Everyone loves payday—except, that is, the payroll administrator. Paying employees (as well as contractors and freelancers) is the most complex element of small business accounting. It's also the scariest. Not only do you have to produce checks and direct deposits that are 100 percent accurate, but you also have to make certain that the underlying calculations—taxes, benefits, and other withholding—are correct down to the penny. Furthermore, you have to submit taxes and filings to the IRS and other tax agencies.
Cloud-based payroll applications can help ensure that you fulfill all of these obligations with precision and timeliness. We reviewed nine of the most popular online small business accounting services. Some have been around for years, including Gusto, OnPay, Patriot Software Full Service Payroll, Intuit QuickBooks Payroll, Square Payroll, SurePayroll, and Workful. Rippling also makes another appearance.
New to our roundup this year is Roll by ADP, the most innovative payroll application we’ve ever seen. Though you have the option to run Roll in a desktop browser, it was designed to be installed, set up, and used as a smartphone app using chat commands. It’s hard to imagine a complex payroll application that relies primarily on short chat messages to guide users, but Roll works surprisingly well. It's also one of the least expensive solutions we evaluated.
This year, we’re awarding Editors’ Choice awards to two payroll websites: Gusto and Rippling. Gusto is a returning winner. It delivers an exceptional user experience and four different subscription levels, so companies can grow with it. We recommend it highly for both novice payroll administrators and very small businesses. Our second Editors' Choice winner, Rippling, can be a good choice for small businesses, too, but, more importantly, it supports larger, more complex companies with dozens or hundreds of employees. It also offers robust human resources, benefits administration, and IT management capabilities. And it integrates with midrange accounting solutions in addition to applications such as Intuit QuickBooks Online.
What's Not Here
There are dozens of payroll websites we could have reviewed, some from household names like ADP and Paychex. Both of these companies offer entry-level DIY payroll services. They lack some of the features found in the sites we reviewed, however, and they’re slightly pricier. They scale up easily, though, so they can be good choices for larger businesses, those that expect to grow rapidly, or those that simply want to go with a well-known name. That said, getting started with them can be a considerable undertaking.
At the other end of the spectrum are sites for businesses that have more complex payroll needs or want to get their payroll as a part of all-encompassing HR software or benefits administration service. As noted earlier, Rippling is one of the best within this subset. It’s surprisingly affordable and offers an exceptional user experience. It also provides all of the tools you need for onboarding, payroll processing, tax filing, and reporting. Advanced features include job costing, highly customizable reports, and global payroll. Zenefits, too, would be a good choice for even an inexperienced payroll or HR manager who must stay current with the myriad compliance issues that exist in today’s workplace. And there are many others. Both Rippling and Zenefits have won Editors' Choice awards in other categories. These are excellent services, but if you just want to get the payroll out, they may be more than you need.
We chose to review the services we judge best-suited for small businesses that process compensation for 10 workers or fewer—businesses, furthermore, that have modest human resources and benefits administration needs.
Precision Is Paramount
If you're still doing your company's payroll manually, you know that the payroll process is complex, exacting, and deadline-driven. Your employees count on you to dispatch their paychecks and authorize direct deposits on scheduled paydays. They expect you to know how much to withhold for all the taxes you owe and the benefits you offer.
There’s an enormous amount of detail to track, especially if you're trying to do it all on paper. Mistakes aren't tolerated well by anyone involved. Tax agencies can assess stiff fines if payroll filings and taxes aren't received by the scheduled dates. Benefits providers can cut off services, such as health insurance if you fall behind on payments.
Simplifying the Complex
Cloud-based payroll solutions can help you organize and automate this onerous task. Some of them offer step-by-step wizards that guide you through the time-intensive process of creating records for employees and supplying the information needed for withholding. They let you establish your own payroll schedules. They also do all the required calculations, and most of them submit your payroll taxes and filings to the appropriate agencies.
These sites walk you through each payroll run and tell you how much each will cost you. They provide report templates, plus offer online portals and mobile apps that let employees access pay stubs (and more, in some cases). Not surprisingly, they're equipped with generous support options. And they're not overly expensive: They mostly run between $10 and $45 per month for the base fee and charge a few extra dollars per month for each employee.
The benefits are obvious. You save time and minimize frustration. You don't have to keep up with payroll tax tables nor deal with the myriad compliance issues associated with employee compensation. You can modify your records quickly, and you have instant access to the smallest details. You're much less likely to make errors using one of these services.
Setting Up Your Payroll
Though each payroll site we looked at provides a unique user experience, they all share similar structures. They begin with the setup process, which is by far the most time-consuming and detail-oriented element of paying your staff. Though the exact order varies, some of them walk you through pages of questions in an orderly, step-by-step fashion. Others provide partial setup wizards and leave the rest to you. These setup wizards ask for information about your company, such as its address and Employee Identification Number (EIN). You select your payroll schedule (usually weekly or biweekly) and name your payroll administrator and signatory.
If your business offers benefits such as health insurance and retirement plans, you can create records for them that outline the cost to employees and any company contributions. Or, in the case of sites like Intuit QuickBooks Payroll and Rippling, you can work with a third-party provider. Funds will then be deducted during the payroll process.
You must also create detailed records for each employee, with details such as contact information, date of birth, Social Security Number, salary or hourly pay rate, and number of allowances from the W-4 form. Since most of these sites submit your payroll taxes and support direct deposit for compensation, you may need to supply bank account information.
You also need to enter any existing payroll records if you've compensated employees in the past. This process can be arduous and may require assistance from the site's onboarding specialists.
If you offer additional payroll types like Paid Time Off (PTO) and sick pay, you can define your policies for accruing these benefits; the services keep track of them for you. Bonuses and commissions can also be paid during a regular pay run, or you can issue them by creating an off-cycle payroll. Need to include garnishments like child support on paychecks? These sites support such withholding. In fact, most offer custom pay types, so you can create your own—sometimes even when you're in the middle of a pay run.
Running Your Payroll
Once you complete the setup, you generally can't return to the dedicated setup tools, so it's important to get it right the first time. That said, every service we tested has a comprehensive settings section where you can modify and add to the payroll information you've already entered.
Next, you're ready to run your first payroll. This is the easy part. Though there are some differences, these sites function similarly during the actual pay run. When you launch a payroll, they display a list of employees and contractors along with their pay rates. You first check to make sure the pay period and pay date are correct. Then, you simply enter the number of hours worked (where applicable) in the appropriate pay type boxes (regular, overtime, vacation, and so on). Most sites let you add dollars for other earnings types and reimbursements on this same page.
After you enter all the necessary details, you see a preview of your payroll. The various services handle this slightly differently, but you'll be able to see each employee's gross and net pay, plus withholding for taxes, benefits, and any company contributions. The payroll site then shows you the total amount of money that will be withdrawn from your bank account for direct deposits and taxes, as well as the exact date it will be debited. After you approve a payroll, most sites can generate additional tables or reports with the details of the pay run.
If you have few employees or a very simple payroll, the processing shouldn't take more than a few minutes. Depending on which site you use, you may be able to let payrolls process automatically (assuming, of course, that there are no changes from the previous run). Some even offer same-day payroll.
HR Support Improving
In larger companies, payroll and benefits administration are usually handled by separate departments. In your small business, though, both of those responsibilities may land on your desk or that of another employee. Fortunately, most of the payroll sites we reviewed offer basic HR components, such as online W-4 and W-9 forms, new-hire reporting, document templates, and document storage. Electronic signatures are often allowed, as is employee participation in the data-entry process.
OnPay kicked its HR capabilities up by quite a bit a couple of years ago, adding compliance audits, an HR resource library, automated onboarding flows, and direct messaging. Intuit QuickBooks Payroll has partnered with SimplyInsured to offer medical, dental, and vision insurance options, as well as benefits administration. Gusto offers a similar service.
COVID-19 Support
Payroll website developers really had to scramble last spring and summer to keep up with the changing payroll landscape brought on by the COVID-19 pandemic. New legislative rules had to be incorporated into the existing payroll structures of these sites. For example, any business that received a Paycheck Protection Program (PPP) loan, part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, had to be able to run the special reports required. Some payroll services included here even served as the lender for these loans or partnered with third-party lenders so that users could apply directly through them.
Other legislation had to be built into the websites themselves, like employee payroll tax deferral, new tax credits, and paid leave laws through the Families First Coronavirus Response Act (FFCRA). Most sites included extra educational content to help payroll managers understand the new laws and their payroll impact
Two Clear Winners
All of the payroll services we reviewed come from reputable companies with years or even decades of experience behind their tools. Don't hesitate to trust any of them with this critical task. They all share similar parts, though their user experiences are very different, and each has a slightly different set of extras. They're all designed for small business use, though some, such as OnPay and SurePayroll, go above and beyond by offering support for multiple vertical industries, including agriculture and food service.
Rippling won an Editors’ Choice award two years ago, and it wins another one this year. Novice payroll managers and very small businesses may find it a bit overwhelming due to its ability to support complex benefits administration and human resources tasks and compliance. But it is possible to use what you need and ignore the rest, which might make it appealing to very small businesses with an eye on growth. Its relatively low price is also attractive.
Gusto, too, receives another Editors’ Choice award this year. It hits the sweet spot for payroll, offering enough functionality to please very small businesses without an overwhelming number of additional features or fees. Its user interface and navigation system are among the best, and its four-tiered pricing structure gives potential users multiple options. In a tough group of competitors, it's a smart choice.
