The Top Payroll Services for Businesses Under 20 Employees

Why Payroll Services and Software Are Crucial for Small Businesses

Managing payroll in-house can be complex and time-consuming, especially for small businesses. Manual processing increases the risk of errors, compliance issues, and inefficiencies. Here’s why investing in a payroll service or payroll software is essential for small businesses:

1. Accuracy in Payments and Deductions

Small business owners need to ensure employees are paid accurately and on time, including overtime, bonuses, and commissions. Payroll software automates calculations and correctly calculates deductions (such as taxes, insurance, and retirement contributions). This avoids errors that could lead to employee dissatisfaction or costly legal issues.

2. Compliance with Tax Regulations

Small businesses must comply with federal, state, and local tax regulations. Payroll services help you meet all tax obligations, automatically calculating, withholding, and filing taxes on your behalf. Staying compliant avoids penalties and fines that can disrupt small businesses with tight budgets.

3. Time Savings

Manual payroll processing takes valuable time away from running your business. With payroll software, small business owners can automate repetitive tasks, such as calculating wages and tax filings, allowing you to focus on business growth and operations.

4. Reducing Errors

Payroll errors, such as incorrect calculations or missed tax payments, can be costly. Payroll services help reduce these errors through automation, ensuring that payroll is processed accurately every time, and mitigating risks like tax miscalculations or missed filing deadlines.

5. Improving Employee Satisfaction

Ensuring employees are paid accurately and on time is critical to maintaining employee satisfaction. Payroll services help avoid late or incorrect payments, which can hurt morale and increase turnover, especially in small businesses where employee loyalty is key.

6. Comprehensive Record-Keeping

Payroll services securely store important payroll data, such as employee pay stubs, tax forms, and records of hours worked. This data is essential for maintaining compliance, preparing for audits, and making informed business decisions.

Compare Best Payroll Software For Small Businesses

4.0

4.0

Justworks

Payroll for small businesses

Starting from:

$8 /mo per person

Seamless payroll automation

Financial insights in real-time

Visit Site

4.8

(9)

4.8

(9)

Gusto

Get 1 month free

Starting from:

$49 /mo

Used by over 400,000 SMBs globally

Automated payroll with tax filing included

Visit Site

4.4

4.4

Rippling

Payroll you can manage all in one place

Starting from:

Custom /mo

Automatic compliance and tax-filing

Built for all sizes, from small businesses to large

Visit Site

4.3

(2)

4.3

(2)

Paycor

Limited Offer: 6 Months at 50% OFF*

Starting from:

$99 /mo

All-in-one HR solution for success

Used by 2.5M users & 40K+ businesses

Visit Site

4.4

(6)

4.4

(6)

QuickBooks

Save 50% for 3 months*

Starting from:

$85 /mo

All plans include extensive payroll features

Offers third-party HR tools

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4.2

4.2

SurePayroll

Get 6 months free*

Starting from:

$20 /mo + $4/user

Payroll made easy for as little as $1 per day

Automated payroll for business efficiency

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Justworks

4.0

Visit Site

Starting from:

$8 /mo per person

Free plan / Free trial:

Not Available

Learn more about Justworks review.

Justworks Payroll is a cloud-based payroll service for small businesses that makes paying employees, contractors, and vendors hassle-free. Since 2012, Justworks has been helping small businesses save time on payroll with an intuitive interface and easy-to-use features like time tracking and tax form generation.

Features

Payroll Features

401k Tracking

FMLA Tracking

Generation of pay stubs and reports

Multi-State

Automation Features

Calculate and pay employee salaries

Compliance with state and federal tax laws

Direct Deposit for Employee Paychecks

Tracking of employee hours and overtime

Update real-time employee information

HR Features

Employee self-service update anytime

Vacation/Sick Leave Tracking

Benefits Management

Employee profile management

Tax Features

Form 1099-MISC

Form 1095-B

Form 1094-B

Form 1095-C

Form 1094-C

Form 940 (Annual federal taxes)

Form 941 (Quarterly federal taxes)

Form 944 (Annual federal taxes)

Form W-2 ( Tax filing included)

Tax Compliance

Integrations

Time and Attendance Tracking

HR & Benefits Systems

Accounting Software

Direct Deposit

Tax filing and compliance

Pros & Cons

Pros

Straightforward pricing

Tax filing management

24/7 customer support

Automatic deductions

Cons

Base plan doesn't include time tracking & benefits management

Gusto

4.8

Visit Site

Starting from:

$49 /mo

Free plan / Free trial:

Not Available

Learn more about Gusto review.

Gusto is a cloud-based HR, payroll, and benefits platform designed for small and medium-sized businesses. It simplifies payroll processing with automated tax filings, direct deposits, and benefits administration, ensuring compliance with labor laws. With features like employee self-service, time tracking, and onboarding tools, Gusto streamlines HR tasks and enhances workforce management. Businesses benefit from reduced administrative burdens, improved accuracy, and seamless integration with accounting software. The platform also offers health benefits and retirement plans, making it a comprehensive solution for business owners. In this Gusto payroll processing review, I'll discuss features, performance, customer service, and Gusto pricing.

Features

Payroll Features

401k Tracking

FMLA Tracking

Generation of pay stubs and reports

Multi-Country

Multi-State

API / Integration Capabilities

Mobile App For Employees

Automation Features

Calculate and pay employee salaries

Compliance with state and federal tax laws

Direct Deposit for Employee Paychecks

Tracking of employee hours and overtime

Update real-time employee information

HR Features

Employee Attendance Tracking

Employee self-service update anytime

Vacation/Sick Leave Tracking

Benefits Management

Employee profile management

Organizational Chart

Tax Features

Automatic Tax Payment

Form 1099-MISC

Form 1095-B

Form 1094-B

Form 1095-C

Form 1094-C

Form 940 (Annual federal taxes)

Form 941 (Quarterly federal taxes)

Form 944 (Annual federal taxes)

Form 945 (Non-Payroll Payments-e.g. Pension & Annuities)

Form W-2 ( Tax filing included)

Form W-3

Form W-4

Tax Compliance

Integrations

Time and Attendance Tracking

HR & Benefits Systems

Accounting Software

Direct Deposit

Tax filing and compliance

Pros & Cons

Pros

Employee Mobile App

Automated tax filing and compliance

Integration with multiple accounting software

Seamless benefits enrollment and management

Cons

Limited options for international businesses

Limited reporting and data analytics capabilities

No Money-Back Guarantee

Rippling

4.4

Visit Site

Starting from:

Custom /mo

Free plan / Free trial:

Not Available

Learn more about Rippling review.

Rippling Payroll is an all-in-one platform designed to streamline your payroll process and save you time and money. Its product suite includes an Applicant Tracking System (ATS), comprehensive payroll and benefits management, accurate time and attendance tracking, efficient learning management, and professional employer organization (PEO) services.

Features

Payroll Features

401k Tracking

FMLA Tracking

Generation of pay stubs and reports

Multi-Country

Multi-State

API / Integration Capabilities

Mobile App For Employees

Automation Features

Calculate and pay employee salaries

Compliance with state and federal tax laws

Direct Deposit for Employee Paychecks

Tracking of employee hours and overtime

Update real-time employee information

HR Features

Employee Attendance Tracking

Employee self-service update anytime

Vacation/Sick Leave Tracking

Benefits Management

Employee profile management

Organizational Chart

Tax Features

Automatic Tax Payment

Form 1099-MISC

Form 1095-B

Form 1094-B

Form 1095-C

Form 1094-C

Form 940 (Annual federal taxes)

Form 941 (Quarterly federal taxes)

Form 944 (Annual federal taxes)

Form 945 (Non-Payroll Payments-e.g. Pension & Annuities)

Form W-2 ( Tax filing included)

Form W-3

Form W-4

Tax Compliance

Integrations

Time and Attendance Tracking

HR & Benefits Systems

Accounting Software

Direct Deposit

Tax filing and compliance

Pros & Cons

Pros

All-in-one HR solution

Very customizable

ACA & COBRA administration

Cons

Requires you to get a custom quote

Pricier than other options

Paycor

4.3

Visit Site

Starting from:

$99 /mo

Free plan / Free trial:

Available

Learn more about Paycor review.

Paycor is a comprehensive payroll software designed to streamline and automate the payroll process while saving businesses time and reducing errors. Paycor also integrates with popular HR systems, providing a seamless and integrated solution for small to medium-sized businesses.

Features

Payroll Features

401k Tracking

FMLA Tracking

Generation of pay stubs and reports

Multi-Country

Multi-State

API / Integration Capabilities

Mobile App For Employees

Automation Features

Calculate and pay employee salaries

Compliance with state and federal tax laws

Direct Deposit for Employee Paychecks

Tracking of employee hours and overtime

Update real-time employee information

HR Features

Employee Attendance Tracking

Employee self-service update anytime

Vacation/Sick Leave Tracking

Benefits Management

Employee profile management

Organizational Chart

Tax Features

Automatic Tax Payment

Form 1099-MISC

Form 1095-B

Form 1094-B

Form 1095-C

Form 1094-C

Form 940 (Annual federal taxes)

Form 941 (Quarterly federal taxes)

Form 944 (Annual federal taxes)

Form 945 (Non-Payroll Payments-e.g. Pension & Annuities)

Form W-2 ( Tax filing included)

Form W-3

Form W-4

Tax Compliance

Integrations

Time and Attendance Tracking

HR & Benefits Systems

Accounting Software

Direct Deposit

Tax filing and compliance

Pros & Cons

Pros

Mobile App

Customizable Features

Easy to Use

Cons

Limited Customer Service Options

Busy Interface

Limited Reporting

QuickBooks

4.4

Visit Site

Starting from:

$85 /mo

Free plan / Free trial:

Available

Learn more about QuickBooks review.

QuickBooks Payroll is a comprehensive payroll management software that is designed to simplify and streamline payroll processing for small to medium-sized businesses. It makes an excellent addition to QuickBooks Online users, however, QuickBooks Payroll can also function as a standalone app.

Features

Payroll Features

401k Tracking

FMLA Tracking

Generation of pay stubs and reports

Multi-State

API / Integration Capabilities

Mobile App For Employees

Automation Features

Calculate and pay employee salaries

Compliance with state and federal tax laws

Direct Deposit for Employee Paychecks

Tracking of employee hours and overtime

Update real-time employee information

HR Features

Employee Attendance Tracking

Employee self-service update anytime

Vacation/Sick Leave Tracking

Benefits Management

Employee profile management

Organizational Chart

Tax Features

Automatic Tax Payment

Form 1099-MISC

Form 1095-B

Form 1094-B

Form 1095-C

Form 1094-C

Form 940 (Annual federal taxes)

Form 941 (Quarterly federal taxes)

Form 944 (Annual federal taxes)

Form 945 (Non-Payroll Payments-e.g. Pension & Annuities)

Form W-2 ( Tax filing included)

Form W-3

Form W-4

Tax Compliance

Integrations

Time and Attendance Tracking

HR & Benefits Systems

Accounting Software

Direct Deposit

Tax filing and compliance

Pros & Cons

Pros

Unlimited Payroll Runs

Extensive Learning & Support Resources

Wide Range of Integrations

Longevity

Cons

More expensive than competitors

Additional filing fees for employees in other states

24/7 support only for Elite plan

SurePayroll

4.2

Visit Site

Starting from:

$20 /mo + $4/user

Free plan / Free trial:

Not Available

Learn more about SurePayroll review.

SurePayroll is a web-based tool providing payroll and tax-filing solutions primarily for small businesses. With its core features of unlimited payroll processing and accurate payroll tax computations, SurePayroll helps businesses optimize their operations.

Features

Payroll Features

401k Tracking

FMLA Tracking

Generation of pay stubs and reports

Multi-State

API / Integration Capabilities

Mobile App For Employees

Automation Features

Calculate and pay employee salaries

Compliance with state and federal tax laws

Direct Deposit for Employee Paychecks

Tracking of employee hours and overtime

Update real-time employee information

HR Features

Employee Attendance Tracking

Employee self-service update anytime

Vacation/Sick Leave Tracking

Benefits Management

Employee profile management

Tax Features

Automatic Tax Payment

Form 1099-MISC

Form 1095-B

Form 1094-B

Form 1095-C

Form 1094-C

Form 940 (Annual federal taxes)

Form 941 (Quarterly federal taxes)

Form 944 (Annual federal taxes)

Form 945 (Non-Payroll Payments-e.g. Pension & Annuities)

Form W-2 ( Tax filing included)

Form W-3

Form W-4

Tax Compliance

Integrations

Time and Attendance Tracking

HR & Benefits Systems

Accounting Software

Direct Deposit

Tax filing and compliance

Pros & Cons

Pros

Simplified employee payroll process

Convenient mobile app designed for small businesses

Reasonably priced plans

Cons

Requirement to provide information to receive pricing details

Lack of 24/7 customer support

Understanding Small Business Payroll Services: More Than Just Processing Paychecks

Modern payroll services do more than just process payments; they offer a range of features that help streamline business operations:

• Wage and Salary Calculations: Automates the calculation of regular pay, overtime, bonuses, and commissions.
• Tax Withholding and Filings: Automatically calculates and files federal, state, and local taxes.
• Direct Deposit and Payment Options: Supports secure electronic payments via direct deposit and other methods.
• Pay Stub and Tax Form Generation: Automates the creation and distribution of pay stubs and year-end tax forms like W-2s and 1099s.
• Time and Attendance Tracking: Integrates with time-tracking systems for accurate labor cost management.
• Benefits Administration: Manages employee benefits, such as health insurance and retirement plans.
• Compliance Management: Stays up-to-date with changing labor laws and regulations to ensure legal compliance.
• Reporting and Analytics: Provide valuable insights into labor costs, employee turnover, and other key metrics.

By leveraging these features, small businesses can save time, reduce errors, and gain valuable insights into workforce management.

Related Articles

Types of Small Business Payroll Services: Finding the Right Fit for Your Business

Small businesses have several options when it comes to managing payroll:

1. In-House Payroll Processing

Pros:

• Complete control over payroll.
• Potentially lower costs for very small businesses.

Cons:

• Time-consuming and requires in-depth knowledge of tax laws.
• Higher risk of errors and compliance issues.

Best for: Very small businesses with simple payroll needs and someone on staff with payroll expertise.

2. Outsourced Payroll Services

Pros:

• Expertise in tax compliance and payroll processing.
• Saves time and reduces the risk of penalties.

Cons:

• Can be more expensive than DIY options.
• Less direct control over payroll processes.

Best for: Small businesses looking to save time while ensuring compliance.

3. Hybrid Payroll Solutions

Pros:

• Flexibility to handle some tasks in-house while outsourcing others.
• Balances control and expertise.

Cons:

• Requires clear communication and delineation of tasks.

Best for: Growing businesses that need support with complex payroll tasks but want to retain some control.

Key Features to Look for in Payroll Services

When choosing small business payroll software or services, consider these essential features:

• Automated Calculations: Handles complex payroll calculations for taxes, deductions, and different pay types.
• Tax Filing and Compliance: Automatically calculates, files, and pays taxes.
• Direct Deposit: Ensures timely, secure payments to employees’ bank accounts.
• Employee Self-Service Portal: Allows employees to view pay stubs, tax forms, and update personal information.
• Mobile Access: Lets you manage payroll from anywhere, a must for business owners on the go.
• Integration with Accounting Software: Synchronizes payroll data with your accounting system for seamless financial management.
• Compliance Updates: Keeps up with changes in labor laws and tax regulations.
• Scalability: Accommodates business growth and increasing payroll complexity.

Benefits of Using Payroll Services for Small Businesses

Investing in a payroll service offers multiple benefits, including:

• Time Savings: Automating payroll tasks frees up time to focus on running your business.
• Improved Accuracy: Automation reduces errors in payroll calculations and tax filings.
• Enhanced Compliance: Stay current with tax laws and avoid penalties.
• Employee Satisfaction: On-time, accurate payments improve morale.
• Data Security: Protect sensitive employee information through encryption and secure data handling.
• Cost Savings: More economical than hiring a full-time payroll administrator.
• Scalability: Payroll services can grow with your business, handling more employees and complex pay structures.
• Expert Support: Access professional help when needed to resolve complex payroll issues.

Potential Drawbacks of Payroll Services

While payroll services provide numerous benefits, there are some potential drawbacks:

• Cost: Some payroll services may be expensive for very small businesses.
• Less Control: Outsourcing payroll may reduce direct oversight of the process.
• Integration Challenges: Syncing payroll software with existing systems like accounting or HR can sometimes be challenging.

How to Choose the Best Payroll Service for Your Small Business

Managing payroll can be one of small business owners’ most complex and time-consuming tasks. As your business grows, so do the intricacies of payroll management, including tax compliance, employee benefits, and record-keeping. Choosing the right payroll service can streamline these processes, save you time, and ensure compliance with regulations. Here’s a comprehensive guide to help you select the best payroll service for your small business.

When selecting a payroll service, follow these steps:

• Assess Your Payroll Needs: Consider your business size, payroll complexity, and compliance requirements.
• Set a Budget: Determine how much you’re willing to spend on payroll services, factoring in long-term value.
• Compare Features: Evaluate providers based on features like tax filing, automation, and reporting.
• Check Integrations: Ensure compatibility with your existing accounting or HR systems.
• Review Customer Support: Choose a service with reliable customer support that can assist when needed.
• Try Before You Buy: Many payroll providers offer demos or trials—take advantage of these to test usability.
• Plan for Growth: Choose a service that can scale with your business as it expands.

Compliance and Data Security Considerations

Payroll services must ensure compliance with various regulations, including federal, state, and local tax laws, labor laws, and worker classifications. Additionally, safeguarding sensitive payroll data through encryption and access controls is essential to protect against data breaches.

Conclusion

Managing payroll efficiently is crucial for small business success. Whether you handle payroll in-house or outsource it, a professional payroll service ensures compliance, saves time, reduces errors, and improves employee satisfaction. As your business grows, a scalable payroll solution becomes even more important for maintaining financial health and operational efficiency. Choose a payroll service that fits your specific needs and empowers your business to thrive.