What is the exact definition of a “small business?” The US Small Business Administration has an online tool to determine eligibility for SBA loans. If you’re curious about that, visit their website. As a sole proprietorship, LLC, or partnership, you could be eligible for a small business loan. You’ll be asked to submit a number of documents for approval, including payroll records.
Another compelling reason to use a payroll service is your ongoing tax obligations, both state and federal. Before launching any new business, make sure that you have a federal Employer Identification Number and check with your state revenue department to see if you need workers’ comp insurance. You’ll need proof of both to set up a payroll service.
Small business owners often make the mistake of starting out without a payroll company. They’ll write business checks for services or pay cash “under the table,” thinking it will help keep costs down. It doesn’t. Your revenue number doesn’t change and those cash payments are not valid expenses, so you’re taxed on the income. Don’t get caught in that trap. Get your payrolls in order and find out the best payroll services for small businesses in this guide!
Best Payroll Services For Small Businesses
Whether you’re starting a catering business, a credit repair business, a party planning business, or any other type of small business, payroll is crucial. Getting your payroll in order can be difficult and time-consuming, which is why a payroll service can definitely come in handy. Wondering what the best payroll services for small businesses are? Read on to find out!
Intuit/QuickBooks – Best Payroll Service for Sole Proprietors and LLCs
The situation above is most common for sole proprietors. Why pay for an accounting and payroll service when you can write checks for free and keep paper receipts? Go through one IRS audit and you’ll never ask that question again. Intuit offers just payroll for $29 a month, but you’re better off paying $59 for the Intuit/QuickBooks payroll and accounting package.
You still need a payroll service even if you’re the only employee. Having your taxes deducted from each paycheck and making quarterly deposits to the IRS will help you avoid large tax bills and penalties at the end of the year. With Intuit’s payroll system, you can choose the frequency and days that you get paid. The accounting software will keep track of bills and expenses.
Intuit/QuickBooks is also a good fit for larger organizations, but they are a top choice for small firms with under fifty employees. The accounting software is easy to use and recommended by the AICPA. QuickBooks offers tax penalty protection and 1099 E-file for independent contractors, should you choose to set yourself up that way. And yes, they have a mobile app.
Gusto – Best Payroll Service for Tech Start-Ups
If you’re looking for a payroll application that is really smart, try Gusto. Small business owners use it to pay their employees, set up all necessary insurances, and manage company benefits like health care and retirement plans. Online access through a mobile app is available to all employees and the onboarding process takes less than five minutes.
Gusto is one of the top payroll apps for technology start-up firms because it’s slick and modern. You can see it on the website from your first visit to the home page. Prices range from $39 to $149 per month, based on how many of their services you want to take advantage of. The cost per employee is $6 to $12 per month, making it fairly cost effective for small businesses.
In addition to payroll and benefits management, Gusto also offers HR support, time tracking tools, team management features including surveys, offer letter templates, and new hire onboarding. All of this is done in typical Gusto fashion, using advanced technology but simple user interfaces. Check out their Talk Shop blog to learn more.
OnPay – Best Payroll Service for Independent Contractors
Priced at just $36 per month plus $4 per employee, OnPay is the perfect payroll service for the independent contractor. With five-star ratings on Capterra and G2 Crowd, along with an “excellent” rating at PC Mag, OnPay comes highly recommended and is quickly becoming one of the leaders in the payroll services space. Their tagline is “The New Standard in Payroll.”
For independent contractors, OnPay will keep track of what you’re taking for an owner’s draw and automatically do your quarterly and year end tax deposits. The software integrates with major accounting tools such as QuickBooks and FreshBooks, which gives you the ability to track all incoming and outgoing cash flows. 1099 and W-2 filings are also part of the service.
OnPay offers benefits and insurance options, like most of its competitors, but non-payroll services are left to outside integration partners. The integration page on their website lists accounting, time tracking, 401K, HR & Compliance, small business lending, and business tool applications that you can integrate for automated data flow.
ADP – Best Payroll Service for Expanding Workforces
Every small business gets a customized price structure with ADP, making it an ideal fit for firms with expanding or fluctuating workforces. You can log on to their website to get a free quote in minutes. ADP, one of the most established names in the payroll services space, offers payroll, benefits, insurance, and HR services. They also have an extensive app store for integrations.
ADP has been around since the 1950’s and was named to Fortune Magazine’s “World’s Most Admired Companies” list fourteen years in a row. They are the alpha in the payroll services space. That doesn’t mean they’re the best fit for you, but if you use their service you can be fairly certain they are not going out of business any time soon.
Patriot – Best Low-Cost Basic Payroll Service
If you’re looking for something simple and cheap, with no set-up costs and a free thirty-day trial, your best choice would be Patriot. For a sole practitioner, LLC, or independent contractor, this service is only $10 a month if you want to handle payroll taxes yourself or $30 a month to have Patriot do it for you. You can run as many as ten employees for $50 a month.
Patriot also offers low-cost accounting software for $15 a month to take care of tracking income and expenses. That sounds pretty cheap, but don’t worry. Patriot has been around for thirty years and keeps their prices low because that’s their business model. If you’re just getting your business started and don’t have much to work with, Patriot could be a fit.