Choosing payroll software comes down to five decisions: whether the provider files and pays every tax for you, which states and localities your workers live in, what you will pay per worker once add-ons are counted, which HR and benefits tools you need alongside payroll, and how well it connects to your accounting and time tracking. Get those right and the rest is mostly interface preference.
Payroll mistakes cost more than most software mistakes. A late deposit or a missed state registration brings penalties and unhappy employees, so weigh tax coverage and support ahead of price.
Know exactly what full service covers
Full-service payroll means the provider calculates pay, withholds taxes, deposits them, and files the returns. Confirm that the plan you are quoted covers each of these:
- Federal filings: quarterly Form 941, annual Form 940 for federal unemployment tax, and the related tax deposits.
- Year-end forms: W-2s for employees and 1099-NECs for contractors, filed with the government and delivered to workers by January 31.
- State and local taxes: state income tax withholding, state unemployment insurance, and local taxes in places such as Pennsylvania and many Ohio cities.
- New hire reporting: federal rules require employers to report new hires to the state, generally within 20 days, and some states set shorter deadlines.
- Garnishments: child support orders and other wage garnishments, withheld and paid to the right agency.
Not every plan does all of this. Patriot Software’s Basic Payroll costs $17 a month plus $4 per worker, but you file and deposit payroll taxes yourself. Its Full Service Payroll costs $37 a month plus $5 per worker and takes over the filings. Ask every vendor whether it guarantees its tax filings and what it pays toward penalties caused by its own errors.
Map your states, localities and worker types
Remote work has turned many small employers into multi-state employers. Each state where an employee lives or works can require its own withholding account, unemployment account and filings. Check two things before you sign:
- Does the plan include multi-state payroll? OnPay includes it in its single $49 a month plus $6 per worker plan with no per-state fee. Gusto’s Simple plan covers payroll in one state, and multi-state payroll is part of Plus at $80 a month plus $12 per person.
- Who registers the new state accounts? Some providers handle state registrations for you. Others only file once you supply the account numbers, which can take weeks to obtain.
Count worker types too. If you pay contractors as well as employees, confirm the provider pays both in one run and files 1099s. If you have tipped staff, seasonal farm workers or clergy, ask whether the provider supports the specific tax treatment those roles need. OnPay, for example, lists restaurants, farms, nonprofits and churches among the industries it serves.
Price the plan per worker, with add-ons
Most payroll software charges a monthly base fee plus a per-worker fee. A few patterns to know:
- Published flat pricing. Gusto, OnPay and Patriot list prices online. Gusto Simple and OnPay both start at $49 a month plus $6 per worker, and Patriot starts at $17 plus $4.
- Quote-only pricing. ADP RUN and Paychex Flex do not publish prices, so you request a quote. Both often run promotions with free months of payroll, and Paychex’s current offer requires a one-year agreement.
- Platform pricing. Rippling starts at $8 per employee per month plus a base fee, and the final price depends on which HR and IT products you add.
Run the numbers for your headcount. A 10-person team on Gusto Simple or OnPay pays about $109 a month ($49 plus 10 times $6). The same team on Gusto Plus pays about $200 ($80 plus 10 times $12). Then add what you will really use: time tracking, HR support, benefits administration, workers’ compensation and any year-end or off-cycle fees.
For current prices and our pick for each kind of employer, see our ranked list of the best payroll software.
Decide how much HR you want attached
Payroll increasingly comes bundled with HR tools. Decide what you need now and what you want within two years:
- Onboarding: digital W-4 forms, employment eligibility paperwork, e-signatures and offer letters.
- Time and PTO: timesheets that feed payroll, plus PTO accrual policies. On Gusto, time and attendance tracking comes with Plus. On OnPay, time tracking is a paid add-on.
- Benefits: health insurance, 401(k) plans and pre-tax deductions that flow into each paycheck. OnPay connects to Vestwell for 401(k) plans.
- Workers’ compensation: pay-as-you-go policies bill premiums with each payroll based on actual wages, which avoids a large upfront deposit and an end-of-year audit surprise.
- HR support: access to HR advisors for handbook, leave and termination questions. ADP RUN adds HR support on its upper packages.
If you expect fast growth and want device and app management alongside payroll, an all-in-one platform such as Rippling fits. A stable 10-person business usually does better with a simpler payroll plan.
Check integrations with accounting and time tracking
Payroll creates some of the largest journal entries in your books, so the accounting sync matters. Confirm that wages, employer taxes, benefits and reimbursements map to the right accounts in QuickBooks Online, Xero or whatever you use. OnPay, for example, connects to QuickBooks Online, QuickBooks Desktop and Xero, and to time tools such as QuickBooks Time and Deputy. Ask for a sample journal entry from a test payroll so your bookkeeper can check the mapping before the first live run.
If hourly staff clock in through a scheduling app or a point-of-sale system, make sure approved hours import directly. Retyping timesheets is where many payroll errors start.
Judge support and the employee experience
Payroll problems are urgent. When a direct deposit fails on payday, you need an answer the same morning. Ask each vendor how you reach support, during what hours, and whether you get a named contact. OnPay, for example, offers in-app chat and tickets on weekdays from 9 a.m. to 8 p.m. Eastern. ADP and Paychex appeal to employers who want a large provider with phone support and, on some packages, a dedicated service team.
Your employees will use the system too, so look at it from their side:
- Self-service portal and app where workers view pay stubs, update direct deposit details and download W-2s without asking you.
- Payment options for workers without bank accounts. OnPay supports direct deposit, paper checks and prepaid debit cards in the same pay run.
- Clear pay stubs that show hours, rates, deductions and PTO balances, which cuts down on payday questions.
During a demo, ask to see the employee view on a phone. If it confuses you, it will confuse your team.
Plan the switch and test before payday
You can change payroll providers at any time, but the cleanest switch happens at the start of a calendar quarter, and the cleanest of all at January 1. A mid-quarter switch means the new provider must import year-to-date wages and taxes for every worker so W-2s come out right.
- Gather year-to-date payroll registers, tax deposit records, state account numbers and each employee’s W-4 and direct deposit details.
- Ask who enters historical data. OnPay includes free setup and data migration, and Gusto offers help moving over from another provider.
- Run a parallel payroll: calculate one pay period in both systems and compare every gross, tax and net figure.
- Confirm the first tax deposit date and who makes it, so nothing falls between providers.
- Tell employees how to log in to the new self-service portal before the first payday.
Keep access to the old provider until you have received its final quarterly and year-end filings for the period it covered. Download every payroll register, tax return and W-2 copy from the old system as well, since the IRS generally expects employers to keep employment tax records for at least four years.
Questions to ask in every demo
- Which federal, state and local filings does this plan file and pay?
- Is multi-state payroll included, or does it cost extra?
- Who registers new state tax accounts when we hire in a new state?
- Do you guarantee tax filings and cover penalties from your errors?
- What will we pay per month at our headcount, with add-ons?
- Which time tracking and accounting tools sync directly?
- Who enters our year-to-date history, and is there a fee?
- Does any promotion require a one-year agreement?
See the full ranking
Best Payroll Software in 2026
We compare six payroll services on tax filing, features, and price, and name the right pick for small teams, growing companies, and budget-minded employers.
Frequently asked questions
When is the best time to switch payroll providers?
The easiest time is January 1, because the new provider starts with a clean year and no year-to-date history to import. The next best is the first day of a calendar quarter. You can switch mid-quarter, but the new provider must load every worker’s year-to-date wages and taxes so quarterly returns and W-2s come out correct.
Do you need payroll software for just one employee?
It is strongly recommended. Even one employee means federal and state withholding, quarterly Form 941, unemployment tax, new hire reporting and a W-2. A full-service plan handles those for about $55 a month on Gusto Simple or OnPay. Owners of S corporations who pay only themselves also need payroll to run a reasonable salary.
What happens if your payroll provider makes a tax mistake?
The IRS and states hold the employer responsible for payroll taxes, even when a provider makes the error. That is why you should ask each vendor whether it guarantees its filings and pays penalties and interest caused by its own mistakes. Also confirm that tax payments come from a dedicated account you can monitor.
Can payroll software pay contractors too?
Yes. Most full-service providers, including Gusto and OnPay, pay W-2 employees and 1099 contractors and file 1099-NEC forms at year end. Check whether contractors count toward the per-worker fee, and whether the provider supports international contractors if you hire abroad. Make sure each worker is classified correctly, because misclassification carries tax penalties.