Best Payroll Software for Small Business in 2023

Best Payroll Software for Small Business in 2023
Imed Bouchrika, Phd by Imed Bouchrika, Phd
Chief Data Scientist & Head of Content

From utilities and subscriptions to mortgages and loans, we all make monthly payments. If you have a business, then monthly salaries to your workforce are also included. As individuals, we may not be preparing a large-scale payroll month after month, but we have an idea of how tedious computations are when it comes to preparing tax and industry-compliant payouts.

Similar to large enterprises, small businesses also need to regularly pay their employees. While most large companies have a payroll system in place, small businesses still find the task complicated, frustrating, and confusing. The leading payroll software for small businesses can address the challenges encountered by SMBs when it comes to payroll management.

Payroll processes among small businesses remain largely manual. In 2020, 27% of payroll staff time was spent on running payroll, 24% on reconciliation, audits, and control, 20% on data entry, and 14% on answering employee inquiries (Deloitte, 2020). In this article, we provide a list of the best payroll software for small business in the market today that offers automation and self-service tools.

We will discuss the key payroll software for small business statistics and trends that paint a picture of the current use of this platform among small businesses. To provide you with the essential information for evaluating your options, key features of each software as well as pricing are also mentioned so you can choose which platform best suits your business operations.

Best Payroll Software for Small Business Table of Contents

  1. Payroll Software for Small Business Statistics
  2. Payroll Software for Small Business Trends
  3. List of Best Payroll Software for Small Business

Payroll Software for Small Business Statistics

The speed of digital transition we have witnessed in the past two years has undoubtedly provided benefits to businesses and consumers alike. The proliferation of apps changed the way we do things, and it has become difficult to imagine how to survive without an app for our everyday essentials. The optimization of processes improved services for customers, and businesses reduced operational costs. In fact, 86% of small businesses agree that technology helped their business survive during COVID (US Chamber of Commerce, 2022).

In terms of growth, operational efficiency, and customer relationships, small businesses leveraging technology platforms are reaping the benefits. To drive performance across various aspects of their operations, small businesses are already using technology in digital marketing (69%), payroll management (63%), human resource management (53%), and bill payment (29%) (Fundbox, 2022).

Source: Fundbox Small Business Trends Survey 2022

This year, small businesses have no plans of cutting technology investments even in the midst of rising inflation concerns. Over the past two years, at least 61% have implemented digital tools and technologies to improve processes and enhance customer experiences (Verizon, 2022). In this sector, 51% agree that technology platforms have helped their business operate more efficiently, while 77% believe that without access to technology platforms, their business would struggle to survive (US Chamber of Commerce, 2022).

tech for small business

In the area of payroll management, 45% of small businesses are already using technology to address the pain points in managing payroll (US Chamber of Commerce 2022). Of this group, 54% use cloud-based technology. The payroll software for small business statistics only shows that automation has delivered significant advantages, while at the same time bringing challenges. Some of the challenges in payroll that these solutions address include compliance (43%), managing the complexities of multi-jurisdictional payroll (34%), and inefficient processes (27%) (Ceridian, 2022).

Compliance is a major challenge in payroll management due to inaccurate employee source data imported into the payroll system (32%) and also because of the need to keep up with regulatory compliance changes that impact new ways of working (30%) (EY, 2021).

Source: Ceridian Future of Payroll Survey 2022

Among the key areas of planned investment by small businesses is the adoption of software applications, with 42% planning to increase spending on finance and accounting-related SaaS, and 41% planning to adopt on-premise software (Analysys Mason, 2022). To date, 97% of small businesses in the US use more than six platforms (US Chamber of Commerce,2022) and 56% are confident that they will be in a better spot a year from now due to ongoing technology investments (Verizon, 2022).

small business use of platforms

Payroll Software for Small Business Trends

Among businesses, payroll is no longer a mere function but is considered today as a strategic part of an organization that can deliver value. From my own experience, the way payroll is run impacts my trust in my employer and reflects my value in the organization. The following payroll software for small business trends reflects the increasing importance of keeping the employee experience valuable through effective payroll management.

  • Uptake in in-house payroll solutions. From 57% pre-pandemic, the number of small businesses doing payroll in-house via payroll software increased to 63.07% while 20.35% still chose to outsource to a payroll provider (Moorepay, 2022). The declining uptake of payroll outsourcing solutions may be a result of the economic challenges brought by the pandemic, but it can also be attributed to the digitization of business processes that amplified the benefits of automation. As of 2022, 36.07% of businesses use cloud-based payroll software, 34.25% use on-premise or desktop software, 15.07% use spreadsheet or CSV input, and 10.05% use managed service and cloud-based interface (Moorepay, 2022).
  • Increasing preference for dedicated payroll platforms. The use of separate HR and payroll software increased by 36% since 2019. Even prior to the pandemic, there is a clear trend in the use of payroll software as a system independent from HR. Among payroll software users, 35.62% use two separate systems, 29.22% use the same solution, 27.4% do not use any HR software, and 7.76% use a system integrated via an API. As of 2021, 67% of businesses have a formalized payroll strategy with the payroll team reporting to shared services increasing by 64% since 2018 (Deloitte, 2020).

Source: Moorepay Payroll Survey Report 2022

  • Employee self-service portal feature. Employee experience is key in attracting and retaining talent. Empowering employees is the main objective of the self-service portal, which is now one of the tools integrated with payroll software solutions. In 2022, 53% of businesses want the automation of payroll processes. The employee self-service portal allows seamless collaboration between payroll staff and employees. Employees can find their pay summaries, loan deductions, tax summaries, notifications, and much more in one platform. In addition, they can reclaim out-of-pocket business expenses. In 2022, 42.4% of businesses adopted employee self-service in their payroll systems (Moorepay, 2022).
  • Payroll access through mobile apps. Mobile apps are now becoming an integral part of every software, as users demand a platform that allows them to access data even on the fly. Manually entering payroll inputs is the most time-consuming aspect of payroll processing as agreed by 20% of businesses and the average cost per payslip is $28.39 (Deloitte, 2020). As such, the use of payroll software with mobile and automated functions can improve overall processes. The automated system simplifies reconciliations and makes transactions simple and instant. This level of accessibility keeps everything in one place and promotes effortless payroll processing.

self-service payroll

List of Best Payroll Software for Small Business

To help small business owners in choosing the best payroll management platform, the Research.com team has identified the 15 best payroll software for small businesses based on compliance automation features, pricing, tax filing, and employee self-service tools. The following payroll software solutions are ideal for small businesses looking for a tool that can streamline payroll processing without requiring a huge investment.

1. RUN Powered by ADP

RUN Powered by ADP dashboard

RUN Powered by ADP is a payroll and HR platform designed to help organizations focus on strategic initiatives. This platform facilitates faster and easier payroll processing with an integrated compliance and tax filing feature.

The system automatically calculates and files payroll taxes, and helps avoid costly mistakes. Using a personalized dashboard, you can access everything you need in accomplishing payroll and HR tasks. You can also put recurring payroll on auto-pilot.

RUN Powered by ADP Key Features:

  • Includes a mobile payroll app for easy access
  • Facilitates direct deposit for faster payroll processing
  • Provides robust reporting for informed decision-making
  • Includes a general ledger interface
  • Updates payroll with new hire reporting
  • Automatically files W-2s and 1099s
  • Assists in tax filing

Price:

By quote

2. Paylocity

Paylocity dashboard

Paylocity is a payroll processing software that simplifies and automates tax processes that enable companies to stay tax compliant. It also offers tools for expense management, tax services, on-demand payment, and hassle-free garnishment.

The small business payroll software of Paylocity offers an intuitive and modern platform for efficient payroll processing. With Paylocity, you are assured of accurate tax compliance through automated calculation, payment, and filing, including quarterly and year-end reporting.

Paylocity Key Features:

  • Simplifies payroll without compromising accuracy
  • Provides professional tax services
  • Automates payroll processes
  • Includes intuitive employee self-service
  • Delivers reliable customer support
  • Covers time and attendance reporting
  • Facilitates benefit administration

Price:

By quote

3. Rippling

Rippling dashboard

Rippling is an HR, finance, and IT platform that includes full-service payroll software. The payroll platform syncs with all your HR data and makes it possible to pay employees accurately and on time. Rippling has an automated tax filing system and includes a dedicated mobile app.

By automating your compliance work, Rippling lets you run your payroll with automated compliance. You can also customize data access by level and department. Tools include time and attendance, expense management, and benefits administration.

Rippling Key Features:

  • Automates payroll workflow
  • Syncs with HR data
  • Facilitates federal, state, and local tax filing
  • Includes a dedicated mobile app
  • Automates compliance work
  • Incorporates job codes and multiple pay rates
  • Allows assigning of role-based permissions

Price:

By quote

4. Paycom

Paycom dashboard

Paycom is a full online payroll management system that lets employees manage time cards, benefits, expenses, and vacation requests. Upon approval, the platform will automatically update payroll eliminating the need for manual reentry.

Improving payroll accuracy is at the core of Paycom. At the same time, it increases process oversight, reduces employer liability, reduces payroll corrections, and lowers time spent on manual checks. Paycom also automates compliance and tax computation and filing.

Paycom Key Features:

  • Offers tools for employee self-service payroll
  • Reconciles payroll automatically
  • Consolidates general ledger
  • Includes tools for payroll tax management
  • Facilitates garnishment administration
  • Covers expense management
  • Provides custom converters for importing data

Price:

By quote

5. Paychex Flex

Paychex flex dashboard

Paychex Flex is the small business payroll solution offered by Paychex, a provider of integrated human capital management solutions. It lets you enter and run payroll online via the free mobile app or through the hands-free voice assist tool. Paychex Flex automatically calculates and files payroll taxes, while at the same time allowing employees to do self-service actions.

With Paychex Flex, you have the option to process payroll from desktop to mobile, and submit it by phone to a payroll specialist. The platform dashboard has configurable views and can easily facilitate the different types of workers, whether exempt and non-exempt or contractors. It also includes automatic tax administration.

Paychex Flex Key Features:

  • Facilitates payroll tax payment and filing
  • Automates new-hire reporting
  • Provides new client onboarding support
  • Integrates HR, payroll, and benefits
  • Includes tools for employee self-service
  • Offers mobile app for payroll and other functions

Price:

Paychex Flex pricing starts at $39 per month for the base subscription plus $5 per employee.

6. Gusto

Gusto dashboard

Gusto is an all-in-one HR platform that offers tools for full-service payroll. Employee benefits, time and attendance, hiring and onboarding, and insights and reporting are just some of the services that this platform provides. It brings together all the tools you need to hire, manage, and accurately pay your team.

The full-service payroll of Gusto uses smart technology that helps companies with compliance, filing taxes, and identifying tax credits. Gusto allows you to run your payroll in minutes and automatically syncs team hours. It automatically files payroll taxes and handles compliance so you get peace of mind while growing your business.

Gusto Key Features:

  • Provides full-service single-state payroll including W-2s and 1099s
  • Includes tools for employee profiles and self-service
  • Speeds up payment through next-day direct deposit
  • Automates tax computation and filing
  • Offers best-in-class customer service
  • Tracks time and built-in benefits
  • Accessible through online and mobile

Price:

Pricing starts at $40 per month plus $6 per person per month.

7. Patriot Payroll

Patriot payroll dashboar

 

Patriot Payroll is a management platform that lets you run your own payroll and taxes, or you may also choose to handle only payroll and let Patriot Payroll handle taxes. It has an employee portal that lets employees access their pay stubs, pay history, and other payroll details securely.

Patriot Payroll covers all compliance work, including employee compensation insurance premiums. It calculates payroll taxes based on employee location and is 100% compatible with any type of mobile device. Patriot Payroll guarantees tax filing accuracy, and should errors occur, fines will be paid for by the vendor.

Patriot Payroll Kay Features:

  • Allows 2-day direct deposit for qualified customers
  • Includes employee portal for easy access and checking
  • Integrates with workers’ compensation
  • Allows all pay frequencies
  • Accommodates multiple tax filing locations
  • Offers multiple pay rates
  • Access is optimized for mobile

Price:

The Basic Plan starts at $17 per month plus $4 per employee or contractor.

8. Justworks

Justworks dashboard

 

Justworks is an online payroll services platform that lets you easily do automated deposits, one-off payments, and payroll tax filings. It simplifies the online payroll process by automating direct deposits for all types of employees, whether full-time or part-time.

Justworks supports weekly and bi-weekly pay frequencies, and helps you comply with payroll tax and employment regulations. Without any additional charge, Justworks lets you do all your domestic payments from one place. It seamlessly connects time sheets to payroll and increases team accountability.

Justworks Key Features:

  • Prepares payroll for salaried and hourly employees
  • Accommodates off-cycle payments
  • Includes tools for vendor and contractor payments
  • Facilitates employer payroll tax filing
  • Takes care of unemployment insurance filings
  • Prepares and assists in payroll reporting
  • Provides mobile app for employees

Price:

Pricing for Justworks starts at $59 per month per employee.

9. TriNet

TriNet dashboard

 

TriNet is a full-service HR solutions platform that includes tools for payroll services solutions. Designed for small and medium businesses, the payroll administration services and self-service tools allow you to focus more on team development. TriNet takes care of compliance and taxes in any state.

Streamlining payroll administration through direct deposit and debiting, TriNet online payroll services allow you to go paperless with e-pay stubs and electronic W-2 preparation and delivery. Invoices are automatically updated and you can also integrate your favorite accounting systems.

TriNet Key Features:

  • Initiates direct deposit and debiting
  • Provides e-pay stubs for easier access to payslips
  • Assists in electronic W-2 preparation and delivery
  • Provides a view of estimated invoices
  • Includes employee self-service platform
  • Facilitates federal, state, and local tax reporting
  • Provides tools for expense management

Price:

By quote

10. Zenefits

Zenefits dashboard

Zenefits is a human resource management company that includes payroll software for administration, reporting, and tax filing. This simple and intuitive platform streamlines onboarding, benefits, payroll, and more. It has a fully integrated and easy-to-use payroll system with advanced features including direct deposits, multiple schedules and pay rates, unlimited pay runs, and more.

Zenefits automatically syncs with HR and keeps your business compliant at all times. You can seamlessly integrate payroll into the accounting platforms that you are already using and effortlessly accomplish payroll on time.

Zenefits Key Features:

  • Automates onboarding
  • Includes employee management tools
  • Covers time off tracking
  • Programs efficient payroll scheduling
  • Integrates with business apps
  • Offers a mobile app for accessibility
  • Delivers valuable insights with analytics dashboards

Price:

The Essentials Plan, which is a base plan, starts at $8 per month per employee. Payroll as an add-on costs $6 per month per employee.

11. CAVU HCM

Cavu HCM dashboard

CAVU HCM is an all-in-one human capital management (HCM) and payroll service provider that looks for ways to save you time and money. It simplifies payroll processes by outsourcing payroll administration. This payroll solution combines software and concierge services.

Among the services offered by CAVU HCM include payroll processing, payroll tax management, workers’ compensation, reporting and analytics, and general ledger integration. It also provides a payroll guide to every client, including compliance assistance. By outsourcing an administrative process, CAVU HCM improves operational efficiency.

CAVU HCM Key Features:

  • Provides complete payroll processing tools
  • Automates tax payment and filing
  • Facilitates direct deposit
  • Offers payroll debit cards as a payment channel
  • Keeps a payroll report library
  • Includes a general ledger interface
  • Administers W-2s and 1099s

Price:

The Essential Plan starts at $50 per week for companies with up to five employees.

12. Multiplier

Multiplier dashboard

Multiplier is a platform that provides tools for the management of global payroll, social contributions, taxes, and local insurance policies. It includes a global payroll processing tool that can cater to startups and enterprises alike. Accurate, secure, and compliant payroll is what Multiplier provides to businesses of any size.

Multiplier ensures a quick and timely payroll process that you can use in handling international payroll for your global workforce. You can also add freelancers and contractors to your platform and pay them in their preferred currencies. Multiplier guarantees that all payments comply with all local corporate and tax laws.

Multiplier Key Features:

  • Accommodates multi-country payroll
  • Facilitates multi-currency payments
  • Includes tools for expense and leave management
  • Offers crypto payments
  • Provides employee self-service platform
  • Automates payroll with a single click
  • Guarantees compliance with regulations and standards

Price:

The Pay Freelancers platform starts at $40 per month, plus $20 per month to run global payroll.

13. Heartland Payroll

Heartland Payroll dashboard

Heartland Payroll is an online payroll processing platform that provides on-demand access to payroll and HR professionals on tax filing, compliance with labor laws, and document preparation. This web-based workforce management solution can be customized based on your business needs.

The reporting capabilities of Heartland Payroll helps in managing payroll taxes while at the same time staying compliant with local laws. Add new hires, update employee info, or sync benefit-related payroll deductions easily with Heartland Payroll.

Heartland Payroll Key Features:

  • Provides tools for payroll tax management
  • Includes benefits administration
  • Covers time and attendance monitoring
  • Integrates general ledger and accounting
  • Combines payroll and HR management tools
  • Extends margin-friendly pricing
  • Web-based workforce management

Price:

Pricing for Heartland Payroll starts at $89 per month for up to five employees.

14. Hourly

Hourly dashboard

Hourly is a compensation and payroll platform that provides tools for easy and accurate payroll management. Using seamless tracking and attendance, Hourly automatically sends your payroll and tax payments through direct deposits and paper checks.

You can also download the Hourly app onto your employees’ phones to automatically track hours and run payroll. It automatically takes care of all your payroll taxes and lets you sign all the right forms, online. The automatic calculations reduce costly errors and leave a clean audit trail.

Hourly Key Features:

  • Automates payroll tax preparation and filing
  • Includes tools for child support garnishments
  • Provides W-2, 1099, state, and local forms
  • Offers time tracking tools
  • Facilitates workers comp payments
  • Includes a mobile app for easy access
  • Easily generates payroll report

Price:

The Gold Plan starts at a base price of $40 per month plus $6 per month per person.

15. Toast

Toast Payroll dashboard

 

Toast is a restaurant POS and management system that offers tools for payroll and team management. The Toast payroll software designed for restaurants combines an intuitive user interface, automation, and synchronization to create a centralized hub from which restaurant managers can handle payroll and other HR processes. This payroll platform syncs directly with the POS module of the establishment.

With Toast, you are assured that your business stays compliant with state and local regulations all the time. It allows you to generate payroll quickly as taxes and other deductibles are computed automatically. For paying your team, you can choose direct deposit, printed check, or pay card options.

Toast Key Features:

  • Integrates with POS timesheet and POS employee data
  • Facilitates payroll processing in all 50 states
  • Takes care of payroll tax filing
  • Offers direct deposit, printed check, or pay card options
  • Digital onboarding for new hires
  • Provides mobile workflow for employee setup
  • Includes integrated tip pooling

Price:

Toast offers pay-as-you-go and monthly pricing, with payroll and team management as an add-on tool. Pricing is provided upon request from the vendor.

Empower SMBs: Use Payroll Software for Small Business

Now that small businesses are slowly recovering from the economic impact of the pandemic, they need all the tools that can optimize operations and reduce operating costs. Using payroll software for small business is a must if they are to effectively recover and emerge stronger in the post-pandemic economy.

The tools provided by small business software platforms streamline processes and eliminate manual tasks that take a big chunk of management time. Payroll software can help small businesses scale and focus on growth. Small businesses significantly contribute to overall economic growth. The use of technology will give a significant boost to their overall health and competitiveness, which will eventually impact the overall economy. Considering the payroll software for small business trends mentioned, the stage is set for small businesses to shine with the help of new apps and platforms.

 

References:

  1. Analysys Mason (2022). SMB technology survey insights: getting back to business. https://www.analysysmason.com/research/content/reports/smb-business-survey/
  2. Ceridian (2022). Future of Payroll Survey. https://www.ceridian.com/asia/resources/future-of-payroll-survey-mapping-the-journey-ahead-for-payroll-professionals
  3. Deloitte (2020). Global Payroll Benchmarking Survey. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/human-capital/us-apa-payroll-congress-survey-report.pdf
  4. EY (2022). How can payroll build value in an organization? https://www.ey.com/en_us/workforce/how-can-payroll-drive-value-in-organizations-with-flexibility
  5. Fundbox (2022). Fundbox U.S. Small Business Trends Survey 2022. https://fundbox.com/blog/fundbox-small-business-trends-survey-2022/
  6. Moorepay (2022). Payroll Survey Report 2022. https://moorepay.turtl.co/story/payroll-survey-report-2022/page/4/1
  7. US Chamber of Commerce (2022). New Study Shows Technology Platforms Critical to Small Business Growth. https://www.uschamber.com/technology/new-study-shows-technology-platforms-critical-to-small-business-growth
  8. Verizon (2022). Small Business Survey 2022. https://www.verizon.com/about/news/small-business-survey-2022

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