Best Payroll Services for 2023

What Is A Payroll Service?

Payroll services take over management of the payroll process for businesses, handling everything from paying employees to managing payroll tax obligations. Small business payroll service providers can either take over part or all of the payroll process, allowing employers to retain whatever level of control they want when it comes to ensuring employees are paid. A small business payroll services also typically include access to payroll software tools to monitor when payroll is processed and how much it costs each cycle. While a few companies offer the flexibility of processing international workforce payments, most are focused on American employees and merely provide basic support for paying overseas contractors.

What Is Payroll Software?

The best payroll software integrates with accounting software and time and attendance systems, sharing data to reduce the need for double entry and to minimize mistakes. It’s often bundled alongside the best HR software, though the leading providers make their payroll tools available as stand-alone items. Most payroll software also tracks payroll tax liabilities, and the best payroll services will handle reporting paperwork with the appropriate jurisdictions. Employees can also use the best payroll software solutions to access their pay stubs and other records through an employee self-service portal or mobile application.

• The best small business payroll services ensures employees and contractors are paid correctly and on time.
• As your business grows, your payroll needs will change, so it’s a good idea to look for a small business payroll service that can scale with your business.
• Online payroll software helps companies automate payroll, file quarterly and annual taxes, and make better business decisions.
• This best picks page is for small business owners looking to simplify payroll and pay their employees and contractors quickly. 

Payroll is often one of the largest expenses incurred by a company, and managing it can be frustrating for everyone involved. Payroll errors are time-consuming to fix and can cause employee satisfaction to plummet. That’s why many small businesses turn to payroll services for processing payroll. However, not all small business payroll services are created equal. The most basic will simply help you crunch numbers, while the best will allow you to automate your payroll and simplify tax filings. When it comes to choosing a payroll service for your business, you’ll want to select one that can handle everything you need. To help you make an informed decision, we researched the top small business payroll service providers to identify the best providers, highlighting the brands that excel in specific areas.

Online payroll providers typically have a monthly or per-payroll cost structure. With monthly plans, you pay a base fee and a per-employee fee. Base fees typically range between $30 and $150 per month, and per-employee fees often range from $5 to $15 per month. Some firms are open and honest about their costs, while others prefer to generate a customized quote in response to a new business inquiry. This means handing your contact details over to a sales rep, who is free to give you the hard sell on that company’s products and services.

With a monthly fee structure, you can usually run payroll as often as you like for one flat fee. This is often a more economical choice for a business that runs payroll several times per month. With a per-payroll fee structure, companies may charge you anywhere from $10 to $100 per payroll run, plus per-employee fees of $2 to $15 per month. A per-payroll model might work better for a business that runs payroll more infrequently. In addition, some providers charge extra for year-end tax services and initial setup.

A few online payroll services offer a free trial, giving you the chance to try out the software for at least one payroll run to see if it meets your needs. Even if you can’t get a free trial, several vendors will let you cancel your contract at any time.

Payroll services offer a variety of features and tools that streamline payroll processing for small businesses. Here are some of the most valuable features to look for when considering payroll companies.

• Unlimited payroll processing: Some payroll services allow you to run payroll as many times as you want each month. This gives you the freedom to determine the pay periods that make the most sense for your employees. This flexibility also lets you pay independent contractors whenever they complete a project, without paying extra for additional payroll runs.
• Payment options: Most online payroll services allow you to pay employees by direct deposit, paper checks or prepaid debit cards (also known as pay cards).
• Payroll taxes: Online payroll services determine how much your business owes in payroll taxes. They’ll also complete and file the paperwork with the appropriate federal, state and local tax agencies, and make the required payments on your behalf.
• Year-end tax forms: Payroll services prepare all of the necessary year-end tax forms for your workforce and provide them to your employees and independent contractors.
• PTO management: Some payroll services handle some or all of your PTO management. This can include tracking how much PTO employees earn and use, as well as allowing employees to request time off and managers to approve or deny those requests.
• Employee self-service: Payroll software typically has an online portal that employees can access to view their pay stubs and year-end tax forms.
• New-hire reporting: Many payroll services can complete and file the required paperwork each time you hire a new employee. These documents need to be filed in the state where your business operates.
• Mobile access: Most payroll services provide a dedicated mobile app or a mobile-friendly website, ensuring the platform is accessible from smartphones and tablets.
• HR services: In recent years, many payroll vendors have started offering additional HR services, like onboarding tools, employee benefits management and HR compliance. Additionally, some payroll companies give your business access to dedicated HR professionals who can help you navigate HR issues.
• International coverage: Some payroll software platforms will support payments to overseas contractors, while companies like Remote and Papaya have been built from the ground up to facilitate payments to foreign workers, freelancers and clients.

There are three key stages involved in choosing the right payroll service for your small business. We outline these below.

1. Determine Your Business’s Needs

When choosing an online payroll service for your small business, there are several factors to consider. For most companies, budget will play a big role in figuring out which provider to go with. What can your organization afford to spend on payroll processing and assorted services? What features can you live without, and which are absolute necessities? Many payroll platforms are bundled into larger suites of HR and human capital management (HCM) software, indivisible from these wider offerings and therefore unsuitable for businesses that want a payroll package only.

You will also need to determine how often you process payroll. Is it every week, biweekly or just once a month? Some payroll providers offer unlimited payroll runs, while others charge per run, so this is an important factor to consider.

Evaluate your firm’s competing priorities. Is same-day or next-day deposit important to you? Is it more vital than other functions? Does your business need a platform that includes additional HR services? Make a list of everything you want your payroll software to help you accomplish so you can look for providers that meet your company’s needs.

2. Research Potential Vendors

Once you know the specific features you’re looking for in a payroll software provider, you can compile a list of potential vendors. From there, you can review the features each vendor offers and get a sense of where each one stands out or falls short. Compare each system against your list of desired functions, and remove from consideration the platforms that don’t align.

Once you’ve narrowed your list down to just a couple of options, it can help to schedule demos with these providers. During a demo, you can see how the software works and ask the sales team pertinent questions. For instance, can you run payroll as often as you want each month? Does the package come with a mobile app and an employee self-service portal? You should also evaluate how intuitive and easy it is to use the program. The platform’s interface should be simple to understand and allow you to run payroll in a matter of minutes. Remember that sales reps will talk up positives and gloss over negatives, so be probing in your questions and don’t let them distract you from getting the answers you need.

Make sure you fully comprehend how the provider’s pricing works and what you can expect to spend each month. For instance, many payroll providers charge a base fee along with an additional per-employee fee. What structure do they use, and are any setup charges or fees levied for additional payroll runs? Do you pay for the software when it’s installed, a month after subscribing or when you perform your first payroll run?

Finally, you should look into what kind of customer service the company provides. How is the payroll provider rated by the Better Business Bureau, and how many customer complaints are there? Is there phone, email and chat support, or are you limited to just one of those options? The answers to these questions should further narrow down your prospects, as will the hours in which support is available. We found many companies offering fixed hours based on either Pacific or Eastern time, which obviously isn’t ideal if those hours of business don’t align with yours.

3. Make Your Selection

After you’ve weighed the pros and cons of each provider, you can identify your top options and begin the sign-up process with your preferred vendor. See if you can negotiate the advertised price, and always ask if any discounts are available; recently withdrawn offers or incentives may still be available on request. Once you’ve chosen the software that’s best for your business, you can move forward with the setup phase.

Here are some of the biggest advantages of using a payroll service:

• Increased efficiency: Using a comprehensive payroll service means you don’t have to hire someone in-house to handle all of your business’s payroll needs.
• Ease of use: The software does most of the heavy lifting for you. It calculates pay amounts, withholds the proper deductions and automatically distributes payments based on the method chosen.
• Ensured tax compliance: Payroll companies also take care of tax filings and payments for you, ensuring you meet your legal obligations. Most offer a tax guarantee, so if the payroll service makes a mistake when filing or paying your taxes, it will fix the problem and pay any fines you incur. If a particular platform doesn’t make this promise, look elsewhere.
• Reduced expenses: The best payroll services can save your company money by streamlining tax preparation. It can also help you cut costs by running more accurate payrolls and, if you go entirely digital, eliminating the need for paper documents.
• Reliable processing: Payroll services are the most reliable way you can run payroll each week. If you set up automatic payroll, it will run without any input from you. But even if you choose to operate it manually, the system can still send you reminders each week. This ensures employees are paid accurately and on time.
• Wide accessibility: If your payroll service offers a self-service app, employees can easily access any details they need. Logging in to the app should reveal their pay stubs, W-2s and direct deposit information. Some platforms let employees check their pay slips before payroll is run, providing a useful window to correct errors preemptively.
• Manage remote workforces: Payroll services provide you with the tools to stay in compliance with laws and regulations in almost any jurisdiction. Some providers also offer employee-of-record services for overseas workers.