Staying on top of payroll and HR can be a time-consuming task for the small business owner, especially with all the other responsibilities involved in running a business. It takes great attention to detail and knowledge of compliance procedures to avoid any costly mistakes.
When you’re already so busy, you might not want to take that risk. Luckily, there are plenty of tools out there for small businesses to leverage, including professional payroll management services.
Why use payroll tools?
Online payroll software services offer the following advantages over traditional, paper-based payroll and HR infrastructure:
- Automated payroll processing. Instead of painstakingly calculating, by hand, the amount of money you owe your employees each pay period, payroll software can help you manage this more efficiently. Payroll software rapidly does all the math for you. It then goes the extra mile and deposits your employees’ paychecks directly into their bank accounts. You may be able to significantly reduce paperwork when paying employees using a payroll software.
- Fewer errors. Calculating paycheck amounts by hand increases the chances of human error. When you process payroll electronically, you let a computer execute all calculations, which can help minimize potential errors. Of course, errors can still persist if you enter incorrect employee wages or information in your software platform, but if all the information you’ve added is accurate, miscalculations are unlikely.
- Easy access to employee data. For employees to receive paychecks through your payroll system, their personal information must first be uploaded into the system. Having this information readily available will often come in handy. If your payroll platform integrates with your time and attendance software, you can also easily access records of your employees’ working and leave hours. Full-service payroll software may also include time tracking functions that can help you track time and attendance.
- Streamlined employee benefits. Many payroll platforms offer small business owners like yourself access to higher-level insurance plans not otherwise available. Even payroll companies lacking this feature can help streamline your benefits offerings since they automate all relevant paycheck deductions. This way, if you need to deduct 401(k) contributions from an employee’s paychecks, you may do so with confidence.
- More security. If you process payroll manually on paper, you risk the possibility of your records being destroyed, and the payroll records may also be more susceptible to security breaches. If you manage payroll digitally, you can better address both of these potential problems. Most payroll platforms are cloud-based and store their data at several locations, so physical damage is of little concern. Plus, cybersecurity structures are generally much tougher to breach than ordinary keyed locks.
- Customizable payroll reports. Come tax time, you’ll want payroll reports in hand to more easily file for appropriate tax deductions. Payroll software both easily generates these reports and lets you set custom structures for them. This way, you get key payroll information presented quickly in a manner which you prefer.
- Future budget planning. Customized payroll reports also come in handy when you’re figuring out your labor budget for future quarters or years. They can help you identify whether you have room to bring on more employees or need to implement a hiring freeze.
10 best payroll services for small business
Here are some of our top picks for payroll solutions, along with quotes from real small business owners like you, so you can make a more informed decision:
You’ve probably heard of Intuit when it comes to accounting software, but did you know they can also help cover payroll? There are three small business payroll plans you can choose from, which range from basic features to more advanced options along with software bundles.
If you already use QuickBooks ® Desktop, you can easily integrate the payroll plan. Not sure if Intuit QuickBooks ® Payroll is the best solution for you? Start out with the 30-day free trial to give it a test run.
2. Gusto ®
Gusto ® provides a payroll, HR, and benefits system in an easy-to-use package. With this solution, your day-to-day tasks can be automated so you won’t have to worry about making errors or doing repetitive work. The platform is also geared toward the small business owner—if you’re not familiar with a certain topic, they provide resources to help you along the way.
Here’s what one user shared in their 5-star review:
“As a small business owner, I just hired my first couple employees last year. I was completely new to the whole thing, and was a bit intimidated by all the requirements of doing payroll. After looking into a few payroll software options, I went with Gusto and am glad I did. It walked me through everything, in a very user-friendly way. It has helpful articles about the various requirements of payroll taxes, steps for hiring employees, forms to fill out, etc. The setup took a bit of time, but was a pretty reasonable process.”
Source: Capterra, 11/14/2018
3. Paycor ®
With over 30,000 small and medium businesses on their platform, Paycor ® combines recruiting, HR, and payroll in one software solution. Whether you use the mobile app or the desktop version, you can make direct deposits, manage employee information, and receive notifications throughout the process.
This reviewer says:
"PayCor is used by the entire organization. We use it to onboard new employees, to manage time and attendance, payroll and benefits. Our employees use PayCor to request vacation, watch their punches and read communications from the HR department. PayCor helps me to communicate with employees across three shifts, saves me a great deal of time managing payroll and benefits, and helps my supervisors manage and approve time cards."
Source: TrustRadius 8/20/21
4. Patriot Payroll ®
Patriot Payroll is specifically designed for small businesses with under 100 employees. It’s totally online, one of the most affordable options on the market, and is designed to simplify the processes that go into employee payroll. Setup and customer support is free, and Patriot Software offers a 30-day trial free of charge as well.
Check out this 5-star review:
“Patriot Software is affordable, easy to use software. Support staff is friendly and easy to reach. If your small business is looking for accounting software that is headache free and easy on your budget, I highly recommend Patriot.”
Source: Capterra, 1/13/2017
5. RUN Powered by ADP ®
Automatic Data Processing is a leader when it comes to payroll, with upwards of 600,000 businesses using their services. Even though they offer solutions to companies of all sizes, RUN Powered by ADP ® is specifically designed for small business owners who are looking to save time on the administrative tasks involved in HR and payroll.
Even with a steeper price, ADP ® might have the features you’re looking for. Get started with a free 2-month trial before you take the plunge.
Here’s what a small business owner has to say:
“RUN works well and is a simple solution for a small business looking to run payroll with great support. Automation is essential in a small business, especially when wearing many hats. RUN powers payroll without causing headaches and also allows me to focus on my business.”
Source: Capterra, 8/30/2016
Paychex ® Flex is a cloud-based payroll system built for small to midsize businesses. It covers not only the basics, but also elements like 401(k)s, business insurance, and tax filings. They also pride themselves on their 24/7 customer service.
Here’s why this small business owner rated Paychex ® Flex 5 stars:
“Paychex has been top-notch for over five years, when I switched to them from another payroll company. I operate a small seasonal business with about 10 employees, and from the beginning I have received all the support that I need for my payroll and tax responsibilities, and at a more reasonable rate than I was paying before.”
Source: Capterra, 6/7/2017
The company behind the well-known Square ® point of sale also has a payroll software solution for small business owners. Square Payroll offers an easy, intuitive way for employees to clock in and out, even from their smartphones through the mobile app, and you don’t have to worry about taxes.
Compared to other options, Square ® Payroll comes at a reasonable price—especially since it gives you access to health insurance, 401(k) and other benefit providers.
This small business owner shares a 5-star sentiment:
“More time to work other aspects of my small business. No more spending hours on payroll!”
Source: Capterra, 4/12/2018
8. OnPay ®
OnPay ® is a payroll platform known for its user-friendliness, low costs, and month-to-month plans. OnPay ® can handle your payroll, HR, and benefits, and it will provide you with hands-on customer service during the setup process. The company offers several non-payroll services such as PTO tracking and approval, messaging tools, and highly secure document storage.
Here’s what one small business owner had to say about OnPay ® :
“The OnPay ® customer service has been excellent since the first call I had with them. The help transferring our information from a big, clunky payroll platform to getting it to the streamlined & easy to use OnPay ® platform was seamless. The communication, information, help & kindness shown throughout the process has been a real change from our last experience. The response time is super quick too!”
Source: Capterra, 4/21/2021
9. Namely ®
Namely ® is an HR platform that offers extensive small business payroll tools among its many services. The company is known for its robust time tracking integrations, consistently available expert help, and streamlined process for enrolling employees in benefits.
Here’s an enthusiastic review from a small business owner:
“Namely ® is simply a great platform for HR, Payroll, and benefits management within the organizational framework, as it helps to create better workplaces with varying functionality to adapt in small to mid-size businesses and comply with different regulations at work.”
Source: Capterra, 10/10/2020
10. Xero ®
Technically, Xero ® is an accounting platform, but its payroll integration with Gusto ® (mentioned above) is so popular that small business payroll experts often recommend Xero ® as well. Additionally, Xero’s Payroll on Autopilot ® tool entirely automates your payroll and email notifications to employees about payment. Xero ® also streamlines your contractor payments.
Check out this enthusiastic review:
“Xero ® offered a payroll option that was not expensive and easy to use. That combined with the ease of use and the cloud-based accounting is why Xero ® is my go to choice for small business accounting/bookkeeping. Being able to connect your bank account with Xero ® and import transactions makes it much easier to keep your books up to date. I used to wait all month before entering my transactions into my checking account and it became a big pain in the butt. This is so much easier!”
Source: Capterra, 1/26/2019
Additional best payroll for small business resources
For more small business recommendations and insights, read the below SmartBiz Loans blogs:
- A Small Business Owner’s Guide to Preventing Payroll Mistakes This Year. Learn how to best avoid the human errors that commonly accompany the payroll process.
- How To Pay Your Employees. Discover which forms you’ll need for your employees and master the eight-step payroll process.
- Advantages of Using Payroll Software. See how software improves your payroll’s accuracy, data security, cost-effectiveness and more.