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Best Payroll Software for Small Businesses for 2024

Best payroll for small business

Owning a small business is an ever-changing job description. One minute, you’re designing. Next, you’re filing for your LLC. And then, later that week, you’re scrolling through resumes, trying to find the next team member to help expand your thriving business. 

While growing your team is great for productivity, it becomes more difficult to manage. In 2024, efficient payroll management is hardly a luxury but rather a vital task that no organization can afford to overlook. 

When implemented correctly, the right payroll software can be the game-changer your business needs, offering a streamlined solution to handle payroll tasks efficiently, as well as reducing administrative burdens, errors, and the complexities of compliance. But in today’s rapidly advancing digital age, how do you choose the best payroll software for your business needs?

Small business owners often find navigating payroll services challenging, and it’s no wonder why. Google “payroll software options,” and the sheer number of search results is overwhelming. Yet, still, you’re tasked with discerning which payroll software best fits your organization. 

To help solve this headache and help you find the right solution for your business, we’ve created this comprehensive guide. Here we delve into the world of payroll software solutions, including what they can do for you functionally and their undeniable importance for small businesses. 

Moreover, we’ll walk you through the best payroll software options to consider in 2024, providing insights into their features, pricing, and suitability for specific business needs. 

What are Payroll Services? 

Payroll services used to be a disregarded corner of a dusty office block, where employees would only appear angrily in search of justice for a perceived paycheck error. Today, payroll software can turn your entire payroll process from frustrating to fulfilling. It can also become the cornerstone of managing employee salaries, benefits, deductions, and tax withholdings for businesses. Simply put, online payroll software allows business owners to automate the payroll process, replacing hours of tedious data entry with accurate and timely compensation for employees.

But there’s no one software that’s right for every business. Payroll software options encompass various aspects that small business owners need to understand, like the intricacies of employee salary calculation filled with working hours, overtime, bonuses, and deductions. Payroll software also handles complicated benefits administration, ensuring employees get health insurance, retirement plans, and paid vacation. 

Payroll is a formidable task, to say the least, but modern payroll services help business owners automate these processes, making payday more manageable for everyone. 

Why is Payroll Software Important for Small Businesses? 

Important is a bit of an understatement. Payroll software is essential for the modern business owner for a number of reasons. 

Let’s unpack the wide-reaching benefits of payroll software a bit further:

Save Time and Money

You know the aphorism, “Time is money.” These days, automation is the key to both, helping you stack up marginal gains for your business and reduce your workload at the same time. 

Automating payroll tasks frees staff to focus on more critical projects, like creative, strategic thinking. Meaning you can allocate human capital toward what people do best and allow software to handle the rest.

Because with the advent of advanced payroll software, gone are the days of manual number-crunching and tedious record-keeping. Payroll software streamlines these tasks while significantly decreasing the likelihood of costly errors that arise from manual calculations, so employees are paid accurately and on time.

Improved Accuracy and Compliance

Don’t get dinged for something you didn’t even know you did wrong. Tax codes are being edited and rewritten all the time. But, with payroll software, business owners can be assured that employee pay is calculated accurately and all taxes are deducted and paid correctly. 

Avoiding tax-related pitfalls saves money, reduces stress, and enhances overall business stability.

In the past, this was particularly frustrating, as payroll compliance is a moving target. Federal, state, and local tax regulations evolve, and failing to stay compliant leads to audits, fines, and even legal consequences. Payroll software is designed to prevent errors by automating calculations and updates so all tax obligations are met, providing small business owners with peace of mind.

Streamlined HR Processes 

A business without HR is doomed to fail. Systems, training, and employee benefits are all crucial to keeping those you work with happy, productive, and proud of their work.

Payroll software helps businesses streamline HR processes or create an HR department of one person since many small businesses operate with fewer than 5 employees. Automating HR processes, such as onboarding new employees, managing employee benefits, and monitoring working hours, all contribute to a thriving organizational culture.

Streamlining HR processes also enhances the overall employee experience. An efficiently onboarded new employee feels welcomed and informed about company policies and procedures from day one. Meanwhile, effective benefits administration means employees receive the benefits they need, enhancing their job satisfaction.

Payroll software reduces the administrative burden for your HR team, plain and simple, by simplifying tasks such as time tracking and leave management. This, in turn, allows HR professionals to focus on more strategic and value-added activities, such as employee development and engagement.

Better Reporting and Insights 

Sure, it’s your business, but is it running you? When data is delivered promptly and in a readable manner, small business owners have much more time on their hands to accurately interpret data and apply their knowledge to wise business decisions.

The best payroll software options provide businesses with valuable reports and insights into their payroll data. This, in turn, makes business easier and helps your business grow. 

These reports offer insights into various aspects of your business, including:

With consistent, accurate reporting, small business owners can make data-driven decisions that benefit their business, such as identifying cost-saving opportunities and optimizing labor budgets. This enhances business performance while contributing to long-term growth and success.

The Best Payroll Software of 2024 

Now that we’ve demonstrated the necessity of payroll software let’s explore some of the top payroll software options for small business owners. We’ll review each system from a bird’s-eye view, so you can effortlessly evaluate whether it includes the tools and support you need to make payroll a breeze. 

Gusto  

Gusto offers clients a free 30-day trial and monthly pricing that starts at $40 for up to 10 employees, with an additional $6 per employee per month. It’s an option that works well for many small businesses since Gusto offers a wide array of features, including payroll processing, tax filing, employee self-service, benefits administration, HR tools, and reporting.

ADP 

ADP pricing is only available via direct inquiry, as they use a quote-based pricing model, which allows them to cater to a range of business needs. Respected for comprehensive solutions, ADP is a payroll solution for small businesses that offers versatile pricing options covering payroll processing, tax filing, employee self-service, benefits administration, HR tools, and reporting.

Paychex Flex 

Paychex Flex uses a quote-based pricing model to accommodate diverse business requirements, so pricing is only available via direct inquiry. Known for its robust features and services, Paychex Flex encompasses payroll processing, tax filing, employee self-service, benefits administration, HR tools, and reporting.

Justworks 

Justworks’ starting rate is $59 per employee per month for up to 50 employees, with an additional $49 per employee per month for each additional employee over 50. This payroll software solution is tailored to growing businesses. Justworks packages include payroll processing, tax filing, employee self-service, benefits administration, HR tools, and reporting.

QuickBooks

QuickBooks payroll software offers clients a free 30-day trial and pricing that starts at $75 per month plus $6 per employee per month. Quickbooks, a choice offering in-depth payroll capabilities, includes payroll processing, tax filing, employee self-service, time tracking, and reporting. Another option small businesses consider is integrating their QuickBooks bookkeeping with specialized payroll software, like DaySmart. 

While similar in their offerings, each payroll software includes a unique set of features, pricing structures, and advantages. Having this information at your fingertips can help you make an informed choice that aligns with your business needs.

Summary of the Best Payroll Software

Below is a summary of the best payroll software solutions available today, with pros and cons listed to help you decide on the best solution for your business. If you are interested in going beyond basic payroll capabilities, you may also consider adding DaySmart to your business’ tech stack. DaySmart complements payroll software and all the capabilities these solutions offer, with automatic payroll calculations as well as staff management features, strategic dashboards and reporting, and more. DaySmart helps streamline business operations, integrating seamlessly with payroll processes and more.

SoftwareTop FeaturesPricingProsConsBest For
GustoPayroll processing, tax filing, employee self-service, benefits administration, HR tools, reportingOffers free 30-day trial. Starting at $40/month for up to 10 employees, plus $6/employee/monthComprehensive features, excellent customer supportCan be expensive for small businessesSmall to medium-sized businesses with growing needs
ADPPayroll processing, tax filing, employee self-service, benefits administration, HR tools, reportingQuote-based pricingComprehensive features, powerful reporting tools, good customer supportCan be expensive for small businessesMedium to large-sized businesses
Paychex FlexPayroll processing, tax filing, employee self-service, benefits administration, HR tools, reportingQuote-based pricingComprehensive features, good customer supportCan be expensive for small businessesMedium to large-sized businesses
JustworksPayroll processing, tax filing, employee self-service, benefits administration, HR tools, reportingStarting at $59/employee/month for up to 50 employees, plus $49/employee/month for every additional employeeAll-in-one payroll and HR platform, good customer supportCan be expensive for small businessesSmall to medium-sized businesses with growing needs
QuickBooks PayrollPayroll processing, tax filing, employee self-service, time tracking, reportingFree 30-day trial. Pricing starts at $75/month plus $6/employee/monthSeamless integration with QuickBooks accounting software, customer supportCan be expensive for small businessesSmall to medium-sized businesses that already use QuickBooks

Next, let’s take a closer peek at some key factors you’ll want to consider when making a final decision on your company’s payroll software. 

Factors to Consider When Choosing a Payroll Software 

Best payroll for small business

When considering a payroll solution, you must already have organizing software in place to run your business and manage employees daily. This daily software can then seamlessly coordinate with payroll software to help manage employees with ease and collect the data you need to run payroll efficiently. That’s where a solution like DaySmart can come into play.

DaySmart Capabilities

DaySmart offers affordable monthly plans, starting at just $39 per month for up to 10 employees and only an additional $3 per employee per month. Known for its ease of use, appointment scheduling, and other comprehensive business management offerings, DaySmart software calculates payroll totals automatically for hourly and commission employees, allowing the business owner to generate payroll information quickly and then easily enter it into their payroll service solution. This, in turn, simplifies the payroll process, prevents manual work, maintains accuracy, and avoids the headache of calculating employee commissions between two systems.

Selecting the best payroll software for your business is no small task. When you’re grappling with an essential decision like this, there are a few, other considerations to keep in mind to make sure that the software will perform as you need it to:

  1. Your Unique Business Needs  

Small businesses may use many of the same software tools, but no two are created equal. Small businesses have unique needs, and yours is no different. Specific industries, business sizes, and payroll structures are all different when it comes to the intricacies of business and staff management, which is integral in and of itself. Payroll software must include practical management tools, as DaySmart does, to store and maintain employee information, record working hours, and process payments accurately.

  1. Payment Processing 

While it’s no substitute for full-scale payroll services, integrated payment processing like DaySmart is equipped with, can enhance the payroll process by enabling seamless revenue management and consolidating incoming and outgoing payments into a single platform. Small business owners love payroll software that can handle incoming and outgoing payments, so you have a complete, up-to-date view of your financial data in one place.

  1. Unlimited Payroll Runs 

Listen, “Pobody’s Nerfect,” as they say. And mistakes happen. A flexible payroll system should permit unlimited payroll runs, providing the convenience of running payroll as often as needed without extra charges. If you need to run payroll more than once per pay period for whatever reason, make sure the software you choose allows unlimited payroll runs.

  1. Basic Reports 

Efficient payroll systems offer comprehensive reporting features, including customizable dashboards and basic reports, so you can monitor payroll metrics and employee data. Make sure the software you choose will provide basic reports, such as payroll summaries, tax reports, and employee earnings reports, in a way that organizes the information for you to utilize. 

  1. Automatic Compliance Updates 

You have enough on your plate. You shouldn’t need to worry about changing tax codes and labor regulations. But, of course, you don’t want to be in violation of anything, either. Luckily, comprehensive payroll software can keep you compliant through automatic compliance updates, minimizing the risk of errors and penalties.

  1. Mobile Access

Managing your business on the go? Most small business owners are these days. And having access to your payroll software through a mobile device is undoubtedly advantageous. It allows you to manage payroll tasks, view reports, and handle staff management wherever you are, enhancing convenience and flexibility.

  1. Pricing 

Payroll software can get pricey. Wide-ranging factors, such as the provider, features, business size, and specific needs, all mix together to determine how much payroll software costs. You’ll need to balance the budget with the value offered by the software when evaluating pricing options. 

As you research the best payroll software to suit your small business, keeping these factors in mind will help you make the decision that best suits your business, streamlines payroll management, and ensures tax compliance.

For context, let’s look at how DaySmart software addresses each of the crucial factors mentioned above. 

Frequently Asked Questions (FAQs) 

What are payroll services? 

Payroll services is an all-encompassing term that refers to businesses’ tools and processes to manage employee salaries, benefits, deductions, and tax withholdings. Online payroll software automates the payroll process, replacing hours of tedious data entry and cross-referencing with accurate and timely compensation for employees.

How do you do payroll for a small business yourself? 

These days, doing payroll for your small business isn’t an option, but you do get to decide how much of the leg work you turn over to the payroll platform. However, there are a few steps where you’ll need a human to help. 

To do payroll for a small business yourself, you still need to: 

  1. Gather Employee Information: First, you’ll collect essential information from all employees, such as names, addresses, social security numbers, and tax forms (W-4).
  2. Calculate Wages: Then, you’ll need to calculate employee wages for the pay period by considering hours worked, hourly rates, and any overtime.
  3. Deduct Taxes and Contributions: After you have the gross wage calculated, you’ll deduct federal, state, and local taxes, as well as employee contributions for Social Security and Medicare.
  4. Process Payroll: After applying taxes, you can process payroll using payroll software or an accounting system to calculate what’s owed, then generate paychecks or initiate direct deposits for the pay period. 
  5. File Taxes: Each year, you’ll submit all necessary payroll tax forms and payments to the appropriate tax authorities.
  6. Keep Records: Along the way, maintain accurate payroll records, including pay stubs, timecards, and tax documents, so that tax time isn’t too much hassle. 

What type of HR features should a payroll system have? 

A robust payroll system will include various HR features such as employee self-service portals, time and attendance tracking, benefits administration, leave management, and onboarding capabilities. These features streamline HR processes and improve overall workforce management.

How do I set up payroll for one employee? 

If you’re working in the US, setting up payroll for your first employee involves several steps:

  1. Register Your Business: First, you’ll need to obtain an Employer Identification Number (EIN) from the IRS and set up a business entity. This can take several weeks and a few filing fees to accomplish. 
  2. Gather Employee Information: Then, collect necessary information about your employee, like name, address, and tax forms.
  3. Calculate Wages: Next, you’ll determine how to compensate your employee—hourly or salaried. 
  4. Set Up a Payroll System: Once you’ve agreed with your employee regarding wages, you’ll need to choose which payroll software to use to help calculate taxes, as well as create paychecks or initiate direct deposits.
  5. Report and Pay Taxes: Finally, you’ll file the required payroll tax forms and submit payments to the tax authorities. 

And voila! You’ve set up payroll for your first employee. 

How long does payroll take to process? 

Payroll processing time varies depending on the complexity of your payroll and the tools you choose to use. With modern, automated payroll software, processing payroll for a small business can take a few hours to a day, while larger businesses with more employees and intricate pay structures may take longer, perhaps a few days to a week.

How secure is payroll software? 

Housing such sensitive and personal information, payroll software is designed to be highly secure. Reputable payroll software will employ encryption and other security measures to protect sensitive payroll data. This is why it’s essential to choose a trusted provider and implement robust security practices within your organization to safeguard your employees’ and businesses’ information.

How much does a payroll system cost? 

There’s no simple answer to this one, as the cost of a payroll system varies widely based on the size of your business, the complexity of your payroll needs, and the features required. For a ballpark figure, small businesses might spend anywhere from $40 to $400 monthly for payroll software. You’ll need to consider your specific needs and budget when selecting a payroll system that best suits your business. 

Best payroll for small business

Set Realistic Expectations: Setup Can Be Time-Consuming

Payroll software offers slightly varied user experiences, but all have similar setup processes. This means that across the board, no matter which software you choose, setup can take time. In fact, it’s the most time-consuming and detail-oriented aspect of payroll software, so don’t be shocked when migrating to a new system has a few bumps in the road. This is normal when adopting any new technology or process. Change takes time. 

To mitigate this change, look for software services that offer step-by-step instructions, partial setup wizards, customer support experts, or that allow you to import historical data from competing payroll solutions. Any of these options may save valuable time during the setup process. 

So don’t be discouraged when setup takes time or you have a few frustrated folks who take a minute to adjust to something new. Because, in the long run, automated payroll software runs faster, makes fewer mistakes, and gets everyone their paychecks when they need them. 

There are a lot of great payroll software options out there, and it’s up to you to determine which will be the best solution for your business needs. Depending on the business you are in, you may benefit from a payroll solution that is tailored to your industry. DaySmart, for example, offers software solutions for a wide range of industries, each offering unique features that add value to specific types of businesses. Explore our product offerings simply by clicking the link here.