Payroll Processors: Top Picks for Small Businesses in 2025

Payday shouldn’t be stressful, but as your business grows, payroll can eat up time and leave more room for errors. In this guide, we’ll dig into the basics of running payroll—and take a look at the best payroll processors that can take the work off your hands!

TL;DR: All about payroll processors

If you’re in a rush, here’s a fast look at our top payroll picks for small businesses.

The best payroll companies for small business needs:

• Homebase: Best all-in-one app for small businesses with hourly teams
• Rippling: Best for a completely automated hands-off experience
• ADP Run: Best for robust reporting and compliance in mid-sized businesses
• Quickbooks Payroll: Best for Quickbooks users looking for accounting integration
• Gusto: Best for user-friendly payroll and HR integration
• Patriot Payroll: Best for businesses on a budget who don’t need extra bells and whistle

The three types of payroll processing:

• Manual in-house processing (AKA: you do it yourself!)
• Outsourcing payroll to a third party
• Automated payroll software

How to run payroll in 10 steps:

• Apply for federal Employee Identification Number (EIN) and state tax ID numbers
• Collect employee tax forms (W-4s, I-9s, and direct deposit authorizations)
• Set up a payroll bank account solely for employee wages and tax payments
• Track employee hours worked
• Calculate gross employee pay
• Determine tax withholdings using W-4 forms and up-to-date federal, state, and local tax rates
• Calculate and deduct other withholdings, like health insurance premiums, retirement contributions, or wage garnishments
• Use all these deductions to calculate net employee pay
• Issue paychecks or direct deposits (with pay stubs!)
• File and remit payroll taxes on time to federal, state, and local tax agencies

Key features of great payroll processors:

• Automated features for time tracking, tax calculations, and pay schedules
• Error reduction tools
• Automated tax filing and compliance tools
• Direct deposit and paper check options
• Digital records for pay stubs, tax forms, and employee information
• Employee self-service portals
• Integrations with scheduling, POS, and accounting tools
• Scalability tools

Must-know payroll compliance laws:

• Fair Labor Standards Act (FLSA)
• Federal Insurance Contributions Act (FICA)
• Federal Unemployment Tax Act (FUTA)

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What is payroll processing

Payroll processing is the entire system of how a business tracks how much it needs to pay employees, and how it pays employees. The system includes tracking hours, deducting taxes, and sending out paychecks. In short, the payroll process covers all the tasks that get your team paid accurately and on time.

Types of payroll processing

There are a few ways to handle payroll processing, depending on your business’s size, time, and budget:

• Manual in-house payroll: You do it all—tracking hours, calculating pay, and cutting checks. It’s hands-on and low-cost, but it takes up your time and can be prone to errors.
• Payroll outsourcing: A third party manages everything for you. It’s great for small to mid-size businesses that want to free up time and have more wiggle-room with funds.
• Payroll software: Automated tools help small teams run payroll without needing a full-time expert. From tax deductions to direct deposit, it’s all built in!

Payroll providers often use their own software behind the scenes. If your setup is simple, choosing software directly can save you money and keep you in control.

10 steps to run payroll manually

Curious about how to do payroll on your own? These are the 100% necessary steps to stay compliant.

1. Apply for federal Employee Identification Number (EIN) and state tax ID numbers before processing your first payroll run. Without them, you can’t report or pay taxes.
2. Collect employee tax forms, including W-4s, I-9s, and direct deposit authorizations. These forms ensure you're withholding the right amounts and paying employees legally.
3. Set up a payroll bank account used only for employee wages and tax payments—it makes tracking and reconciliation much easier.
4. Track employee hours worked using timesheets, time clocks, or spreadsheets. Quick tip: if manual calculations feel like a headache, Homebase’s toolkit offers automated timesheet features to cut out data entry!
5. Calculate gross pay by multiplying hours worked by each employee’s hourly rate or using their set salary.
6. Determine tax withholdings using W-4 forms and up-to-date federal, state, and local tax rates. If you’ve got remote, out-of-state employees, make sure you know their specific requirements, too.
7. Calculate and deduct other withholdings like health insurance premiums, retirement contributions, or wage garnishments.
8. Compute net pay by subtracting taxes and deductions from gross pay.
9. Issue paychecks or direct deposits, and give employees pay stubs that show how everything breaks down.
10. File and remit payroll taxes on time to federal, state, and local tax agencies.

Benefits of automatic payroll processors for small businesses

Manual payroll takes time away from growing your business—and errors can mean expensive penalties.

Automatic payroll processors help small businesses save time, stress, and money by:

• Cutting down on data entry with tools that calculate hours and taxes for you
• Reducing errors in paychecks, withholdings, and filings
• Staying compliant with built-in alerts and up-to-date tax rates
• Saving money compared to hiring a full payroll service for small businesses
• Easily scaling as your team grows

Imagine you’ve got a mix of full and part-time staff all clocking in at different times. Solid payroll processors would automatically pull hours, calculate pay, and file taxes without a trip to spreadsheet hell.

Key features to look for in payroll processor software

The best payroll software for small businesses should include key features that offer:

• Faster calculations with automatic time tracking, tax calculations, and pay schedules.
• Error reduction tools like built-in compliance checks and direct deposit validation.
• Tax compliance and automation that manages tax rate updates and e-filing deadlines.
• Streamlined payments with direct deposit tools and batch payment options.
• Improved record keeping that includes digital pay stubs, tax forms, and employee records in one dashboard.
• Employee self-service portals that let employees punch in and out, update their info, view stubs, and access tax documents independently
• Integration with scheduling, POS, and accounting to cut down on duplicate work and boost accuracy.
• Business scaling. Choose business payroll software that supports growing headcount with multiple pay rates and role-based access as your team expands.

How to choose the payroll processor that's right for you 

Not all payroll processors are built the same, and every small business has different needs!

Here are some things to consider as you shop around:

Business size and structure

Are you a solo shop with a couple of part-timers? Or are you managing a team across multiple locations?

A lean team might do fine with basic, cheap payroll software for small businesses. But if you’re growing fast, it might be worth looking into scalable business payroll software with more robust features.

Payment and scheduling needs

Do you pay hourly, weekly, bi-weekly, or monthly? Have shift workers with different rates? Is tip pooling part of your pay-outs?

Choose a system that works with your payroll schedule and can handle different pay types. The right paycheck solutions can shave hours off your routine.

Compliance and legal requirements

When it comes to compliance laws, there’s no messing around. A good processor should automatically keep you compliant with tax filings, deadlines, recordkeeping, and any updated payroll or tax laws. 

If you’ve hired multi-state employees, make sure your payroll software will manage taxes across multiple states.

Budget and cost considerations

Price matters—especially for new businesses. Be real about your budget as you explore payroll management systems, and keep an eye out for free payroll software trials so you can test your options.

Homebase tip: Look into payroll providers for small businesses that offer pricing based on headcount or features, so you’re not paying for more than you need!

Integration and workflow

Does your payroll software connect with your scheduling system, time tracker, HR, or accounting tools?

The right integrations mean fewer errors and no double entry. It also helps your systems “talk” to each other, which saves major time as you grow.

Support

When something goes wrong—or you’re just stuck—can you talk to a real human?

Look for providers with helpful support teams and resources built for small business owners, not just enterprise-level users.

Payroll compliance small business owners need to know

Before you run payroll, it’s important to get familiar with the laws that affect how you pay and report for your employees:

• Fair Labor Standards Act (FLSA) covers regulations for minimum wage, overtime, and recordkeeping.
• Federal Insurance Contributions Act (FICA) covers Social Security and Medicare taxes which must be calculated and withheld for each paycheck.
• Federal Unemployment Tax Act (FUTA) funds unemployment benefits and is paid exclusively by employers (and comes with a tax credit!).

Reviews of the top payroll processors in 2025

Here’s a breakdown of the best payroll providers for small businesses:

Homebase — Best for hourly teams

Homebase is the best payroll processor for small businesses that manages hourly teams. Our toolkit syncs employee scheduling, time-tracking tools, and payroll in an all-in-one app. There’s a reason we were voted Best Payroll for Automation in 2024.

With employee and behind-the-scenes features, your whole team’s got what they need to make payroll processing a breeze.

Key features:

• Automated tax calculation, filing, and payment
• Tip management tools
• Unlimited payroll runs
• Automatic payroll reports
• POS integration (Square, Toast, Shopify, and more!)

Mobile App: Yes

Pricing: Starts at $39/month base fee + $6/month per employee paid

Rippling — Best for automation

Rippling is the best payroll service for a fully automated, hands-off approach to payroll, HR, and IT. It’s great if you’d like a set-and-forget approach, but if you run into trouble, you’re mostly relying on chatbots rather than live customer service.

Key features:

• Global payroll and compliance tools
• In-depth HR functions
• Customizable pay types
• Employee portal

Mobile App: Yes

Pricing: Contact for quote

ADP — Best for reporting and compliance

ADP is the best payroll service for growing businesses with more robust payroll and compliance needs. It’s got a thorough toolkit behind it, but the interface is less intuitive for small teams.

Key features:

• Built in error-checking tools
• Customizable interface
• Detailed reporting
• Options for small and large businesses

Mobile App: Yes

Pricing: Contact for quote

Gusto — Best for payroll and HR integration

Gusto is ideal for small to mid-sized businesses looking for a user-friendly payroll and HR platform. The catch? A lot of its shining features—like next-day direct deposit and custom reporting—are only available in more expensive packages.

Key features:

• State tax registration in all 50 states
• Workers’ compensation set-up
• Contractor payments
• Multiple integrations (including with Homebase!)

Mobile App: Yes

Pricing: Starts at $49/mo + $6/mo per person

Quickbooks Payroll — Best for Quickbooks users

QuickBooks Payroll works best for small businesses already using QuickBooks for accounting, or that’s looking to swap over. While the 90-day discount is great, plans get pricey after it expires.

Key features:

• Automated tax calculations and year-end filing
• Access for accountants
• Mileage tracking for traveling employees
• Hundreds of third-party integrations

Mobile App: Yes

Pricing: Starts at $28/month for solopreneurs, and $95 a month for service providers and retail operations

Patriot Payroll— Best for affordability

Patriot Software is a solid choice for cost-conscious small businesses that want reliable payroll basics without the extras. Just keep in mind that tax filing isn’t included in the basic plan, and features like HR and time tracking are only available as paid add-ons.

Key Features:

• Year-end payroll tax filings
• Direct deposit and printed paychecks
• USA-based support team
• Free contractor and employee portals

Mobile App: Yes

Pricing:  Starts at $17/month + $4/employee

Setting up your first payroll run

Once you’ve picked out your new payroll software, here’s how to run payroll for the first time:

• Initial set up: Enter your business info, link your bank account, and configure tax settings for compliance.
• Employee onboarding: Add team members, upload W-4s, and set pay rates and deposit details.
• First payroll step-by-step: Track hours, calculate pay, review deductions, and approve payments. Always double-check everything before hitting submit.

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FAQs about payroll processors

Here are some frequently asked questions about payroll processors:

What is a payroll processor and how does it work?

A payroll processor helps businesses run payroll by calculating paychecks, taxes, and filing forms automatically. In short, it handles the payroll process from start to finish, so you don’t have to. Think of it as a digital assistant for your small business payroll processing.

What's the difference between payroll software and payroll services?

Payroll software lets you manage payroll in-house using tools and automation, while payroll services often include experts who handle everything for you.

Both are popular payroll solutions for small businesses, depending on your budget and how hands-on you want to be with payroll processing.

Do I need a payroll processor for my small business?

If you're paying employees or contractors, a payroll processor makes life easier by handling taxes, paychecks, and compliance. It’s really up to you, but we’d say it's a smart move for most companies. After all, no one wants to get hit with fines or penalties.

How much does a payroll processor cost per month?

Costs vary, but most payroll companies for small businesses charge $30–$80/month plus a small fee per employee. If you want to give your software a test drive, keep an eye out for a payroll software trial.

Homebase tip: While our payroll add-on costs $39/month base fee + $6/month per employee paid, our Basic Plan includes scheduling and time tracking tools, plus POS integration, entirely for free! Try out a 14-day free trial to see what we can do for your company.

Will a payroll processor keep me compliant with tax laws?

Yes! A good payroll provider for small businesses stays updated on tax rules and helps you file everything. This also helps you stay compliant and reduces stress during tax season.

What happens if my payroll processor makes a mistake?

Most payroll providers will fix errors quickly and often cover penalties if it’s their fault. That’s one of the perks of using professional payroll management systems instead of guessing how to do payroll yourself.

Which payroll processor is best for small business?

Honestly, the best payroll processor really depends on your business’s needs. How big is your team? Are they hourly? Is HR integration a must have? Do you need extra compliance support?

These are the kinds of questions that’ll determine what payroll software will be right for you. Check out our reviews above to learn more about your options!

Is ADP a payroll processor?

ADP provides cloud-based human capital management (HCM) solutions for everything from small business to enterprise companies. Payroll software is a part of that, with full-service payroll solutions and more basic options.

Simplify small business payroll processing

Let’s be real—as a small business owner, you have better things to do than sink hours into payroll spreadsheets. With the right payroll processor, you get that time back and save yourself anxiety about the trouble that comes with making mistakes.

“Before Homebase I was manually tallying up my team's work hours and entering them into payroll, crossing my fingers I hadn't made any mistakes. Now our entire team logs in and out quickly and easily with the Homebase app, and all I have to do is send their hours to my payroll program with the click of a button. Time tracking for small businesses doesn't get better (or more affordable) than this!”

– Kathleen Smith, Smiling Tree Toys

Ready to pay fast so you can grow faster? Hit us up today to get started on a free trial!

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