Best Payroll Services for 2020

Update: We've updated this page with more answers to frequently asked questions about online payroll.

Payroll is arguably the largest expense for businesses, and running it can be a daunting task. The process can be time-consuming, and errors can result in both unhappy employees and fines. To ease the burden, many small businesses are turning to online payroll services. These services handle all of a business's payroll processing and related tax filings and payments. 

With so many to choose from in 2020, finding the service that suits your needs can be tough, so we researched more than 70 of the top payroll companies to help you find the best fit for your business. Our recommendations are below, as well as a comprehensive list of other top payroll companies in case our picks don't work for you. If you are interested in learning more about payroll services, you can check out our guide to choosing a payroll service.

To determine the payroll services we think are best for small businesses and household employers in 2020, we spent dozens of hours researching the top online payroll companies. Here is an explanation of our selection process.

Locating the Best Services

To determine the best payroll services for businesses, we started with a pool of more than 70 online payroll service providers. Following preliminary research of other best-picks lists, we interviewed small business owners to discover new ones to add to our list.

Choosing the Best Services

After conducting some initial research into each, we settled on 21 payroll services to consider as best picks for our business categories: ADP, AmCheck, APS, BenefitMall, Big Fish Payroll Services, Fuse Workforce Management, GetPayroll, Gusto, Intuit, IOIPay, MyPayrollHR, OnPay, Patriot Software, PayUSA, Paychex, Paycor, Paylocity, Payroll On A Budget, Sage, SurePayroll and Wagepoint.

Researching Each Service

Next, we scrutinized each finalist. We reviewed their offerings, watched tutorials and how-to videos, read user comments, reviewed Better Business Bureau ratings and complaints, and tested out services when demos were available. After narrowing down the list to 10 contenders, we contacted each company posing as business owners to test their customer support and learn more about the service.

Analyzing Each Service

In all, we looked at cost, tax services, ease of use, customer service, integration options, incentives (free trials, free months, etc.), tax guarantees, mobile accessibility, payroll reports, employee self-service, extra services (employee retirement plans, workers' compensation, etc.), and Better Business Bureau ratings and complaints.

Best Household Employers

We followed a similar methodology to determine the best payroll service for household employers. In addition to SurePayroll and Intuit, which have plans tailored specifically to household employers, we considered five companies that specialize in payroll services for household employees: NannyChex, HomeWork Solutions, Savvy Nanny Payroll Services, GTM Payroll Services and HomePay by Breedlove.

The design of payroll services is one area to keep an eye on in 2020. Gary Anderson, director of sales at Criterion, told SelectHub that he expects payroll services will strive to create systems that manage other human resource services. As employers shop around for online payroll software, packaged deals will be their ideal choice. Comprehensive payroll software will be considered quality technology and more cost-effective, which will spark an upsurge in all-in-one software. 

All-inclusive payroll systems also help keep data from being entered twice, saving you time. In the future, as competition increases and developing systems call for it, we expect existing payroll systems to phase in human capital management tools. This will lead to a decrease in payroll services that only offer one feature. 

In addition, some businesses require a glut of form filing, and thanks to artificial intelligence and the advanced and evolving nature of quality online payroll services, we expect a decrease in violations. As employment laws change and businesses grow, the software is designed to adapt. Artificial intelligence increases automation and helps manage payroll compliance. Therefore, we foresee a decrease in fines and fewer concerns about the cost of compliance. 

April 2020: A number of online payroll providers have launched online guides to help small businesses navigate the uncertain times they are facing as a result of the COVID-19 pandemic. 

Gusto, ADP, OnPay, and Intuit are among many payroll services that recently unveiled resource hubs on their websites to provide small businesses with the information on topics like the Paycheck Protection Program and the CARES Act. 

Further, Paychex has partnered with PayActiv to provide its customers with a way to provide on-demand payroll. Employees can access their earned wages at any time instead of having to wait until their normal payday. PayActiv is offering businesses a $250 cash incentive for signing up for its on-demand payroll services.

Online payroll companies provide a valuable service to small businesses. They automatically calculate the correct amount your employees should be paid each pay period. They also make the appropriate deductions for things like healthcare benefits and Social Security. 

In addition, online payroll services handle all of your company's payroll tax responsibilities. This includes withholding the proper amount of funds, filling out and filing the required paperwork, and making the necessary payment to each local, state and federal agency. 

Processing payroll online is very convenient for small businesses. These are cloud-hosted services that provide access to your business's payroll from anywhere. You can log in from any web browser and check your payroll reports, input payroll and employee information, and complete payroll. 

Many online payroll companies offer additional services to small businesses, including new-hire reporting, workers' compensation insurance, paid time off (PTO) management, HR services, time and attendance systems, and retirement savings plans. 

When it comes to small business payroll, these online services typically have a monthly or per-payroll cost structure. With monthly plans, you pay a base fee and a per-employee fee. Base fees can range from $30 to $150 per month. Per-employee fees range from $2 to $15. With a monthly fee structure, you can run payroll as often as you like for one flat fee. If you have a semimonthly pay schedule, you will pay these fees twice a month. Online payroll services with a per-payroll fee structure can charge anywhere from $10 to $100 per pay run, plus per-employee costs of $2 to $15. 

In addition, some payroll companies charge year-end tax service and initial setup fees.

What is online payroll software?

Online payroll software and online payroll services are essentially the same thing. It is a bit of semantics. The payroll software is what you access online. It is cloud-based software from the online payroll service provider. The software is what you technically interface with to run the payroll and add new employees into the system. Most online payroll software is easy to use and allows you to process your payroll in minutes. 

What other benefits does payroll software provide? 

There are several big benefits to using comprehensive online payroll solutions. One major plus is its efficiency. You don't have to hire someone to handle all of your payroll needs, because pretty much anyone can use the software. In most cases, all you need to do when running payroll each pay period is to enter the hours each employee worked and any bonuses or commissions they earned. The software does the rest for you. It calculates the paychecks, withholds the proper deductions and automatically deposits the money in each employee's bank account. 

Another benefit is that the payroll company takes care of the tax filings and payments for you. Most of them offer a tax guarantee. If they make a mistake when filing your taxes or in how much they pay, they will fix the problem and pay any fines you incur. 

What type of payroll service is right for my small business? 

When choosing an online payroll service for your small business, there are several factors to consider. First and foremost, you want to make sure it can handle all your payroll and payroll tax needs. Can you run payroll as often as you like? Will it make the deductions you need? Does it give your employees self-service access? Whatever payroll needs you have, you want to make sure the provider you choose meets them. 

You also need a payroll solution that is easy to use. The online interface should be simple to understand, and it should allow you to run payroll in a matter of minutes. 

Depending on your business's needs, you may benefit from a payroll company that offers additional services, such as time and attendance and HR solutions. 

What is unique about comprehensive payroll companies? 

Comprehensive payroll companies do much more than prepare your business's payroll. In addition to payroll processing, they handle all of your payroll tax needs, manage your employees' paid time off, report new hires to the proper agencies and offer workers' compensation insurance. 

Many comprehensive payroll solutions offer additional services, such as HR management, benefits administration, time and attendance services, and 401(k) and college savings programs. 

Why are payroll services important for small businesses? 

Many small businesses don't have a dedicated HR team that knows all the ins and outs of payroll. They rely on payroll companies to manage those responsibilities for them. They depend on these services to ensure their employees are properly paid each month and that their payroll taxes are appropriately filed and paid. 

Online payroll services give small businesses peace of mind that, with just a few clicks of a mouse every two weeks (or on their chosen schedule), their employees will get the money they are owed and that the proper payroll taxes are being withheld for payment when the time comes. Instead of you worrying about whether you filed the tax documents correctly and are paying the right amounts, online payroll services handle all of those tasks for you. They are so confident about this that most services offer an error-free guarantee.

Do payroll service providers offer mobile applications?

Yes, most payroll providers offer mobile apps for iOS and Android devices. Most of these apps allow administrators to run payroll, review past payroll runs and pay payroll taxes. Additionally, employees can take advantage of the mobile apps by reviewing their pay stubs, pay history and paid time-off accruals.

How long does payroll take to process?

This varies by payroll provider, but many payroll services complete the process within two days. This means that payroll administrators need to submit the final payroll numbers two days prior to payday.

Are there any free payroll software solutions?

There are several free payroll options to choose from, include Payroll4Free.com, Wave and eSmart Paycheck. However, before choosing a free program, make sure it matches your company's basic needs. A free program is great for a business just starting out and helps manage your tax calculations, wage garnishments, and Social Security and benefit deductions. However, when using a free service, you may have to sacrifice a few features like customer service or security tools. 

Should you use a payroll service or hire an accountant?

You should hire an accountant if you need help managing the collection and reporting aspects of payroll processing. Accountants can analyze your payroll and provide valuable guidance for businesses, but they can be expensive.

Although accountants can process your company's payroll, the average hourly fee is $33.89 per hour, while certified public accountants charge an average rate of $160 to $275 per hour. Payroll services, by comparison, usually cost about $29 to $150 per month, with an additional fee of $2 to $12 per employee.

How can you save money on payroll?

To save money on payroll, consider outsourcing your payroll tasks. When managing it yourself, you may not do it correctly or on time – and mistakes or late processing can result in hefty penalties and fines. You may also consider looking for a free payroll service. However, most free payroll services don't offer all of the features and tools paid offerings do.

Using a time and attendance system is also a way to save money on your payroll, because it helps ensure you aren't paying employees for time they didn't work. When using a paper timesheet, employees can easily add a few minutes to their time that they didn't actually work. Paying employees for a few minutes of time they didn't work might not seem like a big deal, but if this becomes a habit, the costs can really add up. A digitized time and attendance system forces your team to input exact times, which keeps you from overpaying your staff. 

What are unpaid payroll tax penalties?

Unpaid payroll tax penalties apply when an employer fails to pay the Internal Revenue Service the proper amount of payroll tax funds they owe. Failure to complete Form 941 or provide proper documentation, like W-2s or Form 1099-MISC, is also a problem. You also need to make sure your deposits are on time to avoid fines.