For many small businesses, processing employee payroll week after week, month after month and year after year can be a tedious, time-consuming and relentless endeavor. Writing payroll checks and filing payroll tax returns takes you away from what you really want to do — serve your customers and sell your products.

SEE: Payroll processing checklist (TechRepublic Premium)

The time-consuming nature of payroll processing is why small businesses either choose to hire a dedicated payroll administrator to process their payroll tasks or contract with a third-party vendor that provides payroll services to take over workforce management. Modern payroll processing vendors offer a full array of services including mobile access, process automation, cloud-based technology, online payroll and employee quality-of-life benefits.

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Top payroll processing services for small businesses

Automated processingAdvanced reportingMobile payroll app availableFree trial available
ADP logo.YesYesYesYes
The Gusto logo.YesYesYesNo
The Intuit QuickBooks logo.YesYesNoYes
The OnPay logo.YesYesNoYes
The Patriot logo.YesNoYesYes
The Paychex logo.YesYesYesNo
The Sage HRMS Payroll logo.NoYesNoYes
The Square Payroll logo.YesNoYesNo

ADP: Best for PEO services

ADP logo.
Image: ADP

ADP offers a full array of payroll processing services, employee benefits management, insurance services and human resource tools. ADP’s payroll solution is designed to accommodate businesses ranging from single employees to thousands of employees, ensuring they get paid correctly and in a timely fashion.

ADP’s payroll service allows small businesses to quickly and securely manage payroll, pay employees electronically, and access comprehensive reporting and analytics. The service provides compliance support, tax filing and employee self-service options. Additionally, ADP offers a mobile app for convenient payroll and time tracking.

The ADP dashboard.
Image: ADP

Key features

  • Payroll data syncing with PEO, time tracking, benefits and other software solutions
  • Automated deduction calculations for tax and retirement contributions
  • Comprehensive reporting for employee pay, hours worked and taxes withheld
  • Employee benefits included
  • Automatic filing for all payroll taxes
  • Three-month trial period
  • Time tracking included
  • Unlimited processing
  • Web/mobile interface

Pros

  • Comprehensive HR features
  • A+ rating from BBB
  • Mobile app
  • Federal, state and local compliance support

Cons

  • Lack of transparent pricing
  • Setup and usage complexities for newer users

Pricing

The more services your business uses, the more costs it will incur. ADP offers four pricing plans: Essential Payroll, Enhanced Payroll, Complete Payroll & HR Plus, and HR Pro Payroll & HR. The Essential Payroll package is the best fit for most small businesses. ADP does not advertise its prices, so you’ll need to contact the company directly for a quote.

ADP

Gusto: Best overall

The Gusto logo.
Image: Gusto

Gusto is a full-service payroll processing service for small businesses. It offers automatic payroll calculations, tax filing, direct deposit and time tracking. Additionally, Gusto has employee benefits such as health insurance, retirement plans and workers’ compensation.

Gusto’s payroll service has been designed from the ground up to be a cloud-based service. The company offers a complete array of payroll processing services and additional services like HR management, employee benefits, hiring and onboarding, and employee finance tools.

The Gusto dashboard.
Image: Gusto

Key features

  • A variety of employee benefits management options
  • Employee self-service for accessing pay stubs, enrolling in benefits and making PTO requests
  • Bookkeeping integration included
  • Automatic filing for all payroll taxes
  • Time tracking included
  • Direct deposit
  • Unlimited processing
  • Web/mobile interface

Pros

  • Contractor-only version available
  • Good user experience
  • Affordable pricing
  • Automatically files and pays state and federal unemployment insurance taxes

Cons

  • Priority and full support are only offered in higher tiers
  • Performance reviews are only available with the premium package

Pricing

Gusto offers three pricing plans with varying features. They include:

  • Simple plan: Starts at $40 per month, plus $6 per month per employee.
  • Plus plan: Starts at $60 per month, plus $9 per month per employee.
  • Premium plan: Pricing for this plan is available upon request.
  • Contractor: The base price is $35 plus $6 per month for each contractor. The base rate, however, is currently discounted; for the first six months, the customer will pay a flat rate of $0 and only $6 per month per contractor.


Intuit QuickBooks Payroll: Best for fast direct deposits

The Intuit QuickBooks logo.
Image: Intuit QuickBooks.

Intuit QuickBooks Payroll Processing Service is an online payroll service that integrates with QuickBooks accounting software. It helps small businesses manage their payroll and tax-related tasks quickly and easily — especially with automation for payroll processing, tax filing and direct deposit — allowing employers to comply with federal and state regulations. QuickBooks Payroll also helps employers track employee time and manage employee benefits.

Small businesses and owners adopting the QuickBooks accounting software often adopt the Intuit QuickBooks Payroll software system too.

While this payroll service includes full payroll processing services, it has a few more limitations when it comes to HR services. Integration with QuickBooks, however, is seamless.

The Intuit QuickBooks logo.
Image: Intuit QuickBooks

Key features

  • Same-day direct deposit
  • Automated taxes and forms
  • Tax penalty protection for up to $25,000
  • Bookkeeping integration included
  • Employee benefits included
  • Automatic filing for all payroll taxes
  • 30-day trial period
  • Unlimited processing
  • Web interface

Pros

  • QuickBooks online integration
  • Fast direct deposits
  • User-friendly

Cons

  • Basic HR features
  • Customer support could be improved

Pricing

Intuit QuickBooks provides a 30-day free trial and a 50% discount on the purchase price for the first three months following purchase. They have three pricing options:

  • Core: $22.50 per month, plus $4 per employee per month.
  • Premium: $37.50 per month, plus $8 per employee per month.
  • Elite: $62.50 per month, plus $10 per employee per month.


OnPay: Best for very small businesses

The OnPay logo.
Image: OnPay

OnPay is a cloud-based, full-service payroll processing system designed to help small business owners quickly and accurately manage payroll at an affordable price. It offers an intuitive interface with various features such as pay stubs, direct deposits, tax filing and time tracking.

It also provides compliance support, so employers can be confident they’re meeting all applicable laws. OnPay supports a variety of payment methods, including ACH and prepaid debit cards. It also offers integrations with various third-party services, such as QuickBooks and Xero.

The OnPay dashboard.
Image: OnPay

Key features

  • Employee management
  • Health insurance and retirement benefits management
  • Unlimited monthly pay runs
  • Automated tax payments and filings
  • Free W-2 and 1099 processing

Pros

  • Affordable
  • Available in all 50 states in the U.S.
  • Automated tax payments and filings
  • No add-on fees

Cons

  • No live customer support available on weekends
  • No mobile app

Pricing

OnPay has simplified its pricing structure for this payroll solution to a monthly base fee of $40 plus $6 per employee per month.


Patriot Software: Best for simplicity

The Patriot logo.
Image: Patriot

Patriot Payroll Processing Service is a full-service payroll processing option designed to be affordable for small-business owners. It provides a comprehensive suite of services to make it easier for you to manage your payroll and comply with federal, state and local tax laws.

Patriot Software offers payroll processing services to small businesses without the frills and flourishes of other payroll vendors. If all you want is a vendor to run payroll and file the appropriate payroll and income taxes, Patriot Software may be the most straightforward option on the market.

The Patriot Software dashboard.
Image: Patriot Software

Key features

  • Free expert support
  • Pay different groups of employees weekly, biweekly, semi-monthly or monthly as needed
  • Bookkeeping integration included
  • Automatic filing for all payroll taxes
  • Direct deposit
  • 30-day trial period
  • Unlimited processing
  • Web/mobile interface

Pros

  • Offers a 30-day free trial
  • Affordable
  • Comprehensive knowledge-base resources
  • Self-service employee portals
  • Intuitive user interface

Cons

  • HR service costs extra
  • Time and attendance incur an additional fee

Pricing

The service offers a free 30-day trial period and two pricing plans:

  • Full-service payroll: Can be purchased for $37 per month plus $4 per employee or contractor.
  • Basic payroll: Costs $17 per month plus $4 per employee or contractor.


Paychex: Best for growing businesses

The Paychex logo.
Image: Paychex

Paychex is a human-capital services company that specializes in payroll, employee benefits and other human resources functions. Paychex handles payroll processing, tax filing and other compliance services, and it provides business insurance to small and medium-sized businesses.

Paychex helps businesses comply with local, state and federal laws, providing tools and resources to manage human capital more effectively. Paychex services assist companies in maximizing resources by streamlining their employee onboarding and payroll processing and providing access to employee benefits and other resources.

This vendor offers various payroll services and features, including a mobile app, integrated HR services and workers’ compensation reporting.

The Paychex dashboard.
Image: Paychex

Key features

  • New-hire reporting to government agencies
  • HR analytics and events calendar
  • Bookkeeping integration included
  • Employee benefits management included
  • Automatic filing for all payroll taxes
  • Time tracking included

Pros

  • Offers professional employer organization capabilities
  • Automates payroll tax filing
  • Feature-rich
  • 24/7 chat and phone support
  • Employee self-service functions

Cons

  • Can be pricey for smaller teams
  • Slow responses from support
  • Steep learning curve

Pricing

  • Paychex Flex Essentials: $39 per month plus $5 per employee.
  • Paychex Flex Select: Pricing information is available upon request.
  • Paychex Flex Pro: Pricing information is available upon request.


Sage HRMS Payroll: Best for HR services

The Sage HRMS Payroll logo.
Image: Sage HRMS Payroll

Sage HRMS Payroll is part of a wholly integrated HR management and accounting software system from Sage Group PLC. This payroll service is most effective when your business uses other Sage products and services in its business management portfolio. The service is fully integrated with Sage HRMS, so companies can manage payroll and employee data in one place.

The Sage HMRS Payroll dashboard.
Image: Sage HRMS Payroll

Key features

  • Bookkeeping integration included
  • Employee benefits integration
  • Manual payroll tax filing
  • Unlimited processing

Pros

  • Employee benefits management
  • Benefits accrual tracking and reporting
  • New-hire reporting

Cons

  • Lacks transparent pricing
  • Users report performance issues

Pricing

Pricing information is available upon request from the Sage sales team.


Square Payroll: Best for retailers and contractor-only businesses

The Square Payroll logo.
Image: Square Payroll

The Square Payroll Processing Service is an affordable, easy-to-use payroll solution for small businesses. It is handy for businesses that rely on contractors and hourly employees. With Square Payroll, companies can send employees their paychecks, manage scheduling and time-tracking, withhold and file taxes, and administer benefits such as health insurance and retirement savings.

Square Payroll integrates seamlessly with Square POS, making it simple to use the same software for both POS and payroll purposes.

The Square Payroll dashboard.
Image: Square Payroll

Key features

  • Integrations with Square products
  • Automatic filing for all payroll taxes
  • Direct deposit
  • Payroll for employees and contractors
  • Unlimited processing
  • Web/mobile interface

Pros

  • Contractors-only option
  • Multi-state payroll — available in all 50 states
  • Unlimited pay runs per month

Cons

  • Only basic reporting features
  • Email-only support

Pricing

Square offers two pricing plans:

  • Employees and contractors: $35 monthly base fee plus $5 per employee or contractor.
  • Contractors only: $5 per contractor per month.

How do payroll services work?

Payroll services are third-party providers that manage an employer’s payroll process. They typically offer services, including employee payroll processing, payroll taxes, direct deposit and employee benefits administration.

With payroll services, employers can outsource their payroll responsibilities, allowing them to focus on other aspects of their business. The payroll provider will typically handle all aspects of payroll, including calculating and processing employee payroll, filing taxes, and issuing paychecks or direct deposits to employees.

SEE: GDPR resource kit: Tools to become compliant (TechRepublic Premium)

Other services may be included depending on the provider, such as electronic time tracking, employee onboarding, health insurance administration, workers’ compensation and 401(k) administration.

What features to look for in payroll services?

  • Ease of use: Look for services that are easy to use and come with helpful tutorials and user-friendly dashboards.
  • Automated payroll processes: Automation is key in payroll services. Look for a payroll service that can automate the most time-consuming tasks, such as calculating employee wages, preparing direct deposits, data entry and tax filing.
  • Quality assurance: Look for a payroll service with built-in accuracy checks to ensure all calculations and filings are correct.
  • Employee self-service: Employees can access their payroll information online from anywhere. It’s essential for payroll services to provide user-friendly self-service tools that allow employees to view their hours worked, pay stubs and other information.
  • Customer support: Many payroll services provide 24/7 customer support via phone, email and other channels.
  • Flexible payment options: Look for a payroll service that offers flexible payment options, such as direct deposit, checks and debit cards.
  • Reporting: Payroll services should provide detailed reports on employee earnings statements, payroll summaries and year-end tax forms. Reports should also be customizable so you can track wage and hour data, employee hours worked and other important information as needed.
  • Scalability: Your payroll service should handle your current needs and grow with your business. Look for features such as multiple employee profiles and the ability to add or delete employees as needed.
  • Compliance with labor laws: Payroll services should support employers in complying with all relevant labor laws in their jurisdiction. This includes regulations related to minimum wage, overtime pay and vacation pay.
  • Tax management: Payroll services can help employers manage their taxes. This includes filing payroll taxes on behalf of employers, computing withholding amounts and ensuring compliance with all applicable tax regulations.
  • Direct deposit: Payroll services should offer direct deposit as an option for employees. This allows employees to have their paychecks deposited directly into their bank accounts, eliminating the need to wait for a physical paycheck.

Benefits of using payroll services for your small business

Payroll services are invaluable for small businesses that need help managing their payroll and associated compliance requirements. Outsourcing payroll to a professional provider allows small businesses to save time and money and focus on growing their business. Payroll services provide a range of benefits, including:

Streamlined payroll processing

Payroll services can streamline payroll processing, reducing the time and effort required to manage employee payroll. This type of service makes it quicker and easier to process payroll accurately, stay up-to-date with payroll tax rates, file payroll taxes and calculate employee deductions.

Reduced administrative burden

Using a payroll service can significantly reduce the administrative burden of running payroll. Outsourcing payroll means you don’t need to worry about tracking employee hours, calculating taxes or filing paperwork. As a result, you may be able to reduce your administrative staff costs or shift their roles to more important work.

Accurate and timely payments

Payroll services are designed to be accurate and timely in processing payroll so you can feel confident that your employees will be paid on time and without any errors.

Employee benefits administration

One of the key benefits of using a payroll service is managing employee benefits more efficiently. Many payroll services assist with administering benefits such as health insurance and retirement plans. This can help ensure that employee benefits are appropriately managed and that all necessary paperwork is filed promptly.

Reduced risk of penalties

Payroll service providers can help you comply with a variety of laws and regulations, reducing the risk of costly penalties from the IRS and other regulatory agencies.

Cost savings

Outsourcing payroll to a professional provider can save small businesses money by reducing payroll processing costs and eliminating the need to hire additional staff for this task.

Read next: The best payroll software for your small business (TechRepublic)