Best Payroll Software for Small Business in 2026
Payroll mistakes cost small businesses $845 per employee annually in IRS penalties and corrections. We tested 12+ platforms to find the 5 best payroll solutions that eliminate errors, automate tax filing, and save 5+ hours per pay period.
Watch: Best Payroll for Small Business
What Small Businesses Need from Payroll Software
Small business payroll has unique requirements that enterprise solutions overcomplicate:
✓ Automatic Tax Filing
Federal, state, and local tax calculations and filings done automatically. No manual forms, no missed deadlines, no IRS penalties.
✓ Simple Self-Implementation
No accountant or consultant needed. Setup in 30 minutes, run first payroll same day. Business owners can do it themselves.
✓ Transparent Pricing
Simple per-employee pricing with no hidden fees, add-on charges, or year-end surprise bills. Know exactly what you'll pay.
✓ Benefits Integration
Health insurance, 401(k), and pre-tax deductions handled in one place. No separate vendors or manual reconciliation.
Top 5 Payroll Platforms for Small Businesses
Gusto
Why It's Best for Small Business:
Gusto is the gold standard for small business payroll because it combines full-service tax filing, benefits administration, and exceptional support at transparent pricing. Unlike legacy payroll providers (ADP, Paychex), Gusto has modern software that small business owners can actually use without accountant hand-holding. Automatic tax calculations and filings for federal, state, and local jurisdictions eliminate the #1 reason small businesses get penalized by the IRS.
Key Features:
- ✓Full-service payroll with automatic tax filing (federal, state, local)
- ✓Direct deposit and printable checks
- ✓Employee self-service portal with pay stubs and tax forms
- ✓Benefits administration (health insurance, 401k, FSA, HSA, commuter)
- ✓Time tracking and PTO management
- ✓New hire reporting and onboarding
- ✓Workers' compensation insurance
- ✓Integration with QuickBooks, Xero, and 100+ accounting apps
✓ Strengths
- Easiest payroll software for non-accountants to use
- Transparent pricing with no hidden fees
- Exceptional customer support (phone, chat, email)
- Tax penalty protection guarantee
- Includes HR compliance tools and advisory
✗ Limitations
- No international payroll (US-only)
- Higher per-employee cost than basic competitors
- Limited customization for complex pay rules
- Phone support only on higher-tier plans
Best For:
US-based small businesses (5-100 employees) that want worry-free payroll and benefits in one simple platform.
QuickBooks Payroll
Why It's Best for Small Business:
For the 7 million small businesses already using QuickBooks Online for accounting, QuickBooks Payroll offers seamless integration that eliminates double data entry and reconciliation headaches. Payroll transactions automatically sync to your books, saving 2-3 hours per pay period. While it lacks some of Gusto's HR features, it's the most efficient choice if your accounting workflow is already built around QuickBooks.
Key Features:
- ✓Native integration with QuickBooks Online accounting
- ✓Automatic payroll tax calculations and filings
- ✓Same-day direct deposit
- ✓Time tracking with TSheets integration
- ✓Workers' comp administration
- ✓Employee portal for pay stubs and W-2s
- ✓Contractor payments with 1099 preparation
- ✓Mobile app for payroll on-the-go
✓ Strengths
- Perfect for existing QuickBooks users (zero learning curve)
- Payroll syncs instantly to accounting books
- Excellent for businesses with contractors and employees
- Strong tax filing accuracy with Intuit backing
- 24/7 support available
✗ Limitations
- Requires QuickBooks Online subscription (adds $30-90/month)
- Benefits administration is limited vs. Gusto
- Interface feels dated compared to modern payroll tools
- Overkill if you don't need full accounting software
Best For:
Small businesses (5-50 employees) already using QuickBooks Online who want accounting and payroll in one ecosystem.
OnPay
Why It's Best for Small Business:
OnPay delivers the same full-service payroll and tax filing as Gusto and QuickBooks at 20% lower cost by skipping flashy features small businesses don't need. No tiered pricing or add-on fees—everything from automatic tax filing to HR tools is included in the base price. For cost-conscious small businesses (under 50 employees) that just need reliable payroll without bells and whistles, OnPay offers the best bang for buck.
Key Features:
- ✓Full-service payroll and automatic tax filing included
- ✓Unlimited payroll runs per month
- ✓Employee self-service with mobile app
- ✓PTO tracking and management
- ✓Basic HR tools (onboarding, document storage)
- ✓Workers' comp and benefits administration
- ✓Accounting software integrations (QuickBooks, Xero)
- ✓Dedicated customer support (no chatbots)
✓ Strengths
- Best pricing (no tiered plans or hidden fees)
- All features included (no add-on charges)
- Excellent customer service (US-based support)
- Simple interface perfect for first-time payroll users
- Strong integration with accounting software
✗ Limitations
- Fewer advanced features than Gusto or ADP
- No native time tracking (requires integration)
- Benefits administration is basic
- Smaller integration ecosystem than competitors
Best For:
Budget-conscious small businesses (5-75 employees) that need simple, reliable full-service payroll without premium pricing.
ADP Run
Why It's Best for Small Business:
ADP brings 75 years of payroll expertise and enterprise-grade compliance infrastructure to small business pricing. While more expensive and less user-friendly than modern competitors, ADP is the safest choice for risk-averse business owners in highly regulated industries (healthcare, finance, government contractors) or those with complex multi-state payroll requiring bulletproof compliance and audit trails.
Key Features:
- ✓Full-service payroll with guaranteed tax compliance
- ✓Multi-state and multi-location payroll support
- ✓Wage garnishment and child support payment handling
- ✓Workers' comp pay-as-you-go insurance
- ✓Retirement plan administration (401k)
- ✓HR advisory services and hotline
- ✓Mobile app for employees and managers
- ✓Extensive reporting for compliance and audits
✓ Strengths
- Most trusted name in payroll (75+ years)
- Unmatched compliance expertise and guarantees
- Handles complex payroll scenarios (union, prevailing wage, etc.)
- Strong for multi-state businesses
- White-glove service with dedicated rep
✗ Limitations
- More expensive than modern payroll competitors
- Interface feels outdated and clunky
- Sales-heavy process (requires calls, demos)
- Hidden fees and add-on charges common
- Overkill for businesses under 25 employees
Best For:
Small businesses (25-100 employees) in regulated industries or with complex payroll needs requiring enterprise-grade compliance.
Paychex Flex
Why It's Best for Small Business:
Paychex specializes in industries with hourly workforces (retail, restaurants, healthcare, manufacturing) where time tracking, shift differentials, overtime rules, and tip reporting require specialized payroll handling. The platform includes robust time clocks, scheduling integration, and labor cost management tools that make it easier to pay hourly teams accurately while controlling labor costs—critical capabilities that general payroll tools often lack.
Key Features:
- ✓Integrated time tracking with time clocks and mobile punching
- ✓Overtime and shift differential calculations
- ✓Tip reporting and allocation for restaurants
- ✓Scheduling integration with labor cost forecasting
- ✓Multi-location and multi-pay rate support
- ✓Workers' comp and pay-as-you-go insurance
- ✓Benefits administration and open enrollment
- ✓Dedicated payroll specialist assigned
✓ Strengths
- Best features for hourly and shift-based workforces
- Strong time tracking and scheduling tools
- Great for restaurants (tip reporting, pooling)
- Handles complex multi-location payroll well
- Dedicated support rep assigned to your account
✗ Limitations
- More expensive than Gusto or OnPay
- Sales process is pushy and time-consuming
- Long-term contracts with early termination fees
- Software interface feels dated
- Customer service quality inconsistent
Best For:
Small businesses (10-100 employees) with hourly workforces in retail, restaurants, hospitality, or healthcare needing integrated time tracking.
Quick Comparison: Monthly Cost for 10 Employees
| Platform | Monthly Cost (10 EE) | Best Use Case | Auto Tax Filing | Benefits Admin | Rating |
|---|---|---|---|---|---|
| Gusto | $100/month | Best all-around | ✓ | ✓ | 9.6 |
| QuickBooks | $110/month* | QB Online users | ✓ | Limited | 9.2 |
| OnPay | $100/month | Best value | ✓ | ✓ | 9.1 |
| ADP Run | $119-$159/month | Enterprise compliance | ✓ | ✓ | 8.8 |
| Paychex Flex | $110-$130/month | Hourly workers | ✓ | ✓ | 8.5 |
*QuickBooks requires separate QBO subscription ($30-90/month)
How to Choose the Right Payroll Software
Choose Gusto if:
- You want the easiest, most user-friendly payroll experience
- You need benefits administration (health, 401k) in one place
- You're willing to pay slightly more for exceptional support
- You want HR tools and compliance advice included
Choose QuickBooks Payroll if:
- You already use QuickBooks Online for accounting
- You want payroll to sync automatically to your books
- You have both employees and contractors to pay
- You prefer an all-Intuit ecosystem (accounting + payroll)
Choose OnPay if:
- Budget is your primary concern (best value)
- You want all features included with no add-on fees
- You need simple, reliable payroll without fancy extras
- You appreciate responsive, US-based customer support
Choose ADP Run if:
- You're in a highly regulated industry (healthcare, finance)
- You have complex payroll (multi-state, union, prevailing wage)
- You want the most trusted brand and bulletproof compliance
- You're willing to pay premium pricing for peace of mind
Choose Paychex Flex if:
- You have primarily hourly or shift-based workers
- You need integrated time tracking and scheduling
- You operate restaurants with tip reporting needs
- You want a dedicated payroll specialist assigned to you
Frequently Asked Questions
What's the true cost of payroll software for a 15-person company?
For 15 employees running bi-weekly payroll: Gusto: $130/month ($1,560/year). QuickBooks: $140/month + $30-90 QBO = $2,040-$2,760/year. OnPay: $130/month ($1,560/year). ADP: $180-$200/month ($2,160-$2,400/year). Paychex: $165-$185/month ($1,980-$2,220/year). Add workers' comp insurance ($100-$300/month depending on industry) and optional add-ons. Most companies pay $2,000-$4,000 annually for full-service payroll with 15 employees.
Is paying for full-service payroll worth it vs. doing it manually?
YES. Manual payroll (calculating taxes, filing forms, cutting checks) takes 3-5 hours per pay period = 78-130 hours/year. At $50/hour, that's $3,900-$6,500 in labor cost. Plus: IRS penalties for late/incorrect filing average $845 per employee annually. Full-service payroll ($1,500-$3,000/year) eliminates this time, prevents costly errors, and includes tax penalty protection. ROI breakeven is at just 3-5 employees. The real question is: can you afford NOT to automate payroll?
Can I switch payroll providers mid-year without issues?
Yes, but timing matters. Best time to switch: January 1 (start of tax year, cleanest transition). Acceptable times: Beginning of any quarter (April 1, July 1, October 1). Difficult times: Mid-quarter or mid-year requires transferring YTD payroll data, tax filings, and W-2 responsibility. Most modern providers (Gusto, OnPay, QuickBooks) offer free migration support including data transfer. Allow 2-3 weeks for setup and testing before first payroll run. Avoid switching within 6 weeks of year-end (W-2 complications).
What happens if payroll software makes a tax filing mistake?
Reputable full-service payroll providers (Gusto, OnPay, QuickBooks, ADP, Paychex) offer tax penalty protection guarantees. If they miscalculate taxes or miss a filing deadline, THEY pay the IRS penalties and interest—not you. This protection typically covers federal, state, and local tax errors. Requirements: You must fund payroll on time and provide accurate employee info. This guarantee alone justifies the cost of full-service payroll vs. DIY or basic payroll calculators without tax filing.
Do I need separate software for benefits or can payroll handle it?
Gusto, OnPay, and ADP handle benefits administration natively (health insurance, 401k, FSA, HSA) with automatic pre-tax deductions synced to payroll. This is cleanest for small businesses. QuickBooks Payroll has limited benefits features and may require integrations. Paychex handles benefits well. Separate benefits administration platforms (like Zenefits, Namely) only make sense if you need more advanced features like benefits shopping, COBRA administration, or benefits for 100+ employees. For small businesses under 50, choose payroll software with built-in benefits to avoid vendor juggling.
Need Help Choosing Payroll Software for Your Business?
Download our free Payroll Software Buyer's Guide with cost calculator, feature comparison checklist, and implementation timeline for small businesses.
Download Free Payroll Buyer's Guide →