8 Best Payroll Software for 2020

Payroll software makes it easy to calculate wages, pay employees via direct deposit, and file taxes for businesses that want to manage their payroll in-house. We compared popular options, including Gusto and Paychex. These cloud-based solutions make the most sense for small businesses due to ease of use and affordability.

8 Best Payroll Software for Small Business

Which Payroll Provider Is Right for You?

How We Evaluated the Best Payroll Software

We evaluated top-rated online payroll software programs by comparing costs (flat fees per employee, per pay run, and add-on fees) and other features. We looked for basic features like paycheck and tax calculations, electronic tax payments, direct deposit, and so on; software that didn’t have the basics or required you to be an expert at doing payroll were automatically rated lower. Customer support was also a major consideration, since that can make or break your experience with new payroll services.

Gusto: Best Overall Payroll Software for Small Businesses

Gusto is the best payroll software for small businesses, because it is one of the easiest, most affordable payroll software tools to use and manages payroll for employees as well as independent contractors. It offers many convenient features like self-onboarding for employees, benefits management, automatic payroll runs, and top-rated customer service.

Right now, you can sign up for Gusto’s Core plan starting at $25 monthly for one employee; this low rate is available for six months due to the negative impact of COV-19.

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Gusto’s Pricing

The base price for Gusto is $39 per month, plus $6 per month, per employee or contractor. Gusto doesn’t offer an edition with more limited features. However, due to COV-19, you can temporarily take advantage of its Core plan for as little as $25 monthly ($19 base fee + $6/employee).

Gusto Product Plans

Gusto Features

• Ease-of-use & setup: Modern and intuitive interface; support team is available for live chat during setup; there’s also a searchable support center & video guides.
• Unlimited pay runs: Run payroll as many times as you want at no extra cost for both employees and contractors
• Payment options: Check, 2-day direct deposit; Payroll available on-demand or as employees earn it (Cashout feature)
• Self-service: New hires can e-sign and e-file their tax docs and retrieve them when needed
• Paid time off: Employers can set paid time off (PTO) policies within the system and manage time taken so they know how much each employee has at any time
• Benefits: Health insurance, 401k retirement, 529 savings plans, commuter benefits, health savings accounts, flexible spending accounts
• Integrations: QuickBooks, Xero, and FreshBooks, When I Work, Homebase, Ximble, Receipt Bank
• Add-ons & premium features: Time and attendance, unlimited access to certified HR professionals, employee org chart, HR training & templates, dedicated support team & phone line
• Average user review: 4.8 out of 5 stars; Many users like the self-service features of Gusto and customer service quality. Some employers complained about system issues when they exceeded 100 employees; they also don’t like that benefits aren’t in all states.

Read More: Gusto

QuickBooks Payroll: Best for QuickBooks Accounting Users

QuickBooks Payroll is best for businesses that are currently using QuickBooks accounting software. It connects with QuickBooks very easily and can be a comfortable option for QuickBooks users. The basic price plan is just a little more expensive than Gusto’s, but it includes free next-day direct deposit and access to insurance in all 50 states.

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QuickBooks Payroll Product Plans

QuickBooks Payroll Features

• Ease of use & Setup: Step-by-step tutorials within a comprehensive online knowledge base; the interface is intuitive; the tabs and icons are clearly displayed and labeled.
• Unlimited pay runs: Run payroll as many times as you want at no extra cost for both employees and contractors.
• Payment options: Check, direct deposit (next-day is available to everyone; same-day is available with premium plan).
• Self-service: Employees can see pay stubs, time-off balances, & deductions.
• Benefits: Health insurance is available in all 50 states through a third-party vendor.
• QuickBooks accounting integration: Its general ledger to payroll integration is more seamless than that of other providers’, and efficiencies can come from your familiarity with QuickBooks.
• Add-ons & premium features: Same-day direct deposit, tax penalty-free guarantee of up to $25k (no matter who’s at fault), TSheets time tracking, professional setup, federal and state labor law posters.
• User reviews: 3.8 out of 5; QuickBooks users love the compatibility and customization options. However, even loyal users complain about the upcharges on the payroll side and issues with consistent customer service.

Read More: QuickBooks Payroll

Patriot Software: Best Budget-friendly Choice for Full-service payroll

Starting at $34 per month (for one employee), you can run payroll with Patriot just as you can with QuickBooks Payroll or Gusto, and the service will be much cheaper than other options on our list, except the free payroll software. Of course, this will only work if you don’t need access to health insurance or outside software integrations. You also have the option of running payroll DIY-style for $10 monthly, but you’ll have to file and pay your own payroll taxes.

Patriot Payroll Product Plans

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Patriot Payroll Features

• Ease of use & setup: Setting up Patriot software is easier than with ADP or Paychex (fewer features equals fewer decisions) but a little more difficult than Gusto. You can get help over the phone, via chat, by email, or through the searchable Help Center.
• Unlimited pay runs: Run payroll as many times as you want at no extra cost for both employees and contractors
• Payment options: Check, direct deposit
• Self-service: Employees can see pay stubs, change their bank account information, etc.
• Add-ons & premium features: Time-tracking, HR software (functions as electronic file storage)
• User reviews: 4.1 out of 5 stars; Users commented on the ease of setup, and those who upgrade to the tax services like those benefits. Users rated the support team highly. However, some complain that direct deposit is outsourced to a third party, causing issues when you need to resolve errors..

Read More: Patriot Payroll Review

ADP: Best for Startups & Growing Businesses That Need Flexible Plans

ADP is best if you have plans to scale your business in the next five years. Although a little pricier than the options we’ve discussed so far, it has all of the basics you need, like direct deposit, electronic tax payments, year-end tax filing, and so on. Features are customizable, and there are different payroll options for small, medium, and large companies.

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ADP Run Pricing

To get pricing for ADP, you’ll have to call and speak to a representative. There’s also a $200 set-up fee that reps will sometimes waive. In addition, if you’re looking for payroll services for a nonprofit, you may be able to secure a 25% discount. Of course, all discounts are time-sensitive.

ADP Run Product Plans

ADP Features

• Setup & ease of use: Setup assistance available; May take days or weeks to finalize setup; interface is intuitive with icons and help options; system can still be somewhat complex due to the wide range of features.
• Self-service: Changes to life events (marriage, new child, address), pay stubs, W2s, 401k changes, direct deposit
• Leave management: PTO and sick leave policies; dedicated professionals who monitor state and federal laws to ensure leave programs, including paid sick leave, are compliant with state law.
• Benefits & insurance: Health, dental, vision, life, and disability insurance for your employees; Business insurance for you, including workers’ compensation, business owner’s policy (BOP), commercial auto, disability, and certificates of insurance
• Reporting: Reports on payroll, taxes, benefits, garnishments, employee, and birthdays, to name a few; you can also create custom reporting.
• Software integration: Interfaces to most general ledger software like QuickBooks and Xero; syncs to timekeeping systems as well as with benefits providers and banks; You can also output a generic file for use when sharing data with third-party providers.
• Add-ons & premium features: Insurance and benefits, timekeeping, check delivery, W2 preparation & delivery
• User reviews: 4.2 out of 5 stars: Users seem to like how well the system handles paychecks and taxes. There are complaints about resolutions taking too much time and some stated that it required several phone calls to get issues resolved.

Read More: ADP Run Review

Payroll4Free.com: Best Free Payroll Service for Small Businesses

Payroll4Free.com is best for employers who need to pay less than 10 workers (although you can use it with up to 25). It offers basic payroll processing features, including both W-2 employee and 1099 contractor payments and is free for businesses who print their own paychecks and file their own taxes.

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Payroll4Free.com’s Features

• Setup & ease of use: Guided setup tool; How-to video on YouTube for new user setup; lots of room for error with manual entry
• Payment options: Manual check, direct deposit if you pay the upcharge
• Self-service: Pay stubs, tax forms, leave balance, personal information changes
• Leave management: Can set up PTO and sick leave accruals; usage data will need to be keyed by hand unless you do a time clock integration
• Software integration: Integrates with timekeeping software; general ledger software can upload and share files using the CSV format
• Basic payroll reports: Payroll reports on employee earnings, taxes, time-off accruals, and payroll
• Add-ons & premium features: Tax filing ($12.50/month), direct deposit ($12.50/month)
• User reviews: No user reviews on our site; Reviews on other third-party sites indicate that employers like that it’s free and fairly simple if you have a handful of workers. There are complaints about how dated the system is and its slow speed.

Read More: Payroll4Free

Square Payroll: Best for Retailers/Restaurants Using Square POS

Square is the best payroll software for retailers and restaurants that are already using Square’s free POS system. Time records within the POS automatically sync to the payroll system, so paycheck and tip calculations are accurate.

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Square Payroll Pricing

The base price for Square Payroll is $29 per month, plus $5 per month, per employee or contractor. If you only need to pay contractors, the base fee is waived, and the charge is $5 per contractor/month.

Square Payroll Features

• Ease-of-use & setup: Can complete setup in minutes; Online forum is available for help
• Unlimited pay runs: Run payroll as many times as you want at no extra cost for both employees and contractors
• Payment options: Manual check, direct deposit
• Compliance: New hire reporting to the state
• Taxes: Federal and state
• Paid time off: PTO and sick leave tracking
• Benefits: Health insurance, retirement, workers’ compensation
• Integrations: Homebase, QuickBooks, AP Intego
• Average user review: 4.1 out of 5 stars; Some employers like how easy it is to use. Most complaints are in regards to customer service and how difficult it is to reach a rep.

Read More: Square Payroll

Paycor: Best for Larger Businesses Needing HR Tools

Paycor is best for businesses that have a strong need for HR tools and want to streamline them with payroll. In addition to being able to pay employees and taxes on time, Paycor gives numerous HR tools and modules you can use to manage job candidates, employee performance, training plans, etc. It allows you to put more focus on the people part of your business in the most efficient way.

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Paycor Product Plans

Paycor Features

• Setup and ease of use: Easy to use; Interface is made up of widgets that you can customize to your need; You can turn features on and off as you need them, which prevents your interface from being cluttered with tools you’re not ready to use.
• Self-service: View pay stubs, request time off, clock in and out from the mobile app, review benefits
• Payment options: Check, direct deposit, paycards
• Benefits: Insurance and other benefits in all 50 states; Charged for as a separate package
• Reporting: Tons of reporting options; Generate reports on cash requirements, labor distribution, unpaid employees, headcount, etc. You can also schedule reports to be sent to you or anyone you’re working with (like a CPA) on any frequency.
• Add-ons and premium features: Onboarding, performance reviews, training, time and attendance (includes robust PTO tracker), benefits
• User reviews: 4.3 out of 5 stars; Many users like that Paycor combines HR and payroll in one software. There was a user who couldn’t quite justify the cost, because they weren’t doing much hiring.

Read More: Paycor

Paychex: Best Payroll Software for Quality Customer Service

Paychex is similar to ADP in functionality and has a robust set of features with flexible product plans. All customers get access to 24/7 customer service, and any employer who purchases a package other than the lowest-tier plan gets a dedicated service rep. In addition, compliance experts are on staff to ensure you don’t break any payroll or HR laws.

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Paychex Flex Pricing

Similar to ADP, you’ll need to speak with a representative before you can get a quote for your business. In our experience, prices usually range from $77 to $123 per pay period for 10 employees, and it charges additional for year-end tax documents. Keep in mind that Paychex offers time-sensitive discounts, so you may or may be able to get a better deal. Also, there’s a $200 setup fee the representative may offer to waive if you sign up immediately.

It’s worth noting that pricing for both ADP and Paychex is based on an old-fashioned model of pricing by payroll run. That means those businesses in the service and retail industry that run weekly payrolls will pay two to four times more with ADP than office-type businesses that pay semi-monthly or monthly.

Paychex Product Plans

Paychex Features

• Setup and ease of use: Assistance with setup available; Setup will require you answer many questions and may take a few weeks; Interface is more menu-driven than Gusto or ADP, and there’s a bit more of a learning curve compared to software like Gusto
• Payment options: Check, direct deposit (same-day available with upcharge), paycard, payroll on-demand
• Self-service: Mobile app employees can use to look at payroll, benefits, and time-off data
• Leave management: Tracks leave programs and accruals; Time-off requests and tracking need to be handled manually, unless you pay extra for time and attendance
• Benefits: Available in a separate package; Health insurance, workers’ comp, and other benefits
• Reporting: More than 100 reports on-demand; Choose specific parameters to customize and export.
• Software integration: Ximble, Humanity, Intacct Now, and Xero. It also has an open application programming interface (API) program for software developers to build interfaces with Paychex.
• Add-ons & premium features: Benefits, time and attendance, garnishment service
• User reviews: 4.2 out of 5 stars ; In general, users like the accuracy of its payroll and the support they get from the Paychex team. What they don’t appreciate are the pushy sales folks who try to get them to make a purchase or upgrade.

Read More: Paychex

Bottom Line

Payroll software helps make what would otherwise be a time-consuming and complicated process more efficient and economical. And since most come with some payroll compliance resources and expertise (some built into the system while others are live experts), they help you avoid legal risks and penalties. Be sure to determine the features your business needs most and your budget limitations before deciding which payroll software works best for you.

Based on our reviews, and the needs of most startups and small business owners, Gusto offers the best combination of features by automating as many processes as possible at a competitive price. You don’t have to be a payroll expert to use it, and it won’t break the bank. For these reasons, Gusto is our recommendation for the best small business payroll software for 2020. Sign up for a free 30-day trial today.

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