Best Payroll Systems for Small Business: Top 5 Options

Key Features

• Transparent Pricing: Flat-rate pricing with no hidden fees.

• HR Features: Includes new hire reporting and benefits management.

• Automated Tax Filings: Ensures compliance with federal and local tax laws.

• Employee Self-Service: Provides a self-service portal for pay stubs and tax forms.

• Multi-State Payroll: Supports businesses with employees in different states.

Who’s it for?

OnPay is perfect for small businesses seeking a cost-effective and reliable payroll provider with easy-to-use tools and integrated HR features.

Pricing Details

• Flat Rate: $40/month + $6/employee/month.

Why we recommend OnPay

OnPay’s flat-rate pricing and straightforward design make it one of the best payroll systems for small businesses. Its comprehensive features ensure accurate payroll processing, compliance, and employee satisfaction. Small businesses can handle tax filings, employee benefits, and payroll schedules efficiently, all while avoiding costly mistakes.

OnPay’s strong customer support and automated compliance tools make it a dependable payroll service provider for business owners looking to streamline administrative tasks.

What OnPay could improve

OnPay could expand its reporting capabilities to better serve growing businesses with more complex needs. Adding integrations with additional accounting software would also increase its appeal as a scalable solution for companies planning to expand their payroll and HR operations.

How We Chose the Best Payroll Services: Our Methodology

Our analysis of the best payroll systems for small businesses focused on critical areas to ensure the services we recommend meet a variety of business needs. Each provider was evaluated on its core functionality, usability, pricing, and customer support, among other factors.

We began by examining features—key aspects like automated payroll processing, tax filings, direct deposit, and compliance with local and federal tax laws. Services that integrated well with accounting software, time-tracking tools, or HR systems were given higher priority, as these integrations streamline the payroll process and reduce administrative tasks.

Ease of use was another essential category. We looked for intuitive platforms with straightforward navigation and mobile accessibility, ensuring they cater to both payroll novices and experienced users. Tools that simplify complex payroll processes, like calculating deductions and generating tax forms, scored higher in this area.

Pricing was evaluated with transparency and value in mind. We compared base costs, additional fees for services like benefits management or multi-state payroll, and whether free trials or scalable pricing plans were available for businesses of different sizes.

Customer support played a significant role. Small businesses often need reliable guidance, so we assessed availability, responsiveness, and the quality of support channels such as phone, live chat, and 24/7 assistance. Services with comprehensive help centers and ongoing support options were favored.

Lastly, we factored in user reviews from reputable sources like G2 and Capterra. Real-world feedback helped us gauge reliability, identify common issues, and verify performance claims made by providers.

By combining these categories, we ensured a well-rounded evaluation of payroll software and services that address the diverse needs of small businesses. This methodology allowed us to present accurate, practical recommendations for simplifying payroll processes.

What Are Payroll Services?

Payroll services refer to the management and administration of employees’ salaries, wages, bonuses, and deductions. These services can include calculating wages, processing payroll, withholding and filing payroll taxes, managing benefits, and providing pay stubs. Small businesses often use payroll service providers to simplify complex tasks such as tax filings, compliance with labor laws, and ensuring timely employee payments. Payroll services can either be handled in-house with software or outsourced to external payroll service providers, depending on a business’s needs.

Payroll services ensure that companies meet local and federal tax obligations, avoid costly mistakes, and keep their employees satisfied with timely and accurate payments. Most payroll services today also offer HR solutions, benefits management, and tools for managing employees’ time off and tracking their working hours.

What Types of Payroll Solutions Are Available?

Payroll solutions cater to a variety of business needs, ranging from basic to comprehensive options:

• In-House Payroll Software: Ideal for small businesses with straightforward payroll needs, these solutions offer control and affordability. Examples include Gusto and Patriot Payroll.

• Outsourced Payroll Services: Larger businesses or those with complex requirements often outsource payroll to providers like Paychex, which handles all aspects of payroll processing and compliance.

• Professional Employer Organizations (PEOs): These companies take on full HR responsibilities, including payroll, benefits administration, and compliance.

• Hybrid Solutions: A blend of software and service, offering flexibility and tailored options for growing businesses.

Key Differences Between Payroll Software and Payroll Services

Payroll software and payroll services are both essential tools for businesses to handle payroll tasks, but they differ in the level of involvement, automation, and outsourcing. Payroll software is a tool that businesses use to manage payroll tasks internally. It helps automate the calculation of wages, deductions, and taxes, streamlining payroll processing. However, the responsibility for filing taxes, ensuring compliance with labor laws, and managing the complexities of payroll still falls on the business itself. Payroll software is typically a good fit for businesses that have the internal resources to handle payroll and want more control over the process.

On the other hand, payroll services are typically outsourced solutions where a payroll service provider takes on the responsibility of handling the entire payroll process. This includes everything from calculating and processing payroll, filing tax forms, and handling direct deposits to ensuring compliance with all relevant tax laws. Payroll services offer a higher level of convenience and peace of mind because the business doesn’t need to worry about tax filings or regulatory compliance, as the service provider manages these tasks. This is ideal for small businesses that want to focus on growth and avoid the administrative burden of payroll management.

Choosing the Right Payroll Service for Your Business

Choosing the right payroll service can make a significant difference in how smoothly your small business operates. Payroll processing is a critical aspect of your business that affects your employees’ satisfaction and compliance with tax laws. With many payroll service providers available, understanding how to choose the one that best fits your needs is essential. Below are several crucial factors to consider when selecting a payroll service. Beyond payroll, efficient business operations often depend on optimizing logistics such as delivery routes and schedules. Implementing effective route optimization strategies can save time and reduce costs, complementing streamlined payroll systems to enhance overall operational efficiency.

1. Assess Your Payroll Complexity

The first step in choosing a payroll provider is to assess the complexity of your payroll needs. For example, do you have a small number of employees, or are you dealing with multiple workers across various states? The more employees you have and the more diverse your business is, the more complex your payroll becomes. Look for a payroll service that can handle your current and future needs as your business grows.

For instance, businesses that operate across multiple states need a service that can manage multi-state tax filings and handle complex payroll issues like deductions for various local taxes. Payroll providers like QuickBooks Payroll and Paychex offer robust services with features to handle multi-state payroll processing, allowing you to process payroll without worrying about compliance issues in different regions.

If your business is relatively small, with fewer employees and fewer states involved, services like Patriot Payroll or OnPay can meet your needs without unnecessary complexity or costs. Understanding your business’s payroll structure will help you narrow down the options.

2. Look for Integration with Other Software

Integrating payroll with other essential business software can streamline operations and save you significant time. Many small businesses use accounting or HR software alongside payroll to track expenses, manage employee benefits, and stay on top of tax obligations. When choosing a payroll provider, make sure it integrates seamlessly with the software your business already uses.

For example, QuickBooks Payroll is particularly beneficial for businesses already using QuickBooks Online for accounting, as the integration allows for automatic syncing of financial data. Similarly, OnPay integrates with a variety of accounting platforms like Xero and QuickBooks, making it a versatile choice for businesses with existing accounting software. Streamlining these processes allows you to reduce errors, avoid redundant data entry, and keep financial information in sync.

When evaluating integration options, also consider other software integrations, such as HR tools, time tracking, and benefits management. A fully integrated payroll service can simplify your administrative tasks and provide a more cohesive workflow for your team.

Here’s a breakdown of which integrations are offered by the providers on our list:

3. Understand Pricing and Service Levels

The cost of payroll services is an important consideration for any small business. While some payroll providers offer flat-rate pricing, others charge based on the number of employees or offer tiered pricing depending on the features you need. It’s essential to ensure the pricing structure aligns with your budget and business needs.

Patriot Payroll, for example, offers a very affordable base plan, making it an excellent choice for small businesses with basic payroll needs. However, if you require more advanced features like tax filing, employee benefits management, or HR services, you may need to look at higher-tier plans from providers like Paychex or Gusto. These platforms offer comprehensive payroll services that extend beyond just processing payroll, such as providing HR tools, health benefits management, and compliance assistance.

Make sure to compare the cost of each payroll provider with the services included to ensure you are getting the best value for your business. Additionally, look for services that offer scalability so that as your business grows, you can upgrade your plan without needing to switch providers.

4. Evaluate Automation and Time-Saving Features

The more automated your payroll process is, the less time you’ll spend on administrative tasks. Automated payroll can help ensure that employees are paid on time, every time, and that tax calculations and filings are completed accurately. Payroll providers like QuickBooks Payroll and OnPay offer features like automated tax calculations, payroll tax filing, and direct deposit, which can significantly reduce the time you spend managing payroll and tax-related tasks.

Additionally, features like automated time tracking and employee self-service portals can further streamline the payroll process. Employees can access their pay stubs, submit time off requests, and even update their tax documents through self-service portals. This not only improves accuracy but also empowers your employees to manage their information independently.

Look for providers that offer unlimited payroll runs and the ability to schedule recurring payrolls. These features can save you time and ensure that payroll runs smoothly without requiring constant attention.

5. Customer Support and Service Reliability

While payroll services can automate many tasks, you’ll still need reliable customer support when issues arise. Payroll can be complex, especially during tax season or when dealing with compliance issues, so you need a payroll provider that offers responsive support.

Paychex and Gusto are known for their excellent customer service, offering live support options through phone, chat, or email. It’s important to test the responsiveness of customer support by reviewing customer testimonials or reaching out with questions during your evaluation process. OnPay, for instance, is known for offering personalized support, which can be a huge benefit if you have specific payroll or HR-related questions. In addition to payroll features, some businesses may benefit from tools that optimize operational logistics. For companies managing deliveries or field services, selecting a reliable advanced route planner can significantly enhance efficiency by optimizing travel routes, reducing fuel costs, and improving customer satisfaction.

Make sure the payroll provider you choose offers adequate customer support hours, especially during payroll deadlines, tax filing seasons, or after business hours when issues can arise.

Here’s a breakdown of customer support availability for the payroll software providers on our list:

6. Read Reviews and Test the Service

Before committing to a payroll provider, take time to read user reviews from other small business owners to gain insight into the provider’s reliability, customer service, and overall satisfaction. Reviews on platforms like Capterra or Trustpilot can give you a clear picture of what to expect.

In addition, most payroll providers offer free trials or demos of their service. Take advantage of these trials to test the platform’s ease of use, functionality, and customer support before making a long-term commitment. Testing the platform allows you to ensure it meets your expectations and that your team can adapt to the system with ease.

7. Consider Future Growth and Expansion

Finally, it’s important to select a payroll service that can scale with your business. As your business grows, you may hire more employees, expand into new states, or take on additional responsibilities, such as offering benefits to employees. Choose a payroll service that can handle growth and offers the flexibility to add new features as needed.

Providers like Paychex offer scalable solutions with tools to manage payroll, benefits, and HR services for businesses of all sizes, while Gusto offers additional HR and compliance tools that can grow with your business. Choose a provider that will grow with your business journey and adapt to your changing needs.