Best Payroll Software for Small Business in 2025

For small businesses, payroll administration is essential. Payroll can either be outsourced or handled in-house by a company. There are a number of online payroll administration systems that can assist you if you decide to go this route. However, this might make deciding on the best answer for your problems a challenging undertaking. We’ve put together this buyer’s guide to aid you in better understanding the vendor environment and selecting the best payroll software for small business.

Signing up for a few free trials or demos, as well as basic free plans from well-known business payroll software vendors, is a wise move. Using this strategy, you’ll be able to test the most critical aspects of each program and receive a good evaluation of their capabilities. Additionally, you’ll learn more about payroll software for small business. In order to choose the ideal payroll software for your company, we recommend that you test out the products that have the highest SmartScore and Customer Satisfaction Rating in our payroll software evaluations. Quickbooks Payroll, Gusto, OnPay, and Rippling.

Payroll software for small business can cater to the needs of a variety of users. Chief among which are the following:

• Solopreneurs with contractors. These entrepreneurs need payroll solutions that can handle practically the entire payroll process. This allows them to focus on growing their revenue without worrying about whether their contractors are paid correctly and on time.
• Small businesses. These businesses are looking for a cost-effective payroll solution to help them optimize their HR operations without sacrificing key functionalities. Example vendors are Quickbooks and Gusto.
• Growing companies. These buyers are already using other business software and are looking for a dedicated payroll solution that integrates with their current tech stack. They aim to create a seamless process and minimize inaccuracies in payroll. Some examples are Trolley (formerly Payment Rails) and OnPay.

• Quickbooks Payroll. A popular software from Intuit that provides all core features of payroll software as well as advanced functionalities such as inventory tracking, income and expense management, tax deductions, and more.
• Gusto. A payroll system created specifically for small businesses with team members across the globe. It comes equipped with benefits management, workers comp insurance processing, time-off management, automatic tax processing, and more.
• OnPay. Developed for growing companies, this payroll software integrates with many business platforms, creating seamless HR workflows. It is also known for its end-to-end functionalities, from time tracking and payroll computation to tax management and employee onboarding.
• Rippling. An end-to-end HR solution that includes a robust payroll feature that helps small- and medium-sized organizations automate their payment processes.
• Trolley (formerly Payment Rails). The platform makes it easy to onboard new employees, execute mass payouts, and pay team members located overseas.

Choosing payroll software might be tough because of the wide range of systems available. These include the most basic of toolkits to the most expensive and precise of applications. For example, some applications only create audit reports, while others allow users to follow tax code changes and predict them and even perform some custom branding. The list of features is also a classification criterion. Deployment is the primary criterion for division, and you have the option of choosing from among:

• In-house payroll systems. A single license covers all of them, and they are housed on the client’s own server. As the most difficult to set up and may involve hardware installation, they are also the most pricey.
• Software-as-a-service (SaaS) payroll. For the most part, these services are offered as subscriptions and are hosted on the vendor’s server. Owners are not responsible for installing, updating, or maintaining their own software.
• Cloud-hosted payroll platforms. Due to their universal accessibility and the fact that the customer is not required to update or maintain them, these services qualify as the most economical.
• Third-party payroll service. There are companies that provide payroll services using the software. Using a web portal, companies may submit their paperwork and leave the rest in the hands of the service’s accountants and payroll specialists.

Payroll software for small business must include the following features:

• Wage and compensation. There is a wide range of responsibilities that go beyond processing and disbursing payments in payroll management. In terms of remuneration, they may manage business salaries, keep track of vacation and bonus systems, and track salary transfers.
• Benefits management. Payroll management systems can monitor and reward employee performance. Because of the ease with which sick days, absences, and overtime may be computed, no employee will be treated unfairly. Benefits are also calculated and administered by the system in the future.
• Employee records. Individual records of each employee’s pay are maintained in payroll management systems, making it possible for each division to get the most out of the company’s human capital. Personal data and job history are included in these records, which may be adjusted to include other information that you may deem appropriate.
• Time-off tracking. Sick leave, vacation accrual, and other absences are tracked by payroll administration systems, which then use this data to determine compensation. By automating the processes of managing and approving time off, you can rest assured that any adjustments made to your payroll system will go smoothly.
• Tax filings. Payroll tax filings may be prepared using tools that allow you to manage the whole process from start to finish on a single platform. Even better, modern payroll administration systems save all of this data in a unified and easy-to-search database.
• Reports. What is truly crucial for any payroll administration system is reporting, which includes direct deposit reports, online payment reports, and annual reports. To do this, the platform is expected to provide a strong suite of analytics tools, specifically tables, graphs, and charts.
• Time worked tracking. With payroll software, businesses can say goodbye to time clocks. That is because it includes time tracking as one of its functions. It can maintain precise records of employee sign-ins, log-outs, and break times.

Our in-depth comparisons demonstrate that payroll technologies provide several benefits, including time and money savings and the elimination of compliance issues.

• Reducing wasted time and money. By investing in high-quality payroll software for small business, you may save considerable time and money. These programs are straightforward to use, which means your human resources staff will quickly pick them up. For example, a small retail business discovered that by utilizing Quickbooks Payroll, it was able to significantly cut the time required for payroll management. It used to take two days to do payroll procedures manually, but the program slashed that time in half.
• Improve accuracy and reduce risks. Payroll software is a godsend for businesses that must adhere to tax regulations and file tax filings. Manual payroll processing can result in human mistakes, which can have a substantial impact on a business. Indeed, businesses suffer fines if they do not adhere to tax requirements effectively. Payroll management solutions can automate the completion of tax reports and filings for your business, as well as notify you when they are due. Additionally, they are tasked with the monumental burden of tracking changes to the tax code.
• Ready-made reports. Payroll software can assist you in tracking data over time and producing meaningful reports for auditors, accountants, and internal decision-makers. Employee involvement in 401k plans, yearly tax payments, and quarterly cost summaries are all examples of such reports.
• Compliance management. Keeping up with tax requirements and industry regulations is difficult. As such, current payroll software for small businesses has facilities for automating tax computations and submissions. In this manner, corporations can avoid regulatory penalties and fines.

• Integrated business tech stack. Payroll software is integrated within a broader portfolio of financial solutions, which also includes accounting platforms and benefits administration systems. Given their interrelated nature, it makes sense that they would exchange information. Payroll tools simplify the process by making it easier for businesses to develop interfaces. These can be native and built-in or via an API.
• All-in-one payroll solutions. Organizations desire to be self-sufficient so many naturally want to handle their payroll tool with little to no vendor help. To this end, they seek platforms with a robust feature set. Additionally, they require them to be user-friendly in order to minimize assistance inquiries.
• Automation and AI. Users increasingly want their payroll applications to incorporate artificial intelligence. That is because it can help boost automation and also aid payroll managers with duties that cannot be entirely automated.

• Disconnected systems. To alleviate users’ administrative burdens, payroll software must interact with financial systems. Accounting, time tracking, and benefits management are all included. If not, the payroll process may have to be performed manually, defeating the goal of streamlining it.
• Data privacy and security. Vendors, particularly the most trustworthy ones, make every effort to safeguard your data. That is why you must be vigilant to ensure that third-party businesses do not gain access to your personnel data.
• Too many features. While having a feature-rich platform is desirable, having too many features may be intimidating. If you run a small business, it is advisable to go with lightweight software.