracking, others integrate seamlessly with popular third-party time tracking apps. This ensures accurate hourly wage calculations and simplifies overtime management. Look for features like GPS tracking for mobile employees and geofencing to ensure employees are clocking in from authorized locations.
• Onboarding Features: Streamlining the onboarding process for new hires, including collecting necessary forms W-4, I-9, setting up direct deposit, and managing benefits enrollment, can save significant time. Solutions that offer digital signature capabilities for these forms are a definite advantage.
• Benefits Administration: For businesses offering health insurance, retirement plans, or other benefits, integrated benefits administration can simplify enrollment, deductions, and reporting. Some software even acts as a broker, helping you find and manage plans. A recent survey by Kaiser Family Foundation found that over 70% of small businesses consider benefits administration a significant challenge.

Reporting and Analytics

Robust reporting capabilities offer insights beyond just payroll, helping you make informed business decisions. Payroll processing software for accountants

• Customizable Payroll Reports: You should be able to generate reports on various aspects, such as payroll history, tax summaries, departmental costs, and gross-to-net reports. The ability to customize report fields and export formats e.g., CSV, PDF is essential for flexible analysis.
• Labor Cost Analysis: Understanding your labor costs per department, project, or employee helps with budgeting and resource allocation. Software that provides detailed breakdowns of wages, taxes, and benefits helps you optimize your spending. Small businesses often find that labor costs represent 30-40% of their total operating expenses.
• Tax Compliance Reports: Essential for auditing and tax season, these reports summarize your tax liabilities, payments, and filings. They help ensure you’re on track with your obligations.
• New Hire Reporting: Some states require new hire reporting within a certain timeframe. The software should automate this process to ensure compliance.

Top Payroll Software Contenders for Small Businesses

Based on ease of use, features, pricing, and customer satisfaction, several payroll software providers consistently stand out for small businesses.

1. Gusto: The User-Friendly All-Rounder

Gusto is frequently lauded for its intuitive interface, comprehensive features, and excellent customer support, making it an ideal choice for small businesses new to payroll software or those seeking a seamless experience.

• Strengths:
  • Extremely User-Friendly: Its dashboard is clean and easy to navigate, even for those without a payroll background. Running payroll takes just a few clicks.
  • Full-Service Payroll: Gusto handles all federal, state, and local tax filings and remittances automatically, along with year-end W-2s and 1099s.
  • Integrated HR Features: Beyond payroll, Gusto offers onboarding tools, employee self-service portals, time tracking, and even benefits administration health insurance, 401k, workers’ comp. This makes it a powerful HR platform as well.
  • Excellent Customer Support: Known for responsive and helpful customer service via phone, chat, and email.
  • Transparent Pricing: Clear, tiered pricing plans that scale with your business.
• Limitations:
  • Might be slightly more expensive than basic, bare-bones options if you only need payroll for a couple of employees.
  • While its benefits administration is robust, it primarily works with their selected network of providers.
• Ideal For: Small to medium-sized businesses looking for an all-in-one payroll and HR solution, especially those with plans to offer benefits. Its ease of use makes it perfect for business owners who want to “set it and forget it.”
• Pricing: Starts around $40/month + $6/employee per month for the basic plan. Higher tiers offer more advanced HR features and benefits administration.

2. QuickBooks Payroll: Best for QuickBooks Users

If your accounting is already handled by QuickBooks Online, QuickBooks Payroll is often the most natural and seamless integration. It’s built to work hand-in-hand with Intuit’s accounting ecosystem.

*   Seamless Integration with QuickBooks Online: This is its biggest advantage. Payroll data flows directly into your general ledger, simplifying reconciliation and financial reporting.
*   Automated Tax Filing: Offers full-service payroll, including tax calculations, filings, and payments.
*   Multiple Service Tiers: From basic payroll to advanced HR support, QuickBooks Payroll offers plans to suit different needs and budgets.
*   Strong Reporting: Robust reporting capabilities that leverage your integrated accounting data.
*   Workers' Comp Administration: Can help manage pay-as-you-go workers' compensation insurance.
*   Can be more expensive if you're not already a QuickBooks Online user, as you might end up paying for two subscriptions.
*   The interface can be less intuitive for payroll-specific tasks compared to Gusto, especially if you're not familiar with the QuickBooks ecosystem.

• Ideal For: Small businesses already using QuickBooks Online for their accounting. It provides a cohesive financial management experience.
• Pricing: Starts around $45/month + $5/employee per month for its Core plan, with higher tiers offering more features.

3. OnPay: Value-Packed and Flexible

OnPay is a highly-rated option that offers a great balance of features, ease of use, and competitive pricing, often positioning itself as a strong alternative to Gusto.

*   All-Inclusive Pricing: Offers a single, transparent pricing plan that includes all features, rather than tiered plans. This simplifies budgeting.
*   Full-Service Payroll and Tax Filings: Handles all federal, state, and local taxes, including year-end forms.
*   Robust HR and Benefits Integration: Offers extensive HR tools, including offer letters, onboarding, and direct integrations with a wide range of benefits providers health insurance, 401k, workers' comp. They are known for their flexibility in integrating with various benefit brokers.
*   Excellent Customer Service: Highly praised for responsive and knowledgeable U.S.-based support.
*   Payroll Imports: Can import historical payroll data from previous providers, making switching easier.
*   While comprehensive, its user interface, though clean, might not be as "modern" or visually appealing as Gusto for some users.
*   Time tracking is available but relies on third-party integrations rather than being deeply built-in.

• Ideal For: Small businesses looking for a comprehensive, affordable, and flexible payroll and HR solution, especially those who value strong customer support and integrated benefits options.
• Pricing: A flat fee, typically around $40/month + $6/employee per month.

4. ADP Run: The Enterprise Powerhouse for Small Business

ADP Run is the small business version of ADP’s enterprise-level payroll services. It brings the power and experience of a giant in the payroll industry to smaller companies.

*   Robust Features: Offers a comprehensive suite of payroll, HR, and tax compliance tools.
*   Scalability: Can easily accommodate business growth, from a few employees to hundreds.
*   Extensive Support: Access to a vast knowledge base, HR resources, and dedicated support.
*   Benefit Integration and HR Expertise: Offers a wide array of HR services, including compliance assistance, employee handbooks, and talent acquisition tools. ADP serves over 700,000 clients worldwide, giving them immense experience.
*   SurePayroll by ADP: A simplified, more affordable version specifically for very small businesses 1-10 employees, providing a streamlined experience.
*   Pricing can be less transparent, often requiring a quote. It can sometimes be more expensive for very small businesses.
*   The interface, while powerful, can feel more complex or overwhelming for new users compared to Gusto or OnPay.

• Ideal For: Small businesses that anticipate significant growth, value extensive HR support and resources, and are comfortable with a more robust, enterprise-like solution. It’s also a good fit for businesses with complex payroll needs.
• Pricing: Varies widely based on features and employee count. typically requires a custom quote. SurePayroll starts around $29.99/month + $5/employee per month.

5. Paychex Flex: Comprehensive and Customizable

Paychex Flex is another industry veteran offering a wide range of payroll and HR solutions for businesses of all sizes, with specific packages tailored for small businesses.

*   Highly Customizable: Offers a modular approach, allowing businesses to select specific features they need, from basic payroll to advanced HR and benefits.
*   Dedicated Payroll Specialist: Many plans offer a dedicated specialist, providing personalized support and guidance.
*   Extensive HR Services: Includes HR advisory services, compliance assistance, and tools for recruiting, onboarding, and performance management.
*   Time and Attendance Integration: Offers robust time tracking solutions that integrate seamlessly with payroll.
*   Reporting and Analytics: Comprehensive reporting dashboard with actionable insights.
*   Pricing can be opaque and often requires a quote, making it harder to compare upfront.
*   The sheer number of features and customization options can be overwhelming for some users.
*   Customer support experiences can vary, depending on the assigned specialist.

• Pricing: Requires a custom quote based on desired features and employee count.

Crucial Considerations When Choosing Your Payroll Software

Selecting the right payroll software goes beyond just looking at the top contenders.

It requires a deeper dive into your specific operational needs and long-term business goals.

Understanding Your Business Needs

Before you even start researching, list out exactly what you need.

• Number of Employees: Are you paying 2 employees or 20? Some software is priced per employee, making it more cost-effective for very small teams. Others have base fees that make them more viable as you scale.
• Employee Types: Do you have salaried, hourly, commission-based, or contract 1099 employees? Does the software handle all these types effectively, including tracking different pay rates?
• Payroll Frequency: Do you pay weekly, bi-weekly, semi-monthly, or monthly? Ensure the software supports your preferred frequency and allows for easy adjustments or off-cycle runs.
• Geographic Distribution: Do you have employees in multiple states or even countries? Multi-state payroll compliance is complex and requires specialized software capabilities. In 2023, 20 states had changes to their minimum wage laws, highlighting the constant need for updated tax data.
• Benefits Offered: If you offer health insurance, 401ks, FSAs, or other benefits, how seamlessly does the software integrate with their administration and deductions?
• Integration with Existing Systems: Do you use specific accounting software e.g., QuickBooks, Xero, time tracking apps, or HR platforms? Seamless integration can save immense time and reduce errors. Data from Gartner indicates that well-integrated business systems can improve operational efficiency by up to 25%.

Pricing Structure and Hidden Fees

Payroll software pricing can be tricky. Don’t just look at the advertised monthly fee. Accounting and payroll services for small business

• Base Fees vs. Per-Employee Fees: Many providers charge a base monthly fee plus an additional per-employee fee. Calculate the total cost based on your current and projected employee count.
• Tiered Plans: Understand what features are included in each tier. Sometimes, a slightly higher tier offers essential features like HR support or advanced reporting that justify the extra cost.
• Setup Fees: Some providers charge an initial setup fee, especially for more complex migrations or dedicated onboarding support.
• Tax Filing and Year-End Form Fees: Confirm if tax filing federal, state, local, W-2, and 1099 generation and e-filing are included in the base price or if they incur additional charges.
• Add-Ons: Be aware of extra costs for features like time tracking, HR advisory services, benefits administration, or workers’ compensation management.

Ease of Use and User Experience

A powerful system is useless if it’s too complicated to operate.

• Intuitive Interface: The dashboard should be clear, concise, and easy to navigate. Running payroll should be straightforward, ideally taking just a few clicks.
• Onboarding Process: How easy is it to set up your company, add employees, and migrate historical data? Look for providers offering guided setup or data import services.
• Employee Self-Service Portal: Assess the ease of use for your employees. Can they easily access pay stubs, update personal info, and view time off?
• Mobile Accessibility: If you or your employees need to access payroll information on the go, check for robust mobile apps.

Customer Support and Resources

Even the most intuitive software can present challenges. Reliable support is crucial.

• Availability: What are the support hours? Is it 24/7, or limited to business hours?
• Channels: Do they offer phone, email, chat, or in-app support? Which channels are most convenient for you?
• Knowledge Base: Is there a comprehensive online help center, FAQs, or video tutorials? Self-service resources can quickly answer common questions.
• HR Support: Some providers offer HR advisory services, which can be invaluable for small businesses without dedicated HR staff. This can include guidance on compliance, employee handbooks, and workplace policies. A recent survey showed that 45% of small business owners feel overwhelmed by HR regulations.

Security and Compliance

Payroll involves highly sensitive financial and personal data.

• Data Encryption: Ensure the software uses robust encryption protocols e.g., SSL/TLS to protect data in transit and at rest.
• Access Controls: Look for features like multi-factor authentication MFA and granular user permissions to control who can access what information.
• Compliance Updates: The provider should be proactive in updating the software to comply with the latest federal, state, and local tax laws and regulations. This proactive approach prevents costly penalties.
• SOC Reports: Providers often undergo SOC 1 and SOC 2 audits, which attest to their internal controls over financial reporting and data security. Ask for their latest reports if security is a top concern.

What to Avoid in Payroll Software

Just as important as knowing what to look for is understanding what pitfalls to steer clear of.

Choosing the wrong software can lead to significant headaches and financial repercussions.

Opaque Pricing Structures

Be extremely wary of payroll providers that don’t offer clear, upfront pricing.

If you have to jump through hoops to get a quote, or if the initial quote seems too good to be true, it likely is.

Many providers use complex tiered systems or hidden fees for “premium” features that should be standard.

• Red Flag: “Call for a custom quote” without any baseline pricing on their website.
• Issue: Makes it impossible to compare apples-to-apples with competitors, leading to potential budget surprises down the line. Hidden fees for things like W-2 generation, direct deposit, or even basic support can quickly inflate your costs.

Poor Customer Support

Even the most feature-rich software will cause frustration if you can’t get timely and helpful support when you need it.

• Red Flag: No phone support, slow response times, or support limited to vague email interactions. Read online reviews specifically about customer service experiences.
• Issue: When payroll issues arise and they will, you need immediate assistance. Delays can lead to missed deadlines, incorrect payments, and employee dissatisfaction. Imagine a critical tax question on payday with no one to answer.

Lack of Compliance Guarantees

Payroll involves legal and tax compliance. Small company payroll software

Your software should stand behind its calculations and filings.

• Red Flag: The provider doesn’t offer a tax penalty guarantee, meaning if their software makes an error that results in a penalty, they won’t cover it.
• Issue: You, the business owner, are ultimately responsible for payroll compliance. Without a guarantee, any software error could directly cost your business in fines and interest. A reliable provider should have confidence in its system.

Limited or No Integration Capabilities

• Red Flag: The payroll software doesn’t integrate with popular accounting software QuickBooks, Xero, time tracking solutions, or HR platforms you already use or plan to use.
• Issue: This forces manual data entry between systems, which is a prime source of errors and wastes valuable time. It prevents you from having a unified view of your business finances and operations, making strategic decisions harder.

Overly Complex or Outdated User Interface

While robust features are good, they shouldn’t come at the expense of usability.

• Red Flag: The software looks like it was designed in the early 2000s, is difficult to navigate, or requires extensive training just to perform basic tasks.
• Issue: A clunky interface leads to frustration, increased errors, and a higher learning curve. Your valuable time shouldn’t be spent wrestling with software. it should be spent running your business. An outdated interface might also signal a lack of ongoing development and security updates.

Insufficient Security Measures

Payroll data is highly sensitive, containing personal employee information and financial details.

• Red Flag: The provider doesn’t explicitly mention data encryption, multi-factor authentication, or adherence to industry security standards e.g., SOC 2 reports.
• Issue: A data breach involving payroll information can be catastrophic. It can lead to identity theft for employees, reputational damage for your business, and significant legal and financial repercussions. Always prioritize providers with robust security protocols.

The Future of Payroll for Small Businesses

Small businesses should be aware of these trends to make future-proof decisions.

Artificial Intelligence AI and Machine Learning ML

AI is poised to further revolutionize payroll by enhancing accuracy, automation, and predictive analytics.

• Automated Error Detection: AI algorithms can analyze payroll data patterns to identify anomalies and potential errors before they become costly mistakes. For example, flagging unusually high overtime hours for an employee or an inconsistent deduction amount.
• Predictive Analytics for Workforce Planning: ML can help predict future labor costs, identify optimal staffing levels based on historical data, and even forecast future tax liabilities, aiding in budgeting and strategic financial planning.
• Enhanced Compliance: AI can continuously monitor regulatory changes across federal, state, and local levels and automatically update payroll rules, ensuring businesses remain compliant with minimal manual effort. A recent report by PwC suggests that AI could reduce payroll processing time by up to 40% in the coming years.

Real-Time Payroll and On-Demand Pay

The traditional bi-weekly or monthly pay cycle is being challenged by the desire for greater financial flexibility.

• Instant Payments: Some providers are exploring or already offering “instant payroll,” allowing employees to access their earned wages before the official payday. This can be a significant benefit for employees facing unexpected expenses. A 2023 survey by the American Payroll Association found that over 60% of employees would be interested in on-demand pay options.
• Enhanced Employee Well-being: Access to earned wages on demand can reduce financial stress for employees, potentially leading to higher productivity and retention. For employers, it can be a competitive edge in attracting talent.
• Technical Challenges: Implementing real-time payroll requires robust banking integrations and sophisticated accounting backend systems to manage cash flow effectively.

Deeper HR Integration and Workforce Management

The lines between payroll and HR are blurring, with comprehensive platforms becoming the norm.

• Holistic Employee Experience: Future systems will offer even more seamless integration of payroll, benefits administration, time tracking, performance management, recruiting, and learning & development. This creates a single source of truth for all employee data.
• Automated Lifecycle Management: From hiring to offboarding, integrated systems will automate workflows, ensuring compliance and efficiency at every stage of the employee lifecycle. For example, automatically setting up direct deposit and benefits enrollment upon hiring, or generating final paychecks and necessary tax documents upon termination.
• Data-Driven HR Decisions: By combining payroll and HR data, businesses can gain deeper insights into employee costs, retention rates, benefits utilization, and productivity, enabling more strategic workforce decisions. Deloitte’s 2024 Human Capital Trends report emphasizes the growing importance of integrated HR and financial data for business success.

Enhanced Security and Blockchain Technology

With increasing cyber threats, security will remain a paramount concern, with new technologies offering solutions.

• Advanced Biometrics and Authentication: Beyond MFA, future systems may incorporate more advanced biometric authentication for secure access to sensitive payroll data.
• Blockchain for Data Integrity: While still in early stages for mainstream payroll, blockchain technology could offer an immutable and transparent ledger for payroll transactions, enhancing security, reducing fraud, and simplifying audits. This could provide an unprecedented level of data integrity and traceability for financial records.
• Zero-Trust Security Models: Shifting from traditional perimeter security to a zero-trust model, where every access request is verified, regardless of origin, will become standard for highly sensitive financial systems.

Conclusion: Investing in Your Business’s Backbone

Selecting the best payroll software for your small business isn’t merely about finding a tool to process payments.

It’s about investing in the operational efficiency, compliance, and long-term stability of your enterprise. Payroll processing software for small business

The right software liberates you from the minutiae of manual calculations and regulatory worries, allowing you to focus on growth, innovation, and cultivating a thriving work environment.

While Gusto, QuickBooks Payroll, OnPay, ADP Run, and Paychex Flex each offer distinct advantages, your ultimate choice should be a thoughtful reflection of your business’s unique needs, budget, and desired level of integration.

Don’t shy away from utilizing free trials, seeking demos, and engaging with customer support to ensure the solution feels like a natural fit.

By making an informed decision, you’re not just automating a task.

You’re strengthening the very backbone of your business, setting a solid foundation for sustainable success.

Frequently Asked Questions

What is the best payroll software for a very small business 1-5 employees?

For very small businesses, Gusto and OnPay are often top choices due to their user-friendliness, comprehensive features, and transparent pricing that scales well for small teams. SurePayroll by ADP is also designed specifically for this segment.

Is payroll software worth the cost for a small business?

Yes, absolutely.

While there’s a monthly fee, payroll software saves significant time, reduces errors, ensures tax compliance, and frees up business owners to focus on growth.

The cost of penalties for non-compliance or mistakes often far outweighs the software subscription.

Can I do payroll myself without software?

You can, but it’s not recommended. On pay payroll

Manual payroll is highly prone to errors, time-consuming, and carries significant compliance risks related to federal, state, and local tax laws.

Even for very small businesses, the administrative burden can be overwhelming.

What’s the difference between full-service and self-service payroll?

Full-service payroll means the software provider handles all tax calculations, filings federal, state, local, and remittances on your behalf, including year-end forms like W-2s and 1099s. Self-service payroll or basic payroll usually calculates gross pay and deductions, but you are responsible for filing and remitting taxes yourself. Always opt for full-service if possible.

How much does payroll software for small businesses typically cost?

Most small business payroll software costs between $30 to $100 per month as a base fee, plus an additional $4 to $12 per employee per month. Prices vary based on features and the number of employees.

Do I need separate software for time tracking and payroll?

Not necessarily.

Many payroll software solutions like Gusto offer integrated time tracking, or they integrate seamlessly with popular third-party time tracking apps.

Choosing an integrated solution simplifies data flow and reduces manual entry.

How long does it take to set up payroll software?

Setup time varies.

For basic payroll, it might take a few hours to a day to enter company and employee information.

If you’re migrating historical data or setting up complex benefits, it could take longer, sometimes a few days or a week. Free payroll report generator

Many providers offer guided setup to expedite the process.

What is a tax penalty guarantee?

A tax penalty guarantee means the payroll software provider will cover any penalties you incur if their system makes an error in tax calculation or filing.

This provides peace of mind and highlights the provider’s confidence in their compliance engine.

Can payroll software help with 1099 contractors?

Yes, most comprehensive payroll software solutions handle both W-2 employees and 1099 contractors.

They can facilitate payments to contractors and generate the necessary 1099 forms at year-end for tax reporting.

Is benefits administration included in payroll software?

It depends on the provider and the plan tier.

Some software, like Gusto and OnPay, offer integrated benefits administration where you can manage health insurance, 401ks, and other benefits directly within the platform.

Others might offer integrations with third-party benefit providers.

How important is customer support for payroll software?

Extremely important.

When issues arise e.g., a tax question, a missed payment, a software glitch, responsive and knowledgeable customer support is crucial to resolve problems quickly and avoid compliance issues or employee dissatisfaction. Human resources payroll

Can I switch payroll software easily?

Yes, many payroll providers offer assistance with migrating historical data from your previous system.

While there might be some initial setup time, the process is generally straightforward.

It’s often recommended to switch at the beginning of a quarter or year for easier tax reporting.

What reporting features should I look for?

Look for customizable reports on payroll history, tax summaries, departmental labor costs, gross-to-net pay, and new hire reporting.

The ability to export data to various formats e.g., CSV, PDF is also beneficial for analysis.

What about compliance with state-specific payroll laws?

Reputable payroll software providers keep their systems updated with the latest federal, state, and local tax laws, including minimum wage changes, sick leave laws, and unemployment insurance rates. This is a key advantage over manual payroll.

Is cloud-based payroll software secure?

Yes, leading cloud-based payroll software providers employ robust security measures, including data encryption SSL/TLS, multi-factor authentication MFA, regular security audits e.g., SOC 1 and SOC 2 reports, and secure data centers, to protect sensitive information.

What if I have employees in multiple states?

If you have employees in different states, you need a payroll software that can handle multi-state payroll, accurately calculating and remitting taxes for each state according to its specific laws and reciprocity agreements. Gusto, OnPay, and ADP are strong contenders here.

Does payroll software integrate with accounting software like QuickBooks or Xero?

Yes, most top payroll software solutions offer direct integrations with popular accounting platforms like QuickBooks Online, QuickBooks Desktop, Xero, and sometimes others.

This streamlines reconciliation and financial reporting. Adp pricing sheet

Can payroll software help with workers’ compensation insurance?

Some payroll software providers, like Gusto and ADP, offer “pay-as-you-go” workers’ compensation integration.

This means your premiums are calculated and paid each payroll cycle based on actual wages, which can improve cash flow and reduce audit surprises.

What are common mistakes to avoid when choosing payroll software?

Common mistakes include choosing software based solely on price, ignoring crucial features like tax filing, overlooking customer support quality, not considering scalability, and failing to test the user interface during a free trial.

How often are payroll tax laws updated?

Payroll tax laws are updated frequently.

Changes can occur annually, quarterly, or even more often at federal, state, and local levels, impacting tax rates, deductions, and reporting requirements.

This constant flux underscores the need for automated, compliant payroll software.