Choosing the Best Payroll System for Your Small Business in 2024

Finding the best payroll for your small business is essential to keeping your team happy. Payroll isn’t just about paying employees on time—it’s also about ensuring tax compliance, reducing the risk of costly errors, and saving time that could otherwise be spent growing your business.

Choosing the best payroll system can help you automate many tasks, from managing compliance with labor laws to handling employee benefits and tax filings. Whether you need to process payroll for one employee or fifty, a reliable payroll solution is key to ensuring accuracy and peace of mind.

In this article, we'll explore the best payroll systems for small businesses, discuss the features that make them stand out, the benefits they offer, and how to choose the right solution for your business.

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What to look for in the best payroll for small businesses

Consider these key factors when choosing a payroll service for your business:

• Ease of use: A payroll system should be user-friendly, especially if you don't have a dedicated HR department. For small business owners like you,the best payroll software has intuitive interfaces, clear instructions, and simplified processes for setting up employees, running payroll, and handling tax filings. Time-saving features like automated calculations and report generation can streamline payroll management and make it easy for any business owner to run payroll.

• Compliance: Ensuring compliance with local, state, and federal tax regulations is a critical function of payroll systems. The best payroll service stays updated with tax laws, files necessary forms, and handles deductions, ensuring your business remains compliant and avoids costly penalties. This is especially important when you don't have the time or resources to keep up with every legal change.

• Integration: The best payroll management software for small businesses should integrate smoothly with other systems, such as accounting software, time-tracking tools, and HR systems. For example, integrating with platforms like Homebase payroll or popular accounting tools allows for seamless data flow, reducing manual input and ensuring more accurate payroll processing.

• Flexibility and scalability: As your business grows, your payroll system should scale with it. Whether you’re adding more employees, adjusting pay schedules, or offering new benefits, flexibility is crucial. Look for payroll management software that can handle different pay structures, overtime rules, and employee types (full-time, part-time, seasonal).

• Customer support: A responsive and knowledgeable customer support team is essential, particularly if your business needs assistance with setting up and managing payroll. The right payroll provider offers multiple support options, including phone, email, and chat –so help is always available when you need it.

What is the best payroll program for small businesses?

Choosing the best payroll program for your small business depends on factors like ease of use, pricing, features, and scalability. Check out our comparison of top payroll solutions, so you can determine which one is the best fit for your hourly teams. Note that the prices are accurate as of time of writing, but be sure to check the company websites for the latest pricing. 

Homebase

• Overview: Homebase is ideal for small businesses with hourly employees, offering payroll, time tracking, scheduling, and team management in one platform.
• Key features: Time clock with GPS, automated tax filings, team communication, and seamless integration with scheduling tools.
• Pricing: Starts free, with premium features available at a low monthly fee.
• Why it’s great for small business: Homebase is specifically designed for hourly teams, making it a great solution for restaurants, retail stores, and other businesses with hourly workers. Integrate payroll with time tracking and scheduling to improve accuracy, which is crucial for reducing time theft and ensuring compliance.

Gusto

• Overview: Gusto is a popular all-in-one payroll and HR software designed for small to medium businesses.
• Key features: Full-service payroll, benefits administration, employee onboarding, and compliance support. Gusto also automates tax filings and offers direct deposit options.
• Pricing: Starts at $40/month + $6 per employee.
• Why it’s great for small business: Gusto's comprehensive HR features, combined with user-friendly payroll processing, make it a top choice for businesses that need to handle benefits alongside payroll.

OnPay

• Overview: OnPay is known for its simplicity and affordability, offering essential payroll features and benefits management.
• Key features: Full-service payroll, health benefits, workers’ comp, and automated tax filing.
• Pricing: Flat rate of $40/month + $6 per employee.
• Why it’s great for small business: OnPay is great for businesses looking for a straightforward, no-frills payroll system that integrates with accounting tools like QuickBooks and Xero.

SurePayroll

• Overview: SurePayroll specializes in providing payroll services for small businesses and household employers.
• Key features: Automated payroll, tax filing, mobile app, and 401(k) integration.
• Pricing: Starts at around $20/month + $4 per employee.
• Why it’s great for small business: SurePayroll is a good fit for businesses that need a reliable payroll system with mobile capabilities and tax filing.

QuickBooks Payroll

• Overview: Part of the QuickBooks family, this payroll service integrates seamlessly with QuickBooks accounting software.
• Key features: Automated payroll, same-day direct deposit, tax filing, and accounting integration.
• Pricing: Starts at $6.25/month + $4 per employee.
• Why it’s great for small business: QuickBooks Payroll is perfect for businesses already using QuickBooks for accounting, allowing for seamless integration and accurate record-keeping.

Paychex

• Overview: Paychex is a full-service payroll and HR solution designed for businesses of all sizes.
• Key features: Payroll processing, benefits administration, employee onboarding, time and attendance tracking.
• Pricing: Custom pricing based on business needs.
• Why it’s great for small business: Paychex is ideal for small businesses looking to scale, as it offers a wide range of services and supports more complex payroll needs.

RUN Powered by ADP

• Overview: RUN is ADP's payroll service tailored for small businesses.
• Key features: Payroll, tax filing, time tracking, and HR services.
• Pricing: Custom pricing.
• Why it’s great for small business: ADP is a trusted name in payroll, and RUN provides a comprehensive solution for businesses looking to manage payroll, HR, and compliance seamlessly.

Square Payroll

• Overview: A simple payroll solution that works well for businesses that already use Square’s point of sale (POS) system.
• Key features: Automated tax filings, direct deposit, benefits administration, and integration with Square POS.
• Pricing: $35/month + $5 per employee.
• Why it’s great for small business: Square Payroll is great for businesses that use Square for payment processing, providing a seamless way to integrate payroll with your existing system.

Wave Payroll

• Overview: Wave Payroll is designed for small businesses and integrates with Wave’s accounting platform.
• Key features: Direct deposit, tax filing, and accounting integration.
• Pricing: Starts free (depending on your state) for the starter plan.
• Why it’s great for small business: If you already use Wave Accounting, Wave Payroll is a great low-cost option that integrates easily with your finances.

How to choose the right payroll software for your business

Selecting the best payroll management software for small business can streamline your operations and ensure compliance with payroll and tax laws. Here's what to look for in the ideal payroll software for your company.

Assess business needs.

Determine if you need software that just handles payroll or if you need a more comprehensive solution that includes HR, benefits administration, and compliance. 

For example, if you run a small team with basic payroll, you may want a simpler solution like Homebase, while a growing company might look for a more advanced tool.

Consider pricing.

Payroll software varies in pricing depending on the features and size of your team. Evaluate pricing plans to see if they fit within your budget, and compare whether the platform charges a flat monthly fee or a per-employee fee. 

Many payroll systems, such as Gusto or QuickBooks Payroll, offer flexible pricing to accommodate different business sizes.

Evaluate customer support.

Look for a payroll provider that offers excellent customer support, especially if payroll is a new responsibility for your business. 24/7 customer service, access to a knowledge base, or dedicated account managers can determine whether an issue gets solved today or tomorrow.

Consider user reviews and case studies.

Platforms like Homebase payroll and Paychex often have success stories that show how their solution worked for similar businesses. Checking out reviews can also help you make an informed decision.

Look for automation.

Automation is key to streamlining your payroll system. The payroll management software you choose should automate tasks like calculating wages, processing tax withholdings, and generating pay stubs. Automated payroll software helps reduce the risk of human error, especially when it comes to tax filings.

Check for tax calculations and filings.

Payroll software should handle tax calculations and automate tax filings for federal, state, and local taxes. Providers like Homebase payroll and ADP offer automated tax compliance, which saves you time and keeps you compliant with payroll tax regulations.

Assess time tracking and attendance integration features.

A payroll system with integrated time tracking and attendance capabilities simplifies the payroll process. Platforms like Gusto and Homebase allow for easy tracking of employee hours, reducing the need for manual input and increasing payroll accuracy.

Check off employee self-service portals.

The best payroll system should allow employees to access their pay stubs, update personal information, and manage benefits through self-service portals. This reduces the administrative burden on your HR team and empowers employees to manage their own payroll details.

Consider mobile access for payroll management.

Look for payroll management software that offers mobile apps for payroll processing, giving you flexibility to manage payroll on the go. Homebase and Square Payroll offer mobile payroll features that are particularly beneficial for small business owners who need to run payroll from anywhere.

Common mistakes to avoid when choosing a payroll system.

Selecting the best payroll system for small business can feel overwhelming, and it's easy to make costly mistakes. Here's what to watch out for:

Choosing based solely on price.

While cost is a major factor, choosing a payroll system purely based on price can be risky. The cheapest solution may lack essential features like automated tax filing, direct deposit, or integration with your existing systems. 

Focus on finding the right balance between cost and functionality to ensure you meet both short-term and long-term payroll needs. Sometimes, investing a little more upfront in the best payroll software like Gusto or Homebase can save you in the long run with fewer errors and streamlined processes.

Overlooking integration with other tools.

A major mistake is not checking that your payroll system integrates with other crucial tools like time tracking, HR, or accounting software. For instance, if you use a separate system for time tracking, your payroll provider should be able to integrate seamlessly to eliminate manual data entry and reduce errors. 

Systems like Homebase payroll and QuickBooks Payroll offer excellent integration with time-tracking tools, making it easier to track hours worked and run payroll in one step.

Not evaluating customer support and responsiveness.

Customer support is critical, especially if you're new to running payroll or anticipate needing help. Avoid choosing a payroll provider that lacks responsive or comprehensive customer support. 

Look for companies offering multiple support channels (email, chat, phone) and read user reviews to gauge their reputation for support. For example, OnPay and Paychex are known for strong customer service.

Ignoring scalability as your business grows.

Don’t make the mistake of choosing a payroll service that only works for your current team size. If you plan to scale your business, ensure that your payroll management software can grow with you. Many small businesses choose platforms like Gusto and Homebase, which offer flexible pricing and features that adapt as your business grows, from handling one employee to dozens.

How to switch to a new payroll provider

Switching to a new payroll provider is a big step for your business, but it doesn’t have to be disruptive. Here's how to make the transition as smooth as possible:

When should you consider switching payroll systems?

There are several signs that it may be time to switch payroll providers. If you're facing recurring payroll errors, dealing with a lack of integration with other key systems like time tracking or HR software, or experiencing slow or unresponsive customer support, it’s worth considering a switch. 

Additionally, if your current payroll solution isn't scaling with your growing business or if costs are increasing without added value, a new provider may offer a better fit.

Ensure a smooth transition.

• Evaluate new payroll systems: Research and choose a new payroll provider that offers the features and benefits that suit your business, such as automated tax filing, integration with time-tracking systems, or employee self-service options. Make sure to involve key stakeholders in this decision.

• Migrate data: Transferring data is a critical step in switching payroll systems. Ensure that all employee details, historical payroll information, and tax data are migrated accurately. Many top payroll providers like Homebase or Gusto offer assistance with data migration to prevent errors during the switch.

• Train employees: Introduce your team to the new system, whether it’s a cloud-based payroll service or a payroll app. Provide training materials or short tutorials to help them understand how to access their pay stubs, clock in and out, and manage benefits, ensuring minimal disruption.

Avoid disruptions during the switch.

• Test the new system before going live: Run a parallel payroll cycle where both the old and new systems are running simultaneously to check for discrepancies or issues.

• Ensure timely data transfer: Make sure all employee data is transferred early to avoid missing information.

• Notify employees: Keep employees informed about the switch to a new payroll provider. Ensure they understand any changes to their paycheck delivery methods or how they access their pay stubs.

• Monitor compliance: Ensure your new system complies with federal, state, and local tax regulations, as well as labor laws, to avoid penalties.

Ready to find the best payroll for small businesses?

With so many payroll software options on the market, you have to determine your must-have features and budget to narrow down your choices. The best payroll for small businesses will automate common tasks and free up more time for you to focus on the work you love. It will also give you confidence you're handling payroll accurately and keeping compliant with legal regulations.

Don't let payroll be a source of stress. Embrace the power of automation and take control of this crucial aspect of your operations to achieve payroll peace of mind.

The Homebase app is designed for small businesses like yours to make payroll simpler than ever. Minimize stress and ensure your employees are paid accurately and on time using our tools. Get started today. 

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Frequently asked questions 

How much do payroll services cost for a small business?

The cost of payroll services for small businesses can vary depending on the provider and the level of service. On average, payroll services can range from $20 to $200 per month, with additional fees for things like tax filings, direct deposits, or HR features. 

Full-service payroll providers may charge per employee, so the total cost increases as your team grows. Some services, like Homebase, offer more affordable solutions for small businesses with additional features such as time tracking and scheduling.

Can I run payroll myself without software?

Yes, you can run payroll manually without software, but it requires significant effort. You'll need to calculate wages, taxes, and deductions by hand, keep up-to-date with federal and state tax regulations, and manually file payroll taxes. 

While running payroll manually may help you save money on payroll software, it's much more time consuming and increases the likelihood of human error, missed deadlines, and compliance issues. Automated payroll solutions simplify and speed up this entire process while reducing errors.

Is payroll outsourcing better for small businesses?

Outsourcing payroll can be an excellent option, especially if you want to save time and ensure compliance with tax regulations. Outsourcing allows payroll experts to handle everything from processing payments to tax filings, leaving you free to focus on other aspects of your business. 

The downside is the cost, as payroll outsourcing services can be more expensive than using payroll software or doing payroll in-house. However, the time savings and reduced risk of errors make outsourcing appealing for many small business owners.

How long does it take to process payroll with payroll software?

With payroll software, processing payroll can take anywhere from a few minutes to a couple of hours, depending on the size of your team and the complexity of your payroll needs. 

Automated solutions like Homebase, Gusto, or Quickbooks Payroll streamline the process by automatically calculating taxes, deductions, and benefits. 

Once everything is set up, you can typically process payroll quickly, as the software handles most of the heavy lifting, including tax filing and direct deposits.