Payroll is a biweekly process, but doing it manually can mean hours of work and the possibility of errors. The right software can cut that time down to a half hour and the confidence that it's been done right.
But not every payroll tool is built for businesses your size. Most are designed for larger or more complex operations, so you end up paying for features you’ll never use while still doing the manual work yourself. This guide covers the best payroll software for small businesses, who each one is built for, what it costs, and how to get started.
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TL;DR: Best small business payroll software
For small businesses and hourly teams, the biggest unlock is payroll software that connects directly to time tracking and scheduling, so nothing gets entered twice.
- Gusto: Best for mixed or salaried teams that need strong benefits administration. From $49/mo + $6/employee.
- Homebase: Best for small businesses with hourly employees like restaurants, retail, salons. Core features (time tracking, scheduling) are free; payroll from $39/mo + $6/employee.
- QuickBooks Payroll: Best for businesses already running accounting in QuickBooks. From $50/mo + $6.50/employee.
- Square Payroll: Best for businesses already using Square POS in food service or retail. From $35/mo + $6/employee (full service) or $6/person (contractor).
- Wave Payroll: Best for freelancers and very small businesses using Wave's free accounting software. From $40/mo + $6/employee.
The best small business payroll software compared
“Best” depends entirely on your business. A restaurant with 15 hourly employees has different needs than a three-person consultancy. Here’s where each tool wins.
Gusto: Best for mixed or salaried teams that need benefits
Gusto is built for small businesses with salaried employees, or a mix of salaried and hourly staff, particularly in professional services, tech, or creative industries.
If you’re hiring a marketing coordinator or a studio manager, health insurance and a 401(k) matter. Gusto makes it possible to offer health, dental, vision, and retirement plans without a dedicated HR person. It all runs through the same platform as payroll, so deductions happen automatically and there’s no separate spreadsheet to reconcile at month end.
On the payroll side, automated tax filing covers all 50 states, unlimited payroll runs are included on every plan at no extra charge, and W-2s and 1099s are filed on your behalf. Time tracking and scheduling are only available on the Plus plan at $80/mo + $12/employee—they’re not included on Simple and aren’t available as a standard feature at the base price. Simple plan customers can add time tracking as a paid add-on, but if you need both time tracking and scheduling built in, Plus is the plan to start from.
Pricing: $49/mo + $6/employee. Plus plan at $80/mo + $12/employee adds time tracking, scheduling, next-day direct deposit, and advanced HR tools.
Best for: Salaried or mixed teams in professional services, tech, or any industry where offering benefits is a hiring priority.
Pros:
- Health, dental, vision, 401(k), and workers' comp integrated into payroll
- Automated tax filing in all 50 states on every plan
- Unlimited payroll runs and W-2/1099 filing included
- Clean interface, approachable for first-time payroll users
Cons:
- Time tracking and scheduling require upgrading to Plus at $80/mo + $12/employee
- At 10 employees on Plus, you’re paying $200/mo before any add-ons
- Not built for shift-based or tipped work
Homebase: Best payroll for small businesses with hourly teams
Homebase starts free. Scheduling and time tracking are included on the free plan for one location with up to 10 employees. Paid plans start at $30/mo per location and unlock advanced scheduling, team communication, AI assistants, HR tools, and more. Payroll is a paid add-on on any plan at $39/mo + $6/month per active employee.
Because scheduling, time tracking, and payroll all live in the same app, hours from the time clock go straight into the payroll run. No clunky data export, no re-entry, no reconciling two screens. If someone’s hours push them into overtime during the week, Homebase flags it before the run. Catching it then takes minutes—a lot faster than if you need to catch it after the check goes out.
When someone works a different role at a different pay rate, the time clock already knows. The payroll run picks it up automatically. For businesses where that happens regularly, that’s a meaningful amount of time recovered every pay period.
Homebase supports tip calculations and reporting within payroll. Businesses that want to automate tip pooling and pull tip data directly from their POS can do so through Tip Manager, a paid add-on at $25/location per month.
Homebase also integrates with Square, Clover, Toast, QuickBooks, Gusto, and ADP for businesses switching providers or running a hybrid setup. Over 150,000 small businesses use Homebase, and managers save an average of 20 hours per month.
Pricing: Free plan available (1 location, up to 10 employees, basic scheduling and time tracking). Paid plans from $30/mo per location. Payroll add-on: $39/mo + $6/month per active employee, including tax filing and direct deposit.
Best for: Restaurants, cafes, retail shops, salons, gyms, and any business where hours vary week to week and overtime needs watching.
Pros:
- Free plan covers scheduling and time tracking for small teams
- Hours flow from time clock directly into payroll, no re-entry required
- Overtime flagged automatically before the payroll run, not after
- Integrates with Square, Clover, Toast, QuickBooks, and more
- Mobile-first, so payroll can be approved from anywhere
- 4.8 stars on the App Store from 84,000-plus reviews
Cons:
- Team communication, advanced scheduling, and HR tools require a paid plan
- Payroll is a paid add-on, not included in any base plan
- Tip pooling and POS tip imports require the Tip Manager add-on ($25/location/mo)
- Built for hourly teams, less suited to businesses with primarily salaried staff
QuickBooks Payroll: Best for businesses already using QuickBooks
If your books are already in QuickBooks Online, adding payroll means wages post to your accounts automatically after every run. Your accountant isn’t waiting on an export at year end. Your chart of accounts is already set up.
However, QuickBooks Payroll isn’t the cheapest tool. The Core plan starts at $50/mo + $6.50/employee and covers full-service payroll, automated tax filing, next-day direct deposit, and 1099 e-filing, but no time tracking. That’s only included on Premium at $88/mo + $10/employee, which also adds same-day direct deposit, expert payroll review, and HR support tools. There's no native scheduling on any plan, which means a shift-based business still needs a separate tool on top.
QuickBooks introduced an AI-powered Payroll Agent in 2026 that collects hours from employees, flags anomalies, and sends a ready-to-approve payroll draft before the run. That’s a useful catch for businesses that move quickly without reviewing every timecard individually.
Pricing: Core: $50/mo + $6.50/employee. Premium (includes time tracking): $88/mo + $10/employee. Elite: $134/mo + $12/employee.
Best for: Small businesses already running QuickBooks Online that want payroll data in the same system as their books.
Pros:
- Wages post automatically to QuickBooks after every run
- Automated tax filing and W-2/1099 generation included
- AI Payroll Agent flags timecard issues before you run
Cons:
- Highest base price on this list
- Time tracking only on Premium and Elite plans
- No native scheduling for hourly team management
Square Payroll: Best for Square POS users in food service and retail
If you already run Square POS, your employees’ timecards are already there. Square Payroll pulls them directly into the payroll run. For a cafe with five employees who all clock in on the POS, that removes the most manual step in the whole process.
The pricing reflects the simplicity. At $35/mo + $6/employee it’s the lowest base price on this list, and multi-state tax filing is included at no extra cost. There’s also a contractor-only option at $0 base fee + $6 per contractor paid, which works well for businesses that rely primarily on 1099 workers.
Where it falls short is outside the Square ecosystem. Scheduling is basic with no open shift management or labor forecasting. HR features are minimal. A business growing toward 30 employees across two locations will hit the edges of what Square Payroll can do.
Pricing: $35/mo + $6/employee (full-service). $0/mo + $6/contractor (contractor-only).
Best for: Small businesses running Square POS in food service, retail, or beauty that want payroll data to come straight from the register.
Pros:
- Timecard and tip data pull directly from Square POS
- Multi-state tax filing included at no extra cost
- Lowest base price on this list
- Contractor-only plan with no monthly base fee
Cons:
- Most of the value disappears if you’re not on Square POS
- Scheduling is capped at 10 days out with no open shift management or labor forecasting
- Minimal HR tools, not built for multi-location growth
Wave Payroll: Best for freelancers and micro businesses on Wave
Wave’s accounting and invoicing tools are free. Payroll is a separate paid add-on at $40/mo + $6/month per active employee. If you’re already using Wave to manage your books and send invoices, adding payroll means every run posts directly to your accounting records without any manual reconciliation.
As of April 2025, Wave expanded full-service tax filing to all 50 states. You get automated federal and state tax filing regardless of where your business operates.
Wave stops being the best option when your team grows. There’s no built-in time tracking, so hourly employees still need a separate tool for clocking in and out. There’s no scheduling and no HR features. Businesses with variable hours, multiple roles, or plans to scale will outgrow it quickly.
Pricing: Payroll add-on: $40/mo base + $6/month per active employee.
Best for: Freelancers, contractors, and very small businesses already using Wave's free accounting and invoicing software.
Pros:
- Accounting and invoicing are free; payroll is a straightforward paid add-on
- Full-service tax filing in all 50 states
- Supports both employees and contractors
- Lowest total cost for businesses already on Wave’s free plan
Cons:
- No time tracking, scheduling, or HR features
- Support via live chat and email only
- Not built for variable hours, multiple roles, or multi-location teams
How to choose the right small business payroll software
Before committing to a tool, start with these three questions:
- What kind of employees do you have? If your team clocks in and out and works different hours each week, you need payroll that connects to a time clock. A payroll tool without built-in time tracking means manually bridging that gap every pay period, and that gap is where most errors start. Salaried teams with fixed pay can get away with simpler tools.
- What are you already using? QuickBooks users get the most value from keeping payroll in the same system as their books. Square POS users can pull timecards straight into Square Payroll with no re-entry. And if you’re currently jumping between a scheduler, a time clock, and a separate payroll provider, using an all-in-one app like Homebase means one less thing to manage every pay period.
- Do you need benefits administration? Health insurance and 401(k) through your payroll provider matters when you’re competing for talent. If that’s a priority, Gusto justifies its higher price, but keep in mind time tracking and scheduling aren’t included on the base plan.
One more thing: the most expensive payroll mistake for hourly businesses isn’t a missed tax deadline. It's entering hours twice. An employee works 43 hours, you catch 40, and you’ve got an underpayment and a correction run. Make sure your payroll provider plays nice with your time clocking software.
What does small business payroll cost?
Base payroll services costs run $35 to $88 per month plus $6 to $12 per employee. Most include automated tax filing and direct deposit. Where plans differ is in what’s available at the base tier versus higher ones—time tracking, scheduling, and advanced HR tools vary by provider, so it’s worth checking what you actually need before choosing a plan.
The real cost comparison isn’t between software options. It’s between software and doing it yourself. At 5 to 7 hours per pay period, manual payroll runs up to 180 hours a year. Factor in the risk of penalties from errors or late filings, and a $39 monthly subscription starts to look straightforward.
How to run payroll for your small business
Payroll software handles the math, but knowing the process before you pick a tool helps you choose the right one. Here’s a practical overview. For the full setup walkthrough, see our guide to how to do payroll for a small business.
1. Gather what you need before you start
Before you can pay anyone, a few things need to be in place: a federal Employer Identification Number (EIN) (free and instant online), state and local tax account registrations, a signed W-4 from each employee, a completed Form I-9 for employment eligibility, and bank account details for direct deposit. Missing any of these on your first run means delays, so get them in order before you hire.
2. Set a pay schedule
Your options are weekly, biweekly, semimonthly, or monthly. Biweekly is most common for hourly teams and gives employees predictable paydays. Check your state's minimum pay frequency requirements before deciding, as some states require at least semimonthly and changing your schedule later creates more work.
3. Calculate wages accurately
For hourly employees, it’s hours worked multiplied by the hourly rate. Overtime, meaning hours over 40 in a workweek, must be paid at 1.5x the regular rate under the Fair Labor Standards Act (FLSA). If an employee’s hours live in one app and payroll lives in another, one missed export can underpay someone. For tipped employees, tips must be tracked and included in the wage calculation separately from base wages.
4. Withhold and file taxes
Federal obligations include income tax withholding based on each employee’s W-4, Social Security at 6.2% each for employer and employee, and Medicare at 1.45% each. State and local taxes vary. You’ll file Form 941 quarterly and Form 940 annually, and issue W-2s by January 31 each year. A late deposit triggers an IRS penalty starting at 2% and climbing to 15% of the unpaid amount.
5. Pay your team and keep records
Issue payments via direct deposit and provide pay stubs showing gross pay, deductions, and net pay. Keep payroll records for at least three years per FLSA requirements and tax records for four years per IRS requirements. An employee dispute about a paycheck from 18 months ago is much easier to resolve when the records are searchable and in one place.
Frequently asked questions
What is the best payroll software for small businesses?
The best payroll software depends on your team type. For hourly businesses like restaurants, retail, or salons, Homebase is purpose-built, connecting scheduling, time tracking, and payroll so hours flow straight from the time clock into the payroll run. For salaried teams needing benefits, Gusto is a strong choice. For businesses already in QuickBooks, QuickBooks Payroll keeps everything in one system.
How much does payroll cost for a small business?
Base fees run $35 to $88 per month plus $6 to $12 per employee. Homebase starts free for scheduling and time tracking, with payroll available as an add-on from $39/mo + $6/employee, including tax filing and direct deposit. Manual payroll costs nothing upfront but runs 5 to 7 hours per pay period—factor in the risk of penalties from errors or late filings, and a $39 monthly subscription starts to look straightforward.
What payroll software works best with a POS system?
It depends on your POS. Square POS users get the tightest integration with Square Payroll, as timecards and tip data come straight from the register with nothing to re-enter. Homebase integrates with Square, Clover, Toast, and other major POS systems, connecting scheduling and time tracking to payroll regardless of which POS you use.
Can a small business do payroll without software?
Yes, but at 5 to 7 hours per pay period it’s one of the more expensive things you can do with your time. Manual payroll means tracking down hours, calculating taxes by hand, filing forms on time, and hoping nothing was missed. Most small businesses find payroll software pays for itself within the first month.
The right payroll software makes payday something you don’t dread
With the right payroll software, you save hours every pay period and no longer run the risk of filing errors. The best payroll provider for your small business is the one that fits how you actually pay your team and ideally, one that connects to how you schedule and track time too.
Homebase is free to start. Scheduling and time tracking are included at no cost for up to 10 employees at one location. When you add payroll at $39/mo + $6/employee, it connects to the time clock data that’s already there. Hours flow in, overtime is calculated, taxes are filed. You review, approve, and move on.
If payroll is still eating your Sundays, Homebase’s the fix. Get started with us for free.
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