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Best Payroll Services for Small Businesses

2020-11-12

Minyang Jiang

If you’re a small business owner with multiple employees, you’ve likely experienced the challenge of balancing your time between strategizing big-picture initiatives and managing internal operations. Small business owners often have to act not only as the chief executive of their business, but also the administrative lead while hiring new employees, filing taxes, and negotiating employee benefits. 

If you’re one of the many small business owners struggling to fulfill all of these roles, it may be a good idea to invest in a payroll service to simplify the tedious work of payroll management. A good payroll service can greatly streamline your human resource operations and even the most basic payroll providers offer payroll calculations and tax filing for your employees and business. Full-service providers can go as far as organizing employee benefits and HR services along with payroll, removing the need for a dedicated HR team in some cases. 

With a number of payroll services available to businesses of various sizes and with different HR needs, choosing the right solution for your company can be difficult. Below, we highlight some of the favorite payroll services used by businesses nationwide to help you identify the best fit for your business.

Intuit QuickBooks Payroll

Intuit’s Quickbooks Payroll offers several payroll management options for small businesses. The most basic packages handle payroll distribution and taxes, while more comprehensive plans offer employee health benefits, workers’ comp administration, and a personal HR representative assigned to your business. While more advanced options are more expensive, Intuit’s Quickbooks provides business with payroll services at a competitively low price, while also allowing owners to integrate their payroll and tax processes using Intuit’s complimentary accounting software. 

Best for: Low cost & integration with other Intuit programs

ADP

Automatic Data Processing, Inc. (ADP) has been a favorite provider of HR management software for several decades, and for good reason. ADP offers businesses a vast array of services that are somewhat unrivaled for online payroll providers. In addition to payroll processing and tax filing, ADP offers to conduct background checks during the onboarding process, integrate your existing systems into their software, and provide around-the-clock support through their mobile app. 

While ADP’s comprehensive services can come at a higher cost than other payroll providers, they are largely unparalleled in the industry, so they may be well worth the investment depending on your HR needs. Unlike other small business payroll services, ADP provides payroll assistance to operations of all sizes and can support your company’s growth from small business to the mid-sized enterprise without limiting the extent of their services. 

If you’re a small business owner looking to grow your business, or if you’re just looking for customer service help in addition to payroll assistance, ADP offers a number of payroll services that may be right for you. 

Best for: Ability to grow with your business and customer service

Gusto

If you’re looking for straightforward payroll assistance, Gusto has gained a reputation for excellent user experience and customer service, and it may be the best payroll service for your business. Gusto provides automated deductions and filing for owners, allowing you to spend less time and attention on HR operations and spend more time improving your business’s performance. In addition to automating HR activities, Gusto provides full support throughout during onboarding, offers a variety of health plans for employees, and maintains direct access to HR experts at all times. 

If you hope to find a payroll system with a great user experience at a reasonable cost, one of Gusto’s payroll servicing options is a great place to start. 

Best for: User experience

Paychex

Paychex is another payroll service that provides comprehensive payroll and HR assistance to small and medium-sized businesses. The provider is known for a well-rounded user experience for both employees and owners alike. 

Paychex provides a full suite of HR services through their mobile app and website aiming to allow owners more time spent on business operations, rather than HR concerns. Paychex’s platform provides federal and state tax filing, payroll calculations, and around-the-clock tech support while simultaneously giving owners instant access to any necessary information regarding these procedures. Paychex provides a flexible array of intuitive payroll services centered on providing you and your employees an optimal experience

Best for: Flexibility and customer service

OnPay

For small business owners with a limited payroll that need assistance with the clerical work, OnPay provides a low-cost, low-effort solution. With a standard pricing model of $36/per month plus $4/per month/per employee, OnPay takes care of all of the payroll basics, including automated tax payments and employee self-service timesheets for your operation. OnPay also offers some HR benefits such as templates for offer letters and software designed to track and approve Paid Time Off requests. 

Due to its simple pricing and fairly standard package, OnPay is the best payroll service for small business owners with fewer HR assistance needs. 

Best for: Simple pricing

How To Choose A Payroll Service

Trusting your payroll to a third party is an important decision — not only are you forking over control of your workers’ livelihoods, but you’re handing over the keys to your own financial kingdom too. Asking the right questions before you join forces with a provider helps you vet potential services to ensure they offer secure products that meet the needs of your company and your staff. Here are four questions for potential payroll service providers that you should ask before making your choice.

Do You Need A Full-Service Provider?

Not all payroll services are created equal. Some services simply cut checks based on wage and time information you provide; other services provide the software that captures time card information and calculates pay. Full-service providers handle payroll from start to finish, often providing the most value and peace of mind for small and mid-sized businesses. A full-service payroll provider usually offers:

  • Payment via direct deposit, paper checks, or debit card systems.
  • Benefits tracking, particularly with regard to paid time off (PTO) accruals for sick leave and vacation.
  • Deduction of healthcare, life insurance, and 401k benefits.
  • Payroll tax services, including filing and paying employer payroll taxes and sending appropriate W2s and 1099s each year.
  • Reporting so you can review and manage your payroll.

Does Payroll Service Meet Your Basic Needs?

You do not want to pay for features that you will not use. But, you also do not want to buy a software that does not meet your basic payroll needs when it comes time to run payroll. Your payroll process will be inefficient and time-consuming if the software does not meet your needs.

Payroll software should have all the features you need, such as wage types, tax withholding, timekeeping, and recordkeeping. Before you start searching for software, you should figure out what you need the software to do. Then use your list of must-have features to help you choose the best software for your business.

When figuring out your basic payroll software needs, consider your industry. The software must meet the needs of your industry. For example, you will likely want software that can handle tip income if you operate a restaurant.

The payroll software you choose should be able to change with you as your business changes. If your business is booming, then you might be able to expand your business and hire more employees. The software should be able to accommodate the new employees and any other payroll changes that might result from additions to your team.

Do you have to pay for features you’ll never use?

Payroll software often comes with shiny features to entice you to buy. But do you actually need all those features?

When you buy a fully-loaded software, you could be overpaying. You should not have to pay for features that you won’t use. While extra software features are enticing, you might be able to save money by purchasing a smaller software package. When you shop for payroll software, you should know your payroll needs.

Some payroll software providers offer plans that have different features, and you can choose the plan that best fits your needs and budget. Some payroll software providers might offer add-on features, like timekeeping. Software providers that offer flexible plans allow you to pay only for what you really need.

How do you ensure security?

Because most payroll service providers today deal at least partly with cloud-based software environments, security is essential. Types of data you and your employees might share with a provider include sensitive information such as account numbers, social security numbers, and other personally identifying information. Ensure that the provider you select secures transactions and data with high-level technology such as 256-bit Advanced Encryption. Find out what the password requirements for payroll systems are and how you and your employees can work with the provider to safeguard information.

Software security and access points are not the only security measures you should question. Information regarding your payroll has to reside somewhere—some service providers might work with you to house that information on in-house servers, but it’s more likely that your data will be stored in a data center. In many cases, the data center storing your information is a separate provider. Find out what data center providers your payroll service company works with and how those providers plan to secure your data.

Author Bio:

Jeffrey Bumbales
Director, Marketing & Strategic Partnerships