Best Payroll Software for Startups
Best Payroll Service Overall
Best for Growing Businesses
Payroll software simplifies the process of paying employees by automating many of the tasks involved. This includes calculating withholding taxes, calculating and issuing paychecks, and maintaining records of employee compensation.
By using payroll software, businesses can save time and money while ensuring that their employees are paid accurately and on time. There are many different payroll software programs available, each with its own unique features and pricing structure. Some of the most popular payroll software programs include ADP, OnPay, Gusto, and Zenefits.
Each of these programs offers a different set of features, so it is important to select the one that best meets the needs of your business. Regardless of which program you choose, you can be confident that investing in payroll services will help your business run more smoothly and efficiently.
9 Best Payroll Systems for Startups of September 2023:
- OnPay - Best Payroll Software Overall
- ADP - Ideal for Growing Businesses
- Gusto - Best for Automation Features
- QuickBooks Payroll - Best for Easy Set Up
- Zenefits - Best HR Features
- Payroll4Free - Best Free Payroll Service
- Paychex - Ideal for Reporting
- Workful - Best for Customer Service
- Square - Ideal for Paying Contractors
Best Payroll Software: OnPay
We recommend OnPay's payroll service for startups because of its ease of use, advanced tools, and affordable pricing.
Along with everything you need to streamline and automate your payroll processing, OnPay also makes it easy to manage employee benefits as well. With OnPay, small business owners are able to choose from a wide variety of health insurance, worker’s comp, and 401(k) plans to offer to their employees, then easily manage these plans within the OnPay platform.
If you are looking for a tool that will help with payroll processing in addition to benefits management and other HR responsibilities then you can’t go wrong with OnPay.
- Offers HR, benefits management, and payroll processing features
- Detailed reporting
- Cost-effective and easy to set up
- The UI can be a little confusing
- Customer service can be difficult to reach at times
- Performs all tax filing and payments
- Multiple pay rates and schedules
- Accounting and time tracking integrations
OnPay offers a single plan that costs $40/month plus $6/month per employee.
Seamlessly manage payroll, HR, and benefits with OnPay's all-in-one platform. Try it for free today.
Learn more by reading our full OnPay review.
ADP is a payroll processing service that manages to pack a wealth of features into a platform that is surprisingly easy to use. This combination of being both easy to use and feature-rich is what earns ADP a spot on our list as one of the best payroll services for startups.
With ADP, startup owners can automatically track and file taxes, create automated direct deposits, easily access state and federal forms and resources, and set up detailed, automated reporting. Best of all, all of these features are available in the base ADP plan, with even more useful features available in upper tiers.
- Easy to set up and use
- Excellent customer support
- A broad range of helpful features, with all core features available on the base plan
- A lack of detailed error messages can make it difficult to resolve an issue when something goes wrong.
- Automated tax services
- New hire onboarding and reporting
- Wage garnishment assistance
ADP requires that you contact their company for a custom pricing quote.
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As an incredibly well-rounded payroll processing solution, Gusto offers everything that startups need to take the hassle out of payroll processing. With Gusto, startup owners can automatically pay employees via either check or direct deposit, track and file federal, state, and local taxes, track paid time off (PTO), and more.
The biggest benefit of Gusto, though, is the fact that it comes available in three well-thought-out pricing tiers, allowing startups to choose the service that best matches both their needs and their budget.
- Full-service payroll available in all fifty states
- Offers unlimited payroll runs
- Highly affordable for the features that it provides
- Basic reporting is included in all pricing tiers
- Next-day direct deposit is only available in Complete and Concierge plans
- Dedicated support is only available in the Concierge plan
- Employee time tracking
- Comprehensive tax compliance documents
- Manage multiple employee benefits
- Simple Plan: $40/month plus $6 per employee/month
- Plus Plan: $80/month plus $12 per employee/month
- Premium Plan: Exclusive Pricing, Contact for Quote
4. QuickBooks Payroll
As one of the most popular payroll processing services on the market today, QuickBooks Payroll has earned its reputation for making payroll processing a simple and straightforward process. QuickBooks Payroll is especially easy to navigate for those who are already using QuickBooks for accounting since the two platforms are so similar and work well together.
In addition to receiving a user-friendly and intuitive solution to set up and use, startups that purchase QuickBooks Payroll can also look forward to receiving all of the tools needed to automate their payroll process, including automated direct deposits and automated tax tracking, and filing and automated reporting.
- Speedy direct deposit options
- Powerful integrations with QuickBooks accounting software
- Incredibly intuitive to set up and use
- Can be costly when compared to other payroll processing services
- Direct deposit for employees and contractors
- Tax compliant forms included
- Auto-fill for paid preparer information
- Core Plan: $45/month plus $6 per employee/month
- Premium Plan: $80/month plus $8 per employee/month
- Elite Plan: $125/month plus $10 per employee/month
You can also choose to bundle payroll and bookkeeping with the following plans:
- Payroll Core + Simple Start: $75/month plus $6 per employee/month
- Payroll Core + Essentials: $105/month plus $6 per employee/month
- Payroll Premium + Plus: $170/month plus $8 per employee/month
If you are looking for a service that offers much more than just payroll processing, Zenefits is a great company to consider. In addition to all of the features you need to process your startup’s payroll, such as time-off tracking, tax filing, and direct deposits, Zenefits also offers additional HR features such as automated onboarding, employee scheduling, performance management, and much more.
- Allows for automated direct deposit payments
- Offers a wide range of both payroll processing and HR features
- Customer service is hit or miss
- Custom email triggers could use greater functionality
- Implementation is sometimes complex and time-consuming
- Benefits administration
- Time, attendance, and PTO
- Enrollment planning
- Essentials Plan: $8/month per employee
- Growth Plan: $16/month per employee
- Zen Plan: $27/month per employee
As a completely free payroll processing solution, Payroll4Free enables startups to try out the benefits of payroll processing software without making an upfront investment. While the features of Payroll4Free are quite limited compared to paid payroll processing services, Payroll4Free still amounts to a big step up from entirely manual payroll processing.
With Payroll4Free, startup owners can calculate and track how much employees are owed by inputting their hours. Unfortunately, there's not much else that you can do with Payroll4Free unless you pay for additional services such as automated tax filing and direct deposit payments. For startup owners with just a few employees that can't justify paying for a more comprehensive solution, though, Payroll4Free is worth checking out.
- Completely free to download and use
- Offers the option to pay for automated tax filing and direct deposit payments
- Limited features
- Setup is completely manual
- Comprehensive payroll processing
- Full-time, part-time, and contract payment capabilities
- Automatic federal, state, and local tax calculations
Payroll4Free is free to download and use. Automated tax filing and the option to pay employees via direct deposit both cost $15/month each.
If comprehensive and easy-to-understand payroll reporting is a priority for your startup, then Paychex is a great payroll processing service to consider. Even the basic Paychex Flex Essentials plan offers robust reporting features, complete with the ability to add custom data fields.
Along with detailed and well-organized reporting, Paychex also offers automated tax filing, 24/7 customer support, useful HR add-on options, and lots of helpful integrations.
- 24/7 customer support
- Detailed reporting with the ability to create custom data fields
- Easy to set up and use
- Includes several hidden fees
- Customer support has received mixed reviews
- Payroll tax administration
- Employee self-service
- New hire reporting
- Paychex Flex Essentials: $39/month plus $5 per employee/month
- Paychex Flex Select: Custom pricing with quotes available upon request
- Paychex Flex Pro: Custom pricing with quotes available upon request
If you are looking for a payroll processing service that will be there in your corner when issues arise, then you can't go wrong with Workful. In addition to offering well-rounded payroll processing software that comes complete with plenty of time-saving features, Workful has also made a name for itself in the payroll processing industry by offering some of the most responsive and genuinely helpful customer support you will find.
Aside from its top-notch customer support, other noteworthy features of Workful include the ability for employees to submit reimbursable expenses through the Workful app and geo-location time clock tracking.
- Easy to set up and use
- Offers employee expense tracking
- Reporting features are somewhat limited
- Limited integrations
- Does not provide automatic tax filing
- Automated PTO tracking
- Tracks time and attendance automatically
- Easy federal and state tax filing
Workful offers a single plan that costs $35/month plus $6/month per employee.
Though better known as a payment processing service, Square offers payroll processing as well. What earns Square a spot on our list of best payroll services, though, is the fact that it offers an affordable payroll processing plan specifically for paying independent contractors.
Paying contractors is less complicated than paying employees, but it can still be a time-consuming process. This forces startups that rely on a lot of contract labor to either pay contractors manually or pay extra for payroll processing features they don’t need. With Square’s startup owners can access all of the tools they need to ensure that their contractors get paid on time with its contractor-specific plan.
- Great integration with Square’s point of sale app
- Affordably priced — especially for the contractor-only option
- Only offers basic reporting
- Limited customization options
- Automatic quarterly and annual tax filings
- Syncs with QuickBooks and third-party timecard partners
- Multistate payroll capabilities
- Pay Employees and Contractors Plan: $35/month plus $6/month per employee paid
- Pay Contractors Only Plan: $6/month per contractor paid
How to Choose a Payroll Solution
Finding the right payroll provider for your startup can feel overwhelming at first since there are so many options out there. But staying focused on your most important needs will help you zero in on the solution that's best for you.
Here are some key factors to think about as you evaluate potential payroll providers:
- Assess Your Needs: Identify the number of employees you have, the complexity of your pay structure, and if you have freelancers or contractors to pay.
- Payroll Taxes: A major aspect of payroll processing is ensuring that your business remains compliant with local, state, and federal tax regulations. Some solutions will automatically calculate, withhold, and file payroll taxes for you, reducing the risk of errors and penalties.
- Employee Benefits Administration: If your startup offers health insurance, retirement plans, or other benefits, it's crucial to find a service that seamlessly manages and integrates these employee benefits with payroll processing.
- Direct Deposit: Employees often prefer direct deposit as it's quicker and more convenient than receiving a physical check. Many modern payroll companies offer direct deposit features, ensuring timely payments and happy employees.
- Unlimited Payroll Runs: For businesses with complex payroll needs, or those who pay bonuses and commissions frequently, having the flexibility of unlimited payroll runs can be invaluable.
- Pay Stubs & Reporting: Clear and detailed pay stubs can help eliminate confusion and foster trust among employees. Additionally, robust reporting features can aid in understanding payroll costs, taxes, and other important financial data.
- Mobile App: As businesses become more digital, having a mobile app where you can run payroll or where employees can check their pay stubs and PTO is a significant advantage.
- Ease of Integration: Your payroll system should work smoothly with other tools and software you use, such as accounting software or time-tracking systems. This helps in reducing manual data entry and potential errors.
- Customer Support: Quality customer service is vital. Issues or questions about payroll are time-sensitive. Ensure your provider offers timely and effective support.
- Pricing: While you should expect to invest in a good payroll service, ensure you're not paying for features you don't need. Some providers offer tiered pricing, allowing you to scale up as your needs grow.
- Reviews and Recommendations: See what other startups or businesses in your industry are using. Online reviews, testimonials, and peer recommendations can provide insights into the user experience and reliability of the service.
By considering these factors and evaluating the features of various payroll companies, you can choose a solution that saves time, reduces errors, and ensures your employees are paid accurately and on time. Whether you prioritize automation features, employee benefits administration, or detailed reporting, there's a solution out there tailored to your startup's needs.
What is payroll software?
Payroll software is software designed to automate the various tasks associated with payroll processing, such as time clock tracking, paying employees, and filing taxes.
How does payroll software work?
Payroll software functions by gathering employee work hours, calculating gross pay, deducting federal, state, and local taxes, and providing the net salary to employees either through direct deposit or checks. These systems often integrate with time-tracking tools, benefits platforms, and other HR solutions to ensure accurate and timely processing of wages. The software helps automate the calculations, withholding, and tax filings, making the payroll process more efficient.
How do you process payroll?
To process payroll, one starts by collecting the hours each employee has worked during the pay period. This is followed by calculating the gross wages, considering hourly rates or salaries and any overtime or bonuses. Deductions are then made for federal and state taxes, as well as any other withholdings, such as health insurance or retirement contributions.
After all the calculations, employees are paid their net salary either by direct deposit, checks, or other payment methods. Proper records should be maintained, and tax filings should be submitted to the appropriate government entities.
How much does payroll software cost?
Payroll software costs vary depending on the features, number of employees, and level of service. Basic payroll software may cost $20-$100 per month, often with additional per-employee fees. More full-service options cost $40-$200+ per month. Larger companies can expect to pay over $1,000 per month.
For instance, as of 2023, OnPay charges $40/month plus $6/month per employee, while some services like Payroll4Free offer a basic version for free. Other platforms, like ADP and Paychex, require custom quotes depending on the business's specific needs. Additional features or premium tiers generally cost more.
Do startups need payroll software?
Payroll software is not an absolute necessity for startups, particularly for startups with a small number of employees, but good payroll processing software can certainly offer a wide range of worthwhile benefits. In addition to freeing up time for you and your staff by automating a wide range of tedious tasks, payroll processing software is also able to help you avoid payroll processing errors that could otherwise lead to costly consequences.
Which payroll software is best?
Our favorite best overall payroll processing solution for startups is OnPay. However, the best software for your startup will ultimately depend on factors such as your unique needs and priorities, your budget, and the size of your startup.
What is HR software?
HR software, or human resources software, is a digital solution designed to streamline and automate various human resource management tasks like recruitment, employee onboarding, benefits administration, performance reviews, and more. It centralizes employee data, facilitates communication, and helps HR professionals manage the workforce efficiently. Modern HR software often offers analytics and reporting functionalities to help businesses make data-driven decisions.
What is professional employer organization (PEO) payroll software?
A Professional employer organization (PEO) is a firm that provides comprehensive HR solutions for businesses, including payroll administration, tax compliance, employee benefits, and risk management. PEO payroll software is a specialized solution offered by PEOs to manage and process payroll for their client businesses.
By partnering with a PEO, businesses essentially co-employ their workforce with the PEO. This allows businesses to outsource many administrative tasks and responsibilities related to payroll and HR while benefiting from the PEO's expertise and infrastructure.