The 6 Best Payroll Software for Small Businesses in 2025
Best Payroll Software for Small Businesses: Running a small business involves wearing many hats, and payroll is one of the most time-consuming and complex tasks.
As a small business owner, you want to ensure your employees are paid correctly and on time while keeping your company compliant with tax regulations. Managing this manually can lead to costly mistakes and wasted hours.
The good news is, with the right payroll software for contractors, you can automate payroll, tax filing, and even HR management. This way, you can save time, reduce errors, and focus on growing your business.
In this guide, we’ll cover the best payroll software for small businesses, exploring the features and benefits of each option.
Whether you need affordable payroll software for contractors or payroll software for small non-profit organizations with grant reporting, we have you covered.
If you’re wondering which payroll solution is right for your company, you’re in the right place. By the end of this article, you’ll understand the most suitable software options available, tailored to the unique needs of small businesses.
Best Payroll Software in 2025
- Gusto: Best All-in-One Payroll Solution
- QuickBooks Payroll: Best Integration with QuickBooks
- OnPay: Best Affordable Payroll Software for Small Businesses
- Zenefits: Best for HR and Payroll Integration
- Paychex Flex: Best Customization for Small Business Payroll
- ADP Workforce Now: Best for Scalability and Flexibility
What is payroll software and Why Do You Need It?
Payroll software is a tool that automates the payroll process for businesses. It helps you calculate employee wages, process payments, deduct taxes, and ensure compliance with tax laws.
Without payroll software, small businesses manually process payroll, which can lead to errors, delays, and compliance issues.
The best payroll software for small businesses can handle all these tasks for you.
It also simplifies things like setting up direct deposit for small business payroll, filing taxes, and even tracking tips for industries like hospitality.
Whether you have full-time employees, part-time workers, or contractors, payroll software can streamline the entire process.
Automating your payroll can save you time and eliminate human error. This is especially beneficial for small business owners who need to focus on growing their companies rather than dealing with payroll issues.
Additionally, payroll software ensures you stay compliant with tax laws, protecting you from costly penalties.
Key Features to Look for in Payroll Software
When selecting payroll software for small businesses, it’s essential to consider features that align with your company’s specific needs. Here are some key features to prioritize:
- Tax Filing Automation: One of the most significant features is automated tax filing. With the right software, your business can calculate and file taxes at both the federal and state levels. This reduces the risk of tax penalties due to errors or missed deadlines.
- Direct Deposit: An efficient direct deposit feature saves time for both you and your employees. Make sure the software allows you to set up direct deposit for small business payroll easily.
- Mobile Access: Look for software that offers a mobile app, allowing you to manage payroll on-the-go. Easy-to-use payroll software for small businesses with mobile app access can help you stay on top of payroll tasks from anywhere.
- Employee Self-Service Portal: A self-service portal lets your employees access pay stubs, tax forms, and other payroll information. This can reduce your administrative burden and improve transparency for your staff.
- Grant Reporting (for Nonprofits): For nonprofit businesses, having payroll software for small non-profit organizations with grant reporting is critical. This feature helps ensure compliance with grant regulations and reporting requirements.
- Scalability: Choose payroll software that scales with your business. This is particularly critical if you plan on expanding your team. Many platforms offer various service levels, so you can add more employees or features as needed.
Best Payroll Software for Small Businesses in 2025
Here’s a rundown of some of the best payroll software for small businesses available today. These solutions are designed to meet various needs, from simple payroll to comprehensive HR management.
1. Gusto: The Best All-In-One Payroll Solution
Gusto is a well-known and highly rated payroll solution that offers an all-in-one platform for small businesses. It’s designed to streamline payroll, HR, and benefits management, making it one of the top choices for small business owners.
Key Features:
- Full-service payroll with automated tax filing
- Benefits management including a 401(k) and health insurance
- Payroll software for small businesses with contractors included
- Mobile app access for business owners and employees
Best for: Businesses looking for easy-to-use payroll software for small businesses that covers all aspects of payroll and HR.
2. QuickBooks Payroll: Best integration with QuickBooks
For small businesses already using QuickBooks for accounting, QuickBooks Payroll is an excellent choice. This payroll software seamlessly integrates with QuickBooks, simplifying your financial management and ensuring payroll data is automatically synced with accounting records.
Key Features:
- Automatic tax calculations and filing
- Payroll software that integrates with QuickBooks for small businesses
- Same-day direct deposit options
- Full-service payroll, including tax management and reporting
Best for: Small businesses already using QuickBooks who need a payroll solution that integrates smoothly with their accounting software.
3. OnPay: Best Affordable Payroll Software for Small Businesses
OnPay offers a cost-effective solution for small businesses looking to simplify their payroll process. It provides robust payroll features at an affordable price, making it a great option for small businesses with limited budgets.
Key Features:
- Unlimited payroll runs per month
- Tip tracking for small businesses (ideal for restaurants and hospitality).
- Affordable pricing with no per-employee fees
- Easy-to-use interface with mobile app access
Best for: Small businesses on a budget who need affordable payroll software for small businesses with contractors and tip tracking capabilities.
4. Zenefits: Excellent for HR and Payroll Integration
Zenefits is an ideal choice for businesses looking for an all-in-one solution that includes payroll, HR, and benefits management. It helps small businesses handle not only payroll but also employee benefits, time-off tracking, and compliance.
Key Features:
- Integration with HR tools like benefits management and employee self-service
- Automated payroll processing and tax filing
- Mobile app access for payroll management on-the-go
- Affordable pricing based on employee count
Best for: Small businesses that want to combine payroll and HR management on a single platform.
5. Paychex Flex: Best Customization for Small Business Payroll
Paychex Flex is a flexible payroll solution that offers high customization levels, making it ideal for small businesses with complex payroll needs. Whether you need to handle different pay schedules or have specific reporting requirements, Paychex Flex can be tailored to suit your needs.
Key Features:
- Highly customizable payroll settings and reporting options
- Automated tax calculations and filings
- Employee self-service portal for pay stubs and tax forms
- Mobile app for payroll management
Best for: Small businesses with specific payroll needs or those looking for more customization in their payroll software.
6. ADP Workforce Now: Best for Scalability and Flexibility
ADP is one of the most established names in payroll. Their Workforce Now platform offers powerful features and scalability, making it an ideal choice for small businesses that plan to grow.
Key Features:
- Scalable payroll solution that grows with your business
- Comprehensive HR features including benefits administration
- Online payroll software for small businesses for tax filing and reporting
- Access to ADP’s vast HR support resources
Best for: Small businesses that expect to expand and need a payroll solution that can grow with them.
How to Choose the Right Payroll Software for Your Business
Selecting the best payroll software for small businesses depends on several factors. To choose the right solution, consider the following:
- Business Size and Complexity: If your business is small and just starting, you might only need basic payroll functions. However, if you have more complex payroll needs, such as handling tips, contractors, or grant reporting, look for software that offers those features.
- Integration with Other Software: Ensure payroll software integrates with accounting software, such as QuickBooks, to streamline your financial processes. Many payroll platforms, including QuickBooks Payroll, offer seamless integration.
- Compliance features: Choose software that automatically handles tax filing and keeps up with tax law changes. This feature is essential for compliance and penalties avoidance.
- Customer support: Good customer support can make a significant difference, especially when you’re dealing with payroll issues. Look for payroll providers that offer strong support through various channels like chat, email, or phone.
Common Mistakes to Avoid When Choosing Payroll Software
When selecting payroll software for your small business, here are some common pitfalls to avoid:
- Not Considering Future Growth: Choose software that grows with your business. Don’t settle for a solution that only meets your needs today.
- Ignoring User Reviews: While software features are important, user reviews can offer valuable insight into ease of use and customer support quality.
- Overlooking Hidden Fees: Be aware of hidden fees that can increase payroll software costs. Look for pricing transparency.
Conclusion: Streamline Your Payroll with the Right Software
Choosing the best payroll software for small businesses can save you time, reduce errors, and ensure your business stays compliant with tax laws.
Whether you need affordable payroll software for small businesses with contractors or a payroll solution for small non-profit organizations with grant reporting, there’s a software solution that fits your needs.
By considering factors like ease of use, mobile access, and tax filing automation, you can find the right tool to streamline your payroll process.
Start by evaluating the options we’ve discussed, and choose the one that best aligns with your business goals.
Take control of your payroll today and focus on what matters most growing your business. With the right software, payroll doesn’t have to be a hassle.
Frequently Asked Questions
What is the best payroll software for small businesses?
The best payroll software for small businesses varies depending on your needs. Gusto and QuickBooks Payroll are popular for their ease of use and features like automatic tax filing, direct deposit, and integration with accounting software. If you’re looking for something affordable, OnPay is a great choice. For restaurants or businesses with contractors, platforms with tip tracking and contractor management like OnPay or Gusto can be a perfect fit.
How do I set up direct deposit for small business payroll?
Setting up direct deposit for small business payroll is simple with most payroll software. First, you’ll need to collect employee bank account details. Then, input this information into your payroll software, which will securely store and process the direct deposit transactions. Software like Gusto or QuickBooks Payroll allows for seamless integration, making it easy to set up direct deposits for all employees quickly and efficiently.
How do I handle year-end payroll for a small business?
To handle year-end payroll for your small business, you need to generate and distribute W-2 forms for employees and 1099 forms for contractors. Many payroll platforms, like Gusto or Zenefits, automate this process, ensuring compliance. You also need to submit year-end tax filings with the IRS. Using payroll software that offers year-end reporting can significantly reduce the time and effort required during this busy period.
What are the benefits of using payroll software for small businesses?
Payroll software offers numerous benefits, including automating tax calculations, improving accuracy, ensuring timely payments, and reducing errors. It helps you stay compliant with federal and state tax laws, reduces the risk of costly mistakes, and frees up valuable time. Payroll software for small businesses often integrates with accounting systems like QuickBooks, offering an all-in-one solution to manage finances, making payroll tasks simple and efficient.
Is there payroll software for small businesses with contractors?
Yes, many payroll software solutions cater to businesses with contractors. Software like OnPay and Gusto makes it easy to manage payroll for both employees and independent contractors. These platforms allow you to track hours, calculate pay, and issue 1099 forms at year-end. Additionally, OnPay offers a contractor-specific plan that includes tax reporting, ensuring your business remains compliant with IRS guidelines for 1099 workers.
Can payroll software integrate with QuickBooks for small businesses?
Yes, several payroll software solutions integrate seamlessly with QuickBooks. QuickBooks Payroll is designed specifically for this purpose, offering a simple way to sync payroll and accounting data. This integration ensures accuracy in financial reports and eliminates the need for manual data entry. If you’re already using QuickBooks for accounting, this feature saves you time and helps maintain a smooth flow of information between payroll and financial records.
How can I track tips with payroll software for my small business?
If your business deals with tips, look for payroll software for small businesses with tip tracking features. Solutions like OnPay and Gusto allow you to easily record tip income and calculate proper wages based on hourly rates and tips. These platforms ensure you comply with tipping regulations and automate the calculation of payroll taxes related to tips, saving time and reducing errors for industries like restaurants or hospitality.
What is the cost of payroll software for small businesses?
The cost of payroll software for small businesses varies based on the features and the size of your company. Basic software can start as low as $25 per month, with more advanced options ranging between $40 and $150 per month. For businesses with contractors or additional HR features, the cost may be higher. However, many platforms like OnPay or Gusto offer affordable pricing tiers, ensuring you only pay for the features you need.
How do I automate payroll taxes for a small business?
To automate payroll taxes for your small business, choose software that includes tax filing and calculation features. Platforms like Gusto and QuickBooks Payroll automatically calculate, withhold, and file taxes on your behalf. These services update in real-time to reflect any changes in tax laws, ensuring compliance. Automation eliminates the need to manually file taxes or track deadlines, reducing the risk of penalties and saving valuable time for small business owners.
What is the best payroll software for small nonprofit organizations with grant reporting?
For small nonprofit organizations that need payroll software with grant reporting, OnPay and Zenefits are great options. These platforms offer grant reporting features that simplify the management of employee wages funded by specific grants. They allow for easy tracking of labor costs against grant budgets, ensuring compliance with reporting requirements. By using payroll software with these features, nonprofits can efficiently manage payroll while meeting the specific needs of their grants.