Payroll software automates every step in the payroll process for small to large businesses. It helps you manage payment for your employees by making it easy to set up direct deposit, withhold payroll taxes, and keep accurate records (so you don’t get fined).
Collecting the right documents from employees, ensuring you keep the right records, withholding deductions and taxes, and making sure you calculate everything correctly can be time-consuming, and it’s easy to make a mistake. It can be risky to do manual payroll, especially considering that in 2019, the Internal Revenue Service (IRS) assessed more than $4.9 million in penalties for issues such as failure to pay and bad checks.
To help you choose the right payroll software for your business, we considered 15 different payroll solutions. We looked at cost, ease of use, important integrations, convenience, reporting features, and support.
The 8 Best Payroll Software of 2021
Best Overall: Gusto
Gusto offers four thoughtful tiers for small to midsize companies that need payroll with a few helpings of human resource (HR) features, making it the best overall choice. Each plan includes full-service automated payroll that’s suitable for almost any business, depending on needs.
Affordable, but good value
Unlimited payroll runs
Paid time off (PTO) tracking available
Full-service payroll (available in all states)
Basic reports included at all tiers
Optional health benefits only available for Core plan and up
Integrations only available for Core plan and up
Dedicated support only for Concierge subscribers
Gusto is similar to other payroll software solutions in that it offers direct deposit or checks to pay your employees. It also tracks and files federal, state, and local taxes automatically. What sets Gusto apart from the other options is that it offers a better plan for each tier that you go up. Rather than removing direct deposit for the low-priced plan, Gusto increases the convenience of direct deposit the more expensive your plan (e.g., direct deposit takes up to four days to clear for the lowest plan, but the high-tier plans get next-day direct deposit).
The Basic plan from Gusto costs $19 per month, and $6 per employee per month, making it one of the most affordable choices for a full-service payroll plan. The Core plan goes up to $39 per month, but the cost per employee stays the same, and you’ll be able to offer two-day direct deposit and health insurance options. You’ll also be able to get helpful software integrations. The Concierge plan is $149 per month and $12 per person offering next day direct deposit, time tracking, and dedicated support.
While the Basic plan is enough for any small business, your employees all need to be in one state—any state—but Gusto will only submit payroll taxes for a single state. If you have remote employees across the U.S., you’ll have to upgrade at least to the Core plan.
Best Reporting: Paychex Flex
Paychex Flex offers more than 160 reports for you to get a clear look at wages, taxes, turnover, and more. Paychex is our best reporting option because it checks almost all the boxes for what you’d want in payroll software when it comes to reports and data. It also automatically files your payroll taxes, gives you unlimited payroll runs, ensures compliance, and includes integrations with important programs you also use, such as accounting and benefits apps.
Easy to use
HR add-on options
Robust reporting feature
Even the lowest-priced plan is pricey
Hidden fees for setup & EOY tax docs
Mixed reviews from users regarding support
There’s a lot to like about Paychex. The payroll software makes it easy to set up and run payroll, it automates submission of federal, state, and local payroll taxes, and it offers plenty of upgrade options, which you may need as your business grows. Still, the basic reporting you get from Paychex could be worth the monthly fee alone, giving it the edge in this category. Plus, you’ll be able to add any other data field you’d like, thanks to custom fields, which is rare for small business online payroll services.
It’s difficult to say how much Paychex will cost you unless you go through the process of getting a custom quote. The lowest-priced plan starts at $59 per month, plus $4 per person per month, which is more expensive than most other small business payroll solutions (and you don’t get all those sweet reports at this tier).
One of the most important aspects of a good online payroll solution is whether it integrates with software you already use. Paychex does integrate with QuickBooks and Xero accounting software, plus many health insurance and benefits apps, time tracking and attendance software, and HR software.
Easiest to Set Up: QuickBooks Payroll
If you’re already using QuickBooks for accounting, then QuickBooks Payroll is our easiest to set up option, as everything will be automated, and it’s going to be an intuitive program for any QuickBooks user. You’re unlikely to need to contact support for help because the tutorial and knowledgebase are so thorough. Even if that’s not working for you, a quick search online will send you to a multitude of walkthroughs.
Easy setup & intuitive interface
Seamless integration with QuickBooks accounting software
Fast direct deposit options
Low-tier plan doesn’t include tax filing
1099 filing costs extra
Not a good value for the cost
QuickBooks earns our nod for the easiest setup because its user interface is so intuitive for anyone familiar with QuickBooks. In addition to customer service, there are ample resources online to get anyone on board with their payroll services. QuickBooks does a good job making establishing and running payroll simple for anyone regardless of experience.
Although QuickBooks offers excellent features, if a bit limited in its HR options, you’ll pay for them. The lowest-priced plan starts at $45 per month, plus $4 per person per month. The Premium plan costs $75 per month, plus $8 per person per month, but it also expands its features to include HR support and a payroll setup review from an expert. The Elite plan from QuickBooks costs $125 per month, plus $10 per employee per month, and you’ll get 24/7 support, plus tax penalty protection.
Best Customer Service: Workful
Workful is one of the newer online payroll services available, and it’s already making a name for itself with its top-notch customer support, which is why it’s our best customer service option. The geolocation time-clock tracking is easy enough to set up and ensures employees clock in and out from wherever you’ve set as appropriate. Also, employees can submit expenses through the app, so they can get reimbursed with the next payroll run.
Easy to use
Includes employee expense tracking
Offers geolocation time-clock tracking
Includes document storage
Tax filing not available in all states
Limited reporting features
Setup seems clunky
Workful is an affordable and easy-to-use application but is not without its restrictions. For example, it doesn’t do automatic tax filing for you. In fact, it’s only available for state payroll tax filing in California, Florida, Georgia, North Carolina, South Carolina, and Texas. It gets out nod for best customer service because it provides fast guidance with easy-to-understand directions for a small business owner.
Workful is one of the easiest-to-use online payroll services available. The left-side main menu is intuitive and the dashboard is clean. Setup is easy enough, with a tutorial that walks you through establishing your services. Once you have the time-clock set up, it’s kind of hands-off work for you. Employees simply use the app to clock in and out.
When it comes to integrations, Workful doesn’t seem to play well with others. You can integrate QuickBooks Online, but that’s it. Workful is trying to be a single software solution, which is why it offers built-in time tracking, document storage, and HR options. However, if you’re happy with your time-tracking solution, use a different accounting program, or need Indeed or Zapier integrations, Workful isn’t the right payroll software for you.
Best for Small Businesses: OnPay
OnPay offers an easy-to-use, affordable online payroll solution that’s ideal for small businesses. There are no hidden fees, which is important for a small business on a budget. The full-service payroll automates calculations and files your federal, state, and local payroll taxes. You’ll still have to run and approve payroll each time.
No hidden fees
Easy to use
Good value for the cost
No same-day or next-day direct deposit
No automatic payroll submission
Setting up payroll the first time in a new program can be time-consuming, but OnPay makes it easier with its setup wizard. Follow the steps and make sure your information is accurate, and you should be just fine. If you have data from another payroll service that you want to import into OnPay, you can get help with that, and OnPay guarantees accuracy.
At $36 per month and $4 per person per month, OnPay is a little more expensive than others, such as Workful and Payroll4Free. However, you get a lot more for the price, which makes it our top choice for a small business owner trying to simplify payroll and human resources.
In addition to the full-service automated payroll you get from OnPay, you’ll also get filing for W-2 and 1099 workers (no extra cost, like others). There’s also plenty of HR features to help you hire new employees, including offer letters, e-signing, automated onboarding, and document storage—features typically offered as add-ons or in top tiers from other services.
Best for Large Companies: ADP
One of the most well-known names in payroll and HR is ADP. The brand recognition and years of experience make it ideal for large companies or businesses that plan on growing pretty fast. The lowest-priced plan includes full-service payroll, direct deposit, reporting, and a self-service employee portal. More complete features and HR services come with higher-priced plans.
Scalable with several plan options
Robust reporting, including customization
Lots of HR add-ons
Pricing isn’t transparent
Possibly too many features for small businesses
Several fees, including for setup
Consider ADP’s main competitors and you’ll see why it’s typically used by larger businesses. ADP has always been more of a professional employer organization (PEO), but it has evolved to offer a payroll service that’s more suitable for small businesses. It’s a good idea to choose a payroll service that can grow with your business, though, if only so you can avoid migrating data to a different service in the future. ADP makes that possible with its ADP RUN service, which is best for businesses with fewer than 50 employees.
Unfortunately, it isn’t easy to compare the cost of ADP’s plans to other services because ADP doesn’t publish its plans’ pricing. You’ll have to fill out forms to get a custom quote for your business, which will be based on your needs and the number of employees your business has. We received a variety of quotes and setup fees for a 10-person business, which fell between $150 to $200 per month, making it an expensive choice compared to all the software on this list. Setup fees ranged from $25 to $200, but reps often offered to waive the fee if we signed up immediately.
Best Free Option: Payroll4Free
Payroll4Free is the best free payroll service you can find that’s truly free—as long as you’re willing to do a bit of manual work. You won’t be able to file payroll taxes or pay your employees via direct deposit, unless you’re willing to fork out a low payment, though. If you have a business with fewer than 25 employees, this would be a step up from a pen-and-paper method of doing payroll.
Free to use
Inexpensive to file taxes & pay via direct deposit
Pay W-2 or 1099 workers
Integrations are extremely limited
Setup is totally manual
Payroll4Free is the only free software that allows for all the administrative components needed to run a payroll. Essentially, Payroll4Free lets you input hours for payroll for your business, leaving a lot of the administrative tasks up to you. It’ll calculate things for you, though. Setup is manual, but it includes a setup tool to help you enter the right information in the right places. This leaves room for error, but that could be said for many payroll software tools.
There are no fees to use Payroll4Free unless you have more than 25 employees or you want Payroll4Free to file your payroll taxes for you. Payroll tax filing costs $12.50 per month as a flat fee. If you want to pay your employees via direct deposit, that will be another $12.50 per month. Otherwise, funds will be deposited into your account so you can manually pay your workers by check, though you may want to consider paying for check printing software. Even if you choose to pay for these services, you’ll still pay less than most other services.
Best for Integrations: Rippling
Rippling is technically an HR software that includes payroll as an add-on feature, but even if you sign up just for the payroll function, you’ll find it affordable and more useful than other options thanks to its robust integration with other software. All payroll software is made more helpful by integrations of accounting and time and attendance software, and Rippling does that and much more.
Affordable for small businesses
Pay employees anywhere in the world
Integrate with more than 500 apps
Launch can take a while
Pricing structure is confusing
Rippling earns its place in this list because of its easy integration of almost any app you already use. Being able to automatically sync all your data needed to run payroll makes it much easier and faster. Sure, most payroll software lets you run payroll as often as you need, but it’s important to make it a quick process, too.
You’ll have to contact Rippling to get a custom quote, but you can expect the cost to include a base fee of $35 to use the platform, and then $5 per month per employee for payroll, according to the quote we received. However, Rippling claims on its website that pricing starts at $8 per user per month. So, the pricing structure is a bit confusing if you’re picking and choosing features.
What Is Payroll Software?
Payroll software is a tool that calculates how much an employee earns based on hours worked and wages set. It also sets aside the appropriate amount for payroll taxes, including the required federal taxes, plus state and local taxes.
Running payroll manually leaves a lot of room for error, which can lead to hefty fines from the IRS. This is why so many businesses prefer to outsource payroll, but that can get expensive. Payroll software is the in-between solution that’s affordable but still helps businesses maintain compliance, so they can avoid penalties and lawsuits.
Who Should Use Payroll Software?
Any business that employs workers, whether full time, part time, or by contract, should consider using payroll software. After all, submitting payroll taxes is required, so make it easier on yourself with payroll software. Automating payroll can save you time, prevent human error, and ensure everyone gets paid the right amount and on time. Depending on the size of your business, you may want to have a dedicated person running your payroll software.
Although payroll software tends to automate calculations, payroll runs for full-time employees, and files payroll taxes, there’s still administration work to do. Depending on the size of your business, you may want someone to manage adding new employees, offboarding an exiting employee, and running off-cycle payrolls as needed.
What Does Payroll Software Cost?
Most payroll software has moved to cloud-based solutions, so they’re by and large SaaS companies. You’ll typically pay a monthly base fee, much like a subscription, which also gives you access to support and you’ll benefit from regular updates to the software. You can find free options, such as Payroll4Free, but you won’t get the automation that comes with a paid service.
The average cost of payroll software is about $30 per month for the base fee, and then around $4 to $8 per employee per month. Some of the most expensive plans start at $150 per month, plus $12 per person per month.
How We Chose the Best Payroll Software
We explored 15 different payroll services before choosing the top eight listed here. One of the most important things to consider for any business is cost, which is why that was heavily considered for each option. We made our decisions due to features like direct deposit and reporting. We also sought options with helpful support to help business owners address questions they have with setting up and running payroll.
Internal Revenue Service. "IRS Data Book 2019," Page 73. Accessed November 10, 2020.