Best Payroll Software: What Actually Works for Small Businesses

Let's cut to the chase. You need to pay your employees correctly, on time, and without the IRS breathing down your neck. The right payroll software handles the tedious stuff-tax calculations, filings, direct deposits-so you can focus on actually running your business.

I've dug into the leading options and put together this guide based on real pricing, actual features, and honest assessments of what works and what doesn't. No fluff, just the information you need to make a decision.

Quick Comparison: Top Payroll Software

SoftwareStarting PriceBest ForWatch Out For
Gusto$49/mo + $6/employeeAll-around small businessAdd-ons can increase cost significantly
OnPay$49/mo + $6/employeeBudget-conscious simplicity2-4 day direct deposit turnaround
ADP RUN$39/mo + $5/employeeScalable enterprise needsOpaque pricing, quote-based
Paychex Flex$39/mo + $5/employeeLarge businesses, 24/7 supportAdvanced HR features cost extra
Patriot$17/mo + $4/employeeBare-bones budget optionBasic plan requires manual tax filing

1. Gusto - Best Overall for Small Businesses

Gusto consistently ranks at the top for small business payroll, and for good reason. It handles the core stuff well-unlimited payroll runs, automatic tax calculations and filings, direct deposits-while also bundling in useful HR features that most competitors charge extra for.

Over 400,000 businesses use Gusto, and customers report saving an average of 4 hours per month on payroll tasks after switching. The interface is genuinely easy to use, which matters when you're not a payroll expert.

Gusto Pricing Breakdown

Note: Gusto's pricing has remained relatively stable, though the Simple plan increased from $40 to $49 in recent years. The Plus plan has seen approximately 25% increases since early pricing was introduced.

What Gusto Does Well

Where Gusto Falls Short

Who Should Choose Gusto

Gusto is ideal for businesses with 1-50 employees who want comprehensive payroll and HR features without juggling multiple platforms. It's particularly strong for startups, growing businesses, and companies that value user experience and modern interfaces. If you're comfortable handling some tasks yourself on the Simple plan, or willing to upgrade for premium features, Gusto delivers excellent value.

For most small businesses under 50 employees, Gusto hits the sweet spot of features, usability, and price. It's our top pick.

Try Gusto →

Want more details? Check out our in-depth Gusto review or see the full Gusto pricing breakdown.

2. OnPay - Best Budget Option with Full Features

OnPay takes a refreshingly simple approach: one plan, one price, no upsells. At $49/month + $6/employee, you get everything-multi-state payroll, unlimited pay runs, all tax filings, and basic HR tools. No feature is locked behind a higher tier.

This transparent pricing model makes OnPay particularly attractive for businesses that hate surprises on their monthly bill. What you see is what you pay.

OnPay Pricing

OnPay has received recognition as "Best for Combined HR, Benefits and Payroll" by USA Today and earned PCMag's Editors' Choice award. On G2, it scores 9.7/10 for payroll entry and 9.5/10 for quality of support-both higher than QuickBooks Payroll. Customer reviews consistently average 4.8 out of 5 stars across major review platforms.

OnPay Strengths

OnPay Limitations

Why OnPay Stands Out

OnPay's commitment to transparent, straightforward pricing is rare in the payroll industry. While competitors nickel-and-dime you with add-ons for multi-state filing, garnishment processing, or off-cycle payrolls, OnPay includes everything upfront. Their customer support team consistently receives high marks for responsiveness and knowledge-a crucial advantage when payroll issues need immediate resolution.

If you want straightforward payroll without worrying about which features you're missing, OnPay delivers.

3. ADP RUN - Best for Growing Companies

ADP is the 800-pound gorilla of payroll, serving over 900,000 small business clients. Their small business product, RUN Powered by ADP, offers the enterprise-level infrastructure and compliance expertise that comes from processing payroll for decades.

The biggest catch? ADP doesn't publish transparent pricing. You'll need to talk to a sales rep to get a quote, which makes comparison shopping harder.

ADP RUN Pricing (What We Know)

ADP's basic offering, Roll by ADP, starts at $39/month + $5/employee for simple payroll and tax filing with a 3-month free trial promotion. However, most businesses will use RUN Powered by ADP, which has custom pricing based on your business size, payroll frequency, and selected features. Industry sources report starting costs around $79/month + $4/employee for the Essential plan, but actual pricing varies significantly.

ADP offers four RUN packages:

Important: ADP charges per payroll run, which can substantially increase costs if you process payroll weekly or bi-weekly. Year-end tax filings also incur additional fees (approximately $55 + $6.50 per W-2 form, plus mailing charges).

Why Choose ADP

ADP Drawbacks

Hidden Costs to Watch For

ADP's pricing complexity deserves special attention. Beyond the base monthly fee and per-employee charges, businesses report additional costs for: implementation fees (around $2,000), payroll processing fees per run, year-end tax form generation and mailing, integration fees for accounting software, and charges for additional services like SUI management or wage garnishments. Always request a detailed, written quote that itemizes all potential fees before committing.

ADP makes sense if you're planning significant growth and want a platform that can handle enterprise needs down the road. For a 10-person business with no growth plans, it's probably overkill.

See how they stack up in our Gusto vs ADP comparison.

4. Paychex Flex - Best for 24/7 Support

Paychex has been in the payroll game for over 50 years and now serves around 740,000 companies. Like ADP, it's built for businesses that want full-service payroll with compliance expertise baked in.

The standout feature? Paychex offers 24/7 customer support by phone and chat-the only major payroll provider with truly around-the-clock help. If you run payroll at odd hours or need help during a crisis, this matters.

Paychex Pricing

Paychex also owns SurePayroll, which offers a simpler standalone solution at lower entry prices for businesses that need basic payroll only.

Paychex Advantages

Paychex Disadvantages

When Paychex Makes Sense

Paychex excels for multi-location businesses, companies operating across multiple states, and organizations that need compliance expertise in regulated industries. The 24/7 support is particularly valuable for businesses with non-traditional hours, distributed teams across time zones, or managers who handle payroll outside standard business hours. The platform's scalability makes it a solid choice if you're planning growth from 20 to 200+ employees.

Compare them directly in our Gusto vs Paychex breakdown.

5. Patriot Software - Best Budget-Friendly Option

If you're running a tight ship and need bare-bones payroll at the lowest possible price, Patriot delivers. Their Basic Payroll starts at just $17/month + $4/worker-the cheapest option on this list.

The catch? The Basic plan means you handle your own tax filings. If you want full-service payroll with automated tax filing, you'll need the Full Service plan at $37/month + $4/employee. Still cheaper than most alternatives.

Patriot Pricing

Patriot offers a 30-day free trial followed by 50% off for 3 months, making it easy to test before committing. There's a $12 fee for each additional state beyond your primary state with Full Service Payroll.

What Patriot Offers

Patriot Limitations

Who Benefits Most from Patriot

Patriot is ideal for very small businesses (under 10 employees) that don't need bells and whistles and want to keep costs as low as possible. It's particularly well-suited for sole proprietors, family businesses, and companies with simple payroll needs in a single state. If you're comfortable handling some aspects of payroll yourself, or working with an accountant who can guide tax filings on the Basic plan, Patriot offers unbeatable value.

Despite its budget pricing, Patriot has earned strong customer reviews, with users particularly praising the responsive customer support team and the software's ease of use.

Understanding Payroll Software Features: What Actually Matters

Not all payroll features are created equal. Here's what actually matters when evaluating payroll software:

Core Payroll Processing

At minimum, your payroll software should calculate gross pay, withhold the correct taxes, and deliver paychecks to employees. Look for unlimited payroll runs (avoid per-run fees), support for multiple pay schedules (weekly, bi-weekly, semi-monthly, monthly), and the ability to handle both W-2 employees and 1099 contractors.

Tax Compliance

This is where payroll software earns its keep. Quality platforms automatically calculate federal, state, and local taxes, file tax forms on your behalf (940, 941, state unemployment), make tax deposits according to your schedule (monthly, semi-weekly, or next-day), and handle year-end forms (W-2, W-3, 1099-NEC, 1096).

Pay attention to guarantees. Providers like OnPay and Gusto guarantee their calculations and will cover penalties if they make an error. This protection alone can justify the software cost.

Direct Deposit

Direct deposit should be standard, not an add-on. Check turnaround times: standard direct deposit typically takes 2-4 days, next-day costs extra on most platforms, and same-day or real-time payments are rare (Paychex offers this).

Employee Self-Service

Modern payroll platforms give employees access to a portal or mobile app where they can view pay stubs, access tax forms, update personal information, and manage direct deposit accounts. This reduces administrative burden on you.

Time Tracking Integration

If you have hourly employees, time tracking integration is essential. Some platforms include this (Gusto Plus, OnPay with integrations), while others charge extra. Integration eliminates manual data entry and reduces errors.

Benefits Administration

Look for support managing health insurance premiums, 401(k) contributions, HSA/FSA deductions, and other voluntary benefits. The best platforms integrate with benefits providers and automatically sync deductions.

HR Tools

Entry-level HR features typically include offer letters and e-signatures, employee onboarding checklists, document storage, and PTO tracking. More advanced platforms add performance reviews, compliance training, and org charts.

Reporting

Quality reporting helps you understand labor costs, track payroll trends, and provide data to your accountant. Look for payroll registers, tax liability reports, department/location breakdowns, and custom report builders.

How to Choose the Right Payroll Software

Here's a decision framework based on your situation:

Choose Gusto if:

Choose OnPay if:

Choose ADP or Paychex if:

Choose Patriot if:

Common Payroll Software Mistakes to Avoid

Mistake #1: Choosing Based on Price Alone

The cheapest option isn't always the best value. Calculate the true cost including add-ons you'll actually need (time tracking, multi-state filing, HR features). Factor in the time you'll save-if software saves you 5 hours per month, that's worth $100-250+ depending on your hourly value.

Mistake #2: Ignoring Integration Needs

If you use QuickBooks, Xero, or other accounting software, verify integration quality. Poor integrations mean manual data entry and reconciliation headaches. Same goes for time tracking, point-of-sale systems, and expense management tools.

Mistake #3: Overlooking Scalability

Switching payroll providers mid-year is painful. Choose software that can handle your growth trajectory. If you're at 15 employees now but plan to hit 40 in two years, make sure your platform scales gracefully without requiring a migration.

Mistake #4: Not Testing Customer Support

Call or chat with support before you buy. Payroll issues need quick resolution-you can't afford to wait 48 hours for a response when employees aren't getting paid. Test response times and knowledge level during the trial period.

Mistake #5: Skipping the Trial Period

Most platforms offer free trials or demos. Use them. Run a test payroll, explore the interface, check reporting capabilities. Don't commit based on marketing materials alone.

What About QuickBooks Payroll?

If you're already using QuickBooks for accounting, QuickBooks Payroll integrates seamlessly. But it's not automatically the best choice. QuickBooks charges extra for 1099 filings and doesn't handle local taxes automatically in many jurisdictions-you'll need to do those yourself.

QuickBooks Payroll offers three tiers:

QuickBooks also doesn't include built-in HR functionality on lower tiers; you'd need to upgrade for HR advisor access. For pure payroll with tight QuickBooks integration, it works. For comprehensive HR and payroll, Gusto or OnPay often deliver more value-and both integrate with QuickBooks anyway.

Payroll Software for Specific Industries

Restaurants and Hospitality

Look for platforms that handle tip tracking (cash and card tips), split shifts at different pay rates, minimum wage tip makeup calculations, and flexible scheduling. OnPay and Gusto both support hospitality-specific needs well.

Construction and Field Services

You need certified payroll for prevailing wage compliance, job costing by project, mobile time tracking with geolocation, and workers' compensation integration. ADP and Paychex offer strong construction-specific features.

Nonprofits and Churches

Seek out platforms with 403(b) retirement plan support, housing allowance tracking for clergy, FUTA exemption handling, and grant tracking for labor costs. OnPay and Patriot both serve nonprofits well at affordable prices.

Healthcare and Medical Practices

Medical practices need shift differential pay, on-call time tracking, integration with medical practice management systems, and compliance with healthcare-specific regulations. Gusto and Paychex are popular in this space.

Agriculture

Agricultural businesses require Form 943 annual filing (instead of quarterly 941s), FUTA exemptions for certain farm labor, H-2A visa worker support, and seasonal worker management. OnPay specifically supports agricultural payroll needs.

The Hidden Costs of DIY Payroll

Before dismissing payroll software as an unnecessary expense, consider the true cost of doing payroll manually:

Your Time

Manual payroll typically takes 4-8 hours per month for a small business. At $50/hour, that's $200-400 monthly-already more than most payroll software costs.

Error Risk

IRS penalties for late or incorrect payroll tax deposits start at 2% and can reach 15% for severe violations. A single mistake can cost hundreds or thousands of dollars. Payroll software providers guarantee calculations and cover penalties for their errors.

Compliance Burden

Tax rates change annually. New hire reporting requirements vary by state. Local taxes add complexity. Staying current on all regulations is a full-time job-payroll software does this automatically.

Opportunity Cost

Hours spent on payroll are hours not spent growing your business, serving customers, or developing products. The opportunity cost often exceeds the direct cost.

Switching Payroll Providers: What to Expect

If you're switching from another provider or moving from manual payroll, here's what the process typically looks like:

Best Time to Switch

Start of the calendar year is ideal (clean slate for W-2s), but quarter-end is also good (simplified tax reporting). Mid-quarter switches are possible but require more coordination on tax filings.

Data Migration

You'll need to transfer employee information (names, addresses, tax withholdings, pay rates), year-to-date payroll totals, paid time off balances, and active benefits enrollments. Quality providers offer migration assistance.

Timeline

Setup typically takes 1-2 weeks for very small businesses (under 10 employees) and 2-4 weeks for larger organizations (20+ employees). More complex operations may need 4-6 weeks.

Common Challenges

Expect some learning curve with new interfaces, potential integration hiccups with accounting software, employee questions about accessing new portals, and possibly timing issues with the first payroll run.

Future-Proofing Your Payroll Choice

Consider these trends when selecting payroll software:

Remote and Distributed Teams

If you might hire remote workers, ensure your platform handles multi-state tax compliance easily. This is increasingly important as remote work becomes permanent.

Contractor Management

Many businesses are using more contractors and freelancers. Make sure your platform handles 1099 contractors seamlessly alongside W-2 employees.

Employee Financial Wellness

Features like earned wage access (early paycheck options), financial planning tools, and automated savings are becoming standard. Gusto and Paychex offer these through their employee apps.

AI and Automation

Error detection, predictive analytics, and automated compliance alerts are increasingly powered by AI. Platforms that invest in these technologies will provide better service over time.

Frequently Asked Questions

Can I run payroll myself without software?

Legally, yes. Practically, it's inadvisable unless you have payroll expertise. The complexity of tax calculations, filing deadlines, and compliance requirements means the risk of costly errors is high. Even Patriot's $17/month Basic plan is worth it to automate calculations.

How often should I run payroll?

This depends on state law, employee preferences, and cash flow. Hourly workers often prefer weekly or bi-weekly. Salaried employees typically receive semi-monthly or monthly paychecks. Some states mandate minimum frequencies.

What happens if I miss a payroll deadline?

Employees must be paid on schedule-missing deadlines can result in state penalties, damage employee morale, and create legal issues. All the platforms reviewed here send reminders and some (like Gusto and OnPay) can help you rush a late payroll.

Do I need a separate business bank account for payroll?

Yes, most payroll providers require a business bank account (not personal) for direct deposit and tax payments. This also helps maintain clean accounting records.

Can payroll software handle multiple states?

Yes, but implementation varies. OnPay includes multi-state at no extra charge. Gusto handles it on Plus and Premium plans. Patriot charges $12 per additional state. ADP and Paychex handle multi-state but factor it into custom pricing.

What if an employee works in multiple states?

This creates complex tax situations. Quality payroll software can handle it, but you'll need to specify which state is the primary work location. Consult with a tax professional if this applies to your business.

Is my payroll data secure?

Reputable providers use bank-level encryption, multi-factor authentication, and SOC 2 compliance. All platforms reviewed here meet industry security standards. Always enable two-factor authentication on your account.

Bottom Line

For most small businesses, Gusto is the right choice. It's not the cheapest, but it hits the sweet spot of automation, features, and user experience that makes payroll genuinely painless. The investment pays for itself in time saved and errors prevented.

If budget is tight and you don't need every feature, OnPay gives you full-service payroll without the price games. The transparent, all-inclusive pricing and excellent support make it ideal for cost-conscious businesses that still want quality service.

And if you're building something bigger or need enterprise-grade compliance, ADP or Paychex have the infrastructure to grow with you. The higher price and complexity are justified for businesses with 50+ employees, multi-state operations, or complex HR needs.

For very small businesses on tight budgets, Patriot delivers remarkable value at $17-37/month, though you'll trade features and polish for affordability.

The worst choice? Doing nothing. Manual payroll or outdated software costs more than you think-in time, stress, and error risk. Pick a platform that fits your current needs and growth trajectory, test it during the trial period, and make the switch. Your future self will thank you.

Get started with Gusto →

Looking for more specific comparisons? Check out these guides: