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Cedric Jackson
By: cjackson
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The Best Payroll Services for Small Business in 2021

Payroll services for small businesses are crucial for growth entrepreneurship due to guide and assist you with the payroll and related tasks such as managing taxes, insurance, time off, and paying the proper fees. That’s why we will help you choose which is the best option for you.

What is Payroll for Small Businesses?

Payroll can be one of the more exhausting parts of running a small business, often complicated due to being information-intensive. You need to put a lot of effort into it if you manually take care of this process.

If you mismanage your companies’ payroll, employees may come to see you as untrustworthy. They may also become frustrated with inaccurate or late payments.

Additionally, mismanaged payroll means your business will continue to operate less and less efficiently.

Payroll is what keeps your business moving

This is true both practically and for employee morale. Professional businesses need to have solid reputations for making payments on time, every time.

business owner doing bookkeeping

What Is Small Business Payroll Software?

A payroll service provider is a software to help you with payroll processes. This software is essential to running a seamless modern workplace. This makes finding the best payroll software for your small business an important part of investing in your company’s foundations.

The best payroll software is no longer accessible only to giant corporations with the most prominent operating budgets. Now small businesses have access to these platforms with as much ease as larger companies. Thanks to the digital revolution, these technologies are available almost everywhere.

How Does Small Business Payroll Software Work?

Rather than prepare your payroll manually, payroll services for small businesses automate the process. 

When setting up employee records, you can choose specific pay periods and whether to print paper checks or pay employees by direct deposit. 

After inputting all the pertinent information into the software program, the payroll software calculates the results. The software tabulates gross and net wages to include deductions for state and federal taxes and other payroll deductions. 

At the same time, payroll software accumulates data to prepare monthly, quarterly and annual reports. 

In addition to standard payroll features, other common functions include tracking personal and sick leave or HR and recruiting features. 

Some systems house informative health and retirement benefit reports you can print out for employees.

Most systems keep up to date with labor laws, workers’ compensation, and garnishment payments. 

In some instances, employees can log into the system to view pay stubs and earnings statements.

Payroll software ensures that a business owner keeps accurate records and frees them to concentrate on other aspects of running a business. 

Likewise, an employer stays compliant with government agencies by submitting accurate information and making timely payroll tax filings and payments.

The Benefits of Payroll Services

Payroll software has innumerable advantages, but they all tend to boil down to preventing errors, ensuring legal and tax compliance, and preventing related issues.

If you use the payroll tools available to you through software packages and services, you can avoid many or all of these issues.

Unfortunately, manual payroll leaves you far more vulnerable to errors. It also takes a lot more time than automated payroll software.

If you do this process manually, you must calculate taxes, bonuses, deductions, raises, and every other facet of data.

Payroll software takes care of all this automatically.

businessman auditing

Your payroll process also needs to be cost-efficient. Automated payroll software easily makes the process more efficient and inexpensive. Using software gives you far more time and attention to other tasks that make your business more profitable.

According to the American Payroll Association, automating can reduce costs of the process by as much as 80 percent!

Reasons to Use Payroll Software

If you’re not convinced yet, here are a couple more reasons:

  • Payroll software can automate the entire payroll process
  • With the best software, you know that your payroll is legally compliant
  • Guaranteed error-free payroll—and dispute resolution tools if errors ever occur
  • Added security, privacy, and customization
  • Instant digital access to employee and payroll data
  • Planning and projection tools for future payroll costs

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How To Start a Payroll For Small Business?

For starting on process payroll, make sure you follow these steps to properly set up and use the platform you choose:

  1. Obtain an employer identification number (EIN)
  2. Check whether you need state or local IDs
  3. Choose if the member of your team and independent contractors or employees
  4. Take care of any required employee paperwork
  5. Decide on a pay period
  6. Document your employee compensation terms
  7. Choose a small business payroll system
  8. Run the payroll
  9. Keep your records straight
  10. Report your payroll taxes

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How Much Does It Cost to Have Payroll Services for Small Businesses?

When choosing the best payroll services for small businesses, the first concern is usually the price.

On average, a basic small business payroll service has a per-employee or per-check fee, besides the base account fee.

While base account fees vary widely from one provider to the next, you can expect to pay anywhere from $20 to $100 per month, plus an additional $1.50-$5.00 per payroll run for each employee.

A business owner’s responsibility is to choose affordable payroll solutions well.

The IRS forces business owners to pay stiff penalties for one in three small businesses because they don’t pay the correct fees and fill out forms appropriately. You don’t want to be that business!

Keep in mind that, naturally, the payroll service cost will increase as your business and team grow.

Some plans may offer various plans or tiers based on the number of employees you have.

Lastly, try to choose small business payroll options that offer free quotes or free trial periods.

How Much Does a Small Business Pay in Payroll Taxes?

One of the benefits of starting payroll services for small businesses is not having to pay the payroll tax fees.

This kind of service even comes with a guarantee: the promise that you won’t have to pay any fines, and if you do end up getting hit with any, the service will handle them.

This is, obviously, a big selling point for a lot of small businesses.

If a payroll service doesn’t provide that guarantee, it doesn’t have to necessarily be a deal-breaker, depending upon what other services they offer.

Keep reading: Expense tracker apps for small businesses.

What Should You Look for When Shopping for Payroll Services for Small Businesses?

When choosing the best payroll services for small business owners, consider the following benefits software providers.

Payroll Provider with Excellent Customer Service

Your small business payroll service has to provide excellent customer service, so answer these questions to choose a payroll software:

  • Are their customer support teams easily reachable via phone, email, or live chatbox?
  • Are their hours of availability convenient to the hours your business keeps?
  • Do they respond quickly to email?
  • When you speak with a support specialist, are they knowledgeable and helpful, getting your issue resolved quickly?

While shopping around for payroll services for small businesses, calling a few times to get a feel for their operations can give you a good idea of whether they will please you.

Additionally, asking your fellow small business owners which payroll services they use and their experiences can also help guide you in the right direction.

Full-Service Payroll Features That Fit Your Small Business

Some industries have specific needs regarding payroll. For example:

  • Do you own a restaurant in which employees earn a lower base salary and tips?
  • Do you have a sales team that earns their salaries on a commission-based structure?

If so, you will have different needs than those businesses paying their employees’ set hourly rates or yearly salaries, and you will want to ensure that your payroll service can work with you accordingly.

Payroll Software with Additional Benefits

While some best payroll service providers for small businesses may offer all kinds of added or bonus features, you will want to ask yourself if you need them.

For example, suppose you only have a few paid employees.

In that case, you may not need anything more complex than the basics of paying your employees in full and on time, paying your payroll taxes appropriately, and the tax filing is on time and correctly.

However, if your small business is rapidly growing, then you may have additional needs or wants.

Various Human Resources-focused add-ons may be worth the extra money, such as tracking vacation time, health insurance deductions, and the like.

Payroll Setup Should be Simple

Let’s face it, with everything else that goes into being a small business owner, the last thing you want to do is spend a lot of time on the phone with your payroll service’s customer service line or getting flummoxed by software glitches.

Take the time to ask around to other small business owners, read reviews and take advantage of any free trial periods that they may offer.

This lets you see if a particular service’s functionality works for you and if you (or your staff) find it easy and user-friendly.

a women in business looking for the best payroll Services For Small Business

What Are the Best Payroll Software Companies for Small Businesses?

Now that we have gone through a quick synopsis of what to look for, a cheap payroll service for small businesses, and of course, the best option according to your needs.

Let’s dive into which best companies are out there and how they each add up.

1. Gusto

gusto logo, best payroll software

Gusto is a quite affordable online payroll software for a small business owner while providing many of the much-needed services, including check services, direct deposit, and benefits planning, among others.

They offer two different plans. Both cost $39 per month; the difference is how much you pay per additional employee.

With Gusto basic, you pay $6, and with Gusto Complete, you pay $12.

This pricing easily makes Gusto one of the more affordable top-tier payroll software options.

Gusto also offers you a free trial that makes it pretty tough to turn down.

Much like Paylocity, Gusto provides employees with access to their pay stubs and tax information, even after moving on.

Gusto has a lot of added functions with an intuitive interface. Here are some of its benefits:

  • It will easily integrate with your in-house accounting software.
  • Automated tax filing services for state, local, and federal levels.
  • Automatically generated W-2 and 1099 forms.
  • Automated employee tax document distribution.
  • Automated new employee filing procedures for state taxes.
  • Automatic wage garnishment and child support deductions in 49 states (South Carolina excepted).
  • Easily integrates with top-tier accounting software products, like QuickBooks or Xero.
  • Track paid time off (PTO) hours.
  • Digital W-2, 1099, and paystub access for employees.
  • Automated worker’s compensation.

Many of these features often cost extra with other payroll software and services. However, the above are all part of Gusto’s basic plan.

More advanced Gusto plans mostly give your business more administrative and HR tools.

You can approve time-off requests in addition to tracking paid-time-off hours. And Gusto will automatically sync your approved PTO hours to each employee’s pay schedule. This means you never have to make PTO adjustments to schedule yourself.

They are one of the best payroll companies for small businesses.

2. Intuit

intuit logo

Regardless of whether you are looking for a basic payroll service or you are in need of something more comprehensive, Intuit will have a package for you.

  • Intuit Basic, which starts at $20 per month, plus $2 per employee/month, is a great price point for any small business. This package will calculate your payroll and taxes (although it will not file your taxes).
  • Additionally, there is Intuit Enhanced which hast a reasonable $31.20 per month. The Enhanced program offers additional features beyond the Basic package, including tax form completion, filing, and payment.
  • Lastly, Intuit offers a Full-Service package, which will run you $79 per month, but that is still quite reasonable, considering it will run the entire payroll, transfer data from other services, and guarantee its accuracy.

3. Namelynamely-logo

Namely has become one of the biggest human resources services around. While their prices are not cited on their website, you will need to call and speak with a representative to find out more about their pricing structures.

Namely offers a full suite of online payroll services for small businesses and human resources tools.

Regarding payroll services, Namely will carry out benefits deductions, pay and file all of your taxes, handle year-end reporting, provide access to payroll histories for your employees and ensure your compliance with regulations, among other services.

Additional helpful services include: assisting with employee benefits, such as health insurance, life insurance, and disability insurance while providing services for onboarding new employees and tracking performance reviews.

4. Paylocity

paylocity logo

Paylocity is what you are looking for if you are looking for a straightforward and efficient payroll provider.

In addition to offering apps to your employees that allow for clocking in and out and checking their paychecks, their website allows employees to track vacation time, request time off, and print out year-end tax forms.

For the employer, Paylocity offers the same payroll software services as many others, along with tracking retirement plans, wellness plans, and compliance checking with the Affordable Care Act.

Much like Namely, Paylocity also offers templates for onboarding new employees.

5. Quickbooks

quickbooks logo

Intuit QuickBooks Payroll is similar to Gusto and integrates with their QuickBooks accounting system. 

  • Software is user-friendly.
  • Available in Core, Premium, and Elite versions
  • All 3 plans include full-service payroll features such as automated payroll and tax forms, health benefits, 401 (k) retirement plans, 1099 E-file, product support, and next-day direct deposit
  • Additionally, all plans calculate payroll and taxes, including a workforce portal, a report feature for payroll history, bank transactions, contractor payments, paid time off, tax payments, etc.
  • Other available features include HR support, workers’ compensation, time tracking, and tax penalty protection.

Expect to pay between $22 to $62 per month and a monthly $4 to $10 charge for each employee. 

QuickBooks Accounting charges between $25 to $80 each month. 

An annual contract is not required for QuickBooks payroll online subscriptions since they bill on a month-to-month basis. 

6. Paychex

paychex logo

Paychex payroll services for small businesses adapt to ongoing growth and changes. It’s best for medium-sized and growing businesses.

  • Single platform designed to integrate payroll, human resources, employee benefits, time and attendance, and recruiting.
  • Software available as a mobile app
  • Basic features include new hire reporting, tax administration, HR library, business forms, report module, labor posters, workers’ compensation, and earnings statements.
  • Additional features include a dedicated payroll specialist, accounting software integration, employee screening and onboarding, financial wellness program, etc.
  • After signing up, Paychex can have your system running in 48 hours.
  • You can upgrade payroll systems to accommodate your business growth.
  • Paychex helps businesses keep up with changing laws and regulations.

The basic service costs $59.00/month. Another plan pricing depends on specific features chosen by the business owner. All plans include a $4 and upcharge for each payee.

7. ADP

adp logo

ADP has 70 years of experience in providing human management tools and over 100 offices in the U.S. 

  • They have four payroll modules with a range of benefits.
  • Plans are available for computers and mobile phones. You can run payroll from your phone or tablet.
  • ADP’s Essential’s package includes basic payroll features along with a general ledger interface and HR tips/newsletter. 
  • Other plans include State Unemployment Insurance management, background checks, employee handbook and job description wizards, document vault, and legal assistance
  • A wide variety of plans are available for 1 to 50 or more employees.
  • All plans feature next-day direct deposit.

ADP offers competitive pricing starting at $29 to $59/month and a $4-5/month employee charge.

In addition, you can get tailored plans based on your specific payroll and HR needs. 

8. Paycor


paycor logo

This “stress-free” platform simplifies how you manage payroll, saves you time, and keeps you compliant with local, state, and federal requirements.

Paycor is for small and medium-sized businesses. 

  • Software designed to manage payroll/taxes, recruit employees, automate HR benefits, track time and attendance, simplify reporting, and help employees learn new skills.
  • Easy to use and set up.
  • It helps employers manage people and replace an existing on-site payroll staff. Paycor partners with business leaders to determine what businesses need. 
  • Cloud-based HR system
  • Business owners can customize and bundle the features they want without paying for tools they don’t need.
  • All plans include full-service payroll management, reporting, and an employee portal.
  • Additional features include wage garnishment, child support, HR templates, payroll specialist assistance, onboarding tools, retirement plan support, and accounting software integration.

Pricing starts at $99/month, with other plans available from $149 to $199/month depending on the number of employees.

9. Sage

sage logo

Sage provides solutions “to manage everything from money to people.” 

  • Payroll management system to create accurate and timely payroll checks and records.
  • Track time off for jury duty, medical leave, bereavement, medical certification and recertification, and leaves of absence. 
  • It helps employers stay compliant with labor regulations
  • Assists with monthly, quarterly, and year-end tax filing
  • You can pay employees by check, direct deposit, or prepaid debit card.
  • Essentials and Essentials Plus is for companies with ten employees or fewer. The full-service plan is for companies with more than ten employees. 

There are three plans to choose from, with pricing starting at $49.00/month for up to 10 employees and an additional $1.75/month fee for each additional employee. 

If you sign up for the full-service plan. Sage’s pricing is per payroll.

In addition, the payroll service charges a separate year-end tax service fee of $50 and $5.50 per employee.

10. Square Payroll

square logoSquare is very well known for its point of sale products. But it also offers payroll services for small businesses with transparent pricing and flexible options.

  • Point of sale, team management, and other software integrate with Square Payroll.
  • A full-service payroll system is available for employees and contractors.
  • The software includes automatic payroll tax calculations, tax filings and payments, timecards and employee app, and free seasonal inactivity.
  • Square payroll offers live support when setting up the system.
  • The software company mails W-2’s and 1099 forms for customers.
  • Customer support is U.S.-based.
  • Square Payroll users have free access to all labor-management features.
  • Integrates with QuickBooks online and Square POS systems

Flat fee pricing of $35.00 and $5/per person each month for unlimited pay runs per month.

You won’t require a commitment or contract.  

Users can cancel or pause a subscription at any time, making the feature very attractive for seasonal businesses. 

Compare the Best Payroll Software for Small Businesses of 2022

Here’s a table that will help you compare payroll services for small businesses.

Payroll softwareTiers and costsOther features
Gusto$39 per month

Gusto Basic: + $6 per employee

Gusto Complete: + $12 per employee

  • Automated tax filing services
  • Automatic W-2 and 1099 forms
  • Integrates with accounting software
  • Track PTO hours
  • Automated worker’s compensation
IntuitIntuit Basic: $20 + $2 per employee (per month)

Intuit Enhanced: $31.20 per month

Full-Service package: $79 per month

NamelyNot advertised
  • Full suite of online payroll services
  • Will carry out benefits deductions
  • Pay and file all of your taxes
  • Handle year-end reporting
PaylocityNot advertised
  • Employee apps
  • Compliance checking with the Affordable Care Act
  • Templates for onboarding new employees.
QuickbooksBetween $22 to $62  +$4 to $10 per employee (per month)
  • Full-service payroll features 
  • It calculates payroll and taxes
  • HR support, workers’ compensation, time tracking, and tax penalty protection
PaychexBasic service: $59 per month + $4 per employee
  • New hire reporting, tax administration, HR library, business forms, report module, labor posters, workers’ compensation, and earnings statements.
  • Dedicated payroll specialist, accounting software integration, employee screening and onboarding, financial wellness program, etc.
ADP$29 to $59+ $4-5 per employee (per month)
  • General ledger interface
  • HR tips/newsletter
  • State Unemployment Insurance management
  • Background checks
  • Employee handbook
  • Job description wizards, document vault, and legal assistance
PaycorBasic plan: $99 per month

Other plans: from $149 to $199 per month (depending on the number of employees)

  • Full-service payroll management, reporting, and an employee portal
  • Wage garnishment, HR templates, payroll specialist assistance, onboarding tools, retirement plan support, and accounting software integration
Sage$49 per month for up to 10 employees ($1.75 for each additional employee)

The full-service plan’s pricing is per payroll.

The payroll service charges a separate year-end tax service fee of $50 and $5.50 per employee.

  • Create accurate and timely payroll checks and records
  • Track time off 
Square Payroll$35.00 + $5 per employee
  • Automatic payroll tax calculations, tax filings and payments, timecards and employee app, and free seasonal inactivity
  • It mails W-2 and 1099 forms.
  • Integrates with QuickBooks online and Square POS systems

Keep Reading: Are You Hiring for the First Time? Here’s How to be Compliant

Finding the Best Payroll Software for Your Small Business

There is no shortage of excellent payroll software available today. Lots of software comes with additional or even complementary services that make them even better. Depending on your business’s exact needs, one may be better than another.

Picking the best software for your business starts by knowing what modern products and services are out there.

You also need to ask yourself what your business needs. Finally, you need to know what your priorities are with how you run your payroll.

To choose the best payroll service, consider these suggestions.   

  • Payroll software/service should meet the needs of your small business now and have the ability to upgrade to more features in the future.
  • It should be within your price range without forfeiting the most needed features for your business industry.
  • A payroll service that integrates with accounting and POS software streamlines the efficiency of your operation.
  • Find an option that offers customer service support.

Regardless of which software you decide to go with for your small business, it’s always a good idea to keep your records in case something unforeseen occurs.

Additionally, don’t be afraid to change payroll services if you find that the one you initially chose doesn’t turn out to be the one that best meets your needs.

Keep reading: How can bookkeeping help your small business.

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Are You Ready to Improve Your Payroll Process?

Payroll software is vital for any small business. Unless you are willing or able to hire a full-time bookkeeper, you should have your payroll services taken care of using this software.

Having the best payroll software at your service takes the complexity and labor out of payroll.

Using it lets you focus on growing profits and improving your business.

At Camino Financial, “No Business Left Behind” is more than a motto. It’s a way of life.

Camino Financial was born out of a desire to help every small business owner succeed. Our goal is to give every small business the tools, knowledge, and resources it needs to thrive.

We offer tons of great industry insights in all our business resources. We also provide financing and financial advising services.

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Payroll Services For Small Businesses FAQ

What Is the Best Payroll Service for Small Businesses?

The answer is not as simple. It depends on what your needs are and your budget. That said, in our opinion, overall, the best payroll company for small businesses is Gusto.

Do I Need a Payroll Service for My Small Business?

Preparing a payroll manually for 2-3 employees is doable. Although, if you can’t keep up, have many employees, or make administrative mistakes, it’s time to get help from a third-party provider. 

You can get payroll software, or you can hire a payroll service company. Payroll services are professionals and know how to manage them. 

As a business owner, you can hand over this time-consuming responsibility to someone else and focus on your business. If there are any errors, the service works with state and federal officials to clear up discrepancies.

How Much Do Payroll Services Cost for Small Businesses?

The cost of payroll services varies per provider based on the specific payroll features you pay for and whether you link the payroll service to accounting software. 

On average, you can expect to pay $20 to $100 per month. In addition, some payroll services charge $4 to $10 per employee. 

Also, you may require to pay a separate check fee for each employee or independent contractor.

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