Top 6 Best Payroll Software for Small Businesses

Payroll software for small businesses is a specialized tool designed to streamline and automate the process of calculating and disbursing employee salaries, deductions, and taxes. 

It helps businesses manage various aspects of payroll, including employee data, tax compliance, time tracking, and generating paychecks. 

Payroll software reduces the administrative burden and minimizes the risk of errors associated with manual payroll processing, making it an essential tool for small businesses aiming to manage their workforce’s financial aspects efficiently.

Quality payroll software is vital for small businesses for several reasons. 

• First, it ensures compliance with tax regulations and labor laws, helping companies avoid costly fines and legal complications. 
• Second, it enhances accuracy and reduces the likelihood of payroll errors, which can lead to employee dissatisfaction. 
• Third, it saves time and resources by automating calculations, tax deductions, and generating payroll reports. 

Challenges in managing employee payroll for small businesses often include tax compliance, keeping up with regulatory changes, and the risk of errors. 

Tax regulations can be complex, and non-compliance can lead to financial penalties. 

Regulatory changes require constant monitoring and adaptation. 

Errors in payroll can result in employee dissatisfaction and potential legal issues.

Payroll software plays a critical role in addressing these challenges. 

It automates tax calculations, deductions, and e-filing, ensuring tax compliance and reducing the risk of errors. 

Many payroll software solutions also offer an employee portal, providing a self-service platform for workers to access their pay stubs and tax forms conveniently. 

These features contribute to accurate and automatic payroll processing, enhancing employee satisfaction and reducing the burden of HR and human resources staff. 

Small businesses can benefit from this efficient and cost-effective solution, often available at an affordable monthly fee or base fee, aligning with their specific business needs. 

Additionally, some payroll software can aid in benefits management, workers comp, and automatic invoicing, making it a comprehensive tool for payroll and business management.

As the Co-Founder of Buddy Punch and a former business owner with multiple locations, I bring a wealth of practical experience and expertise in time tracking, workforce management, and the importance of quality payroll software for small businesses. 

Buddy Punch is one of the best payroll software for small businesses. In this post, we’ll show how you can use it to:

• Cut out the time-consuming and inefficient process of running payroll with spreadsheets or using multiple platforms (e.g., one software for tracking time and then sending a spreadsheet to their payroll provider).
• Get accurate payroll reports that include time worked and paid time off for all employees (whether full-time, part-time, freelance, seasonal, etc.).
• Track and add miscellaneous earnings such as reimbursements, bonuses, severances, etc.
• Pay their employees accurately and on time — either via direct deposit or physical checks.
• Follow all local, state, and federal rules and regulations regarding tax withholdings and calculating overtime.

The first software we’ll cover is Buddy Punch, our payroll software for small businesses and startups. Then, we’ll cover 5 additional options.

Top Payroll Software for Small Businesses

1. Buddy Punch
2. OnPay
3. Gusto
4. PayChex Flex
5. Roll by ADP
6. QuickBooks Payroll

Buddy Punch tracks time worked, including paid time off (PTO), and other earnings you need to run through payroll — such as bonuses and reimbursements. 

Buddy Punch has an online clock-in and clock-out system that you can use from any desktop (Windows or Mac) or mobile device (iOS or Android), so it’s perfect for shift workers, remote workers, traveling employees, or when you’re managing multiple locations. 

Plus, you can use Buddy Punch for salary employees, too.

We’re proud of the product we’ve made and how it helps small businesses run their payroll more efficiently. 

At the time of this writing, we have 4.8 out of 5 stars on Capterra (a third-party, unbiased review site) — based on over 750 customer reviews.

Many of our Capterra reviews highlight how Buddy Punch makes payroll effortless and more efficient — with very responsive customer support.

To learn more about how Buddy Punch can simplify your payroll process and make bookkeeping a cinch:

• Schedule a one-on-one demo.
• Sign up for a free trial.
• View our Buddy Punch Docs section for tutorials and FAQs.

Keep reading to learn more about how our payroll software works.

What to look for when choosing payroll software for your small business? Buying guide

Here’s a buying guide in table format outlining what to look for when choosing payroll software for your small business.

Feature	Description
1. Ease of Use	Intuitive interface for easy navigation and user adoption.
2. Payroll Processing	Capability to process payroll accurately and efficiently.
3. Tax Compliance	Ensures compliance with tax laws and provides tax reporting.
4. Direct Deposit	Ability to offer direct deposit payment options to bank accounts.
5. Employee Self-Service	Self-service portal for employees to access pay stubs and forms.
6. Integrations	Compatibility with accounting, time tracking, and HR systems.
7. Customization	Option to tailor the software to your unique payroll needs.
8. Reporting	Reporting features for insights into payroll and labor costs.
9. Support and Training	Access to customer support and training resources.
10. Cost	Transparent pricing structure that fits your budget.

Consider these key features and factors when choosing payroll software to ensure it aligns with your small business’s payroll management requirements.

1. Buddy Punch: Time Saving Payroll Software for Small Businesses

Buddy Punch is an all-in-one time tracking and payroll software. You don’t need to juggle different platforms for time tracking, PTO, and payroll — it’s all done from one dashboard.

This is much more inefficient than, say, using one tool for PTO tracking and another platform to run payroll. 

Plus, having one system for all your time tracking and payroll needs helps cut down on costly manual errors that can occur when you’re toggling through different screens or exporting and importing CSV files.

Here’s a high-level overview of how Buddy Punch works.

1. Buddy Punch tracks hours worked and other expenses issued via payroll.

If you have shift workers, then your employees can clock in for their shifts using a desktop computer, tablet, or smartphone. 

Buddy Punch tracks all these punches and are easy for your management/admin team to edit if necessary. 

(For example, say someone clocked out for lunch but forgot to clock back in — you can quickly edit their time card to reflect actual hours worked, resulting in accurate payroll at the end of the pay period.)

This automates much of the payroll process, as now you already have accurate and recorded payroll data.

Plus, Buddy Punch has advanced time clock features, such as GPS restrictions, IP locking, and punch rounding, to increase employee accountability and ensure accurate time tracking. (We’ll go over these features in more detail below.)

Note: If your team doesn’t clock in and out, you can use Buddy Punch Payroll to track reimbursements, non-hourly regular employees (i.e., salary employees)), bonuses, commissions, severance, PTO, and more.

2. Buddy Punch automatically calculates payroll based on time worked, PTO taken, and other expenses. 

When it’s time to run payroll, Buddy Punch uses its accurate time-tracking system to ensure your team is being paid correctly. 

Buddy Punch also handles multi-state tax registration and all local, state, and federal taxes.

3. Your team gets paid on time (and in the right way). 

At Buddy Punch, you can choose 2-day or 4-day processing — and you can set up a helpful reminder to make sure you submit payroll on time.

Plus, your employees get a self-service login which they can use to set up direct deposit and pick their tax withholdings. You can also pay employees via check.

That’s a very high-level overview of how Buddy Punch’s payroll software works. 

If you want to see a more customizable breakdown of how Buddy Punch can help your small business, schedule a one-on-one demo, or keep reading.

How Buddy Punch Provides Accurate Payroll Info

First, Buddy Punch tracks your team’s punches — clocking in and out for their shift, clocking in and out for breaks/lunches, etc.

Buddy Punch has advanced clock-in and clock-out features that help guarantee accurate time tracking, including:

• Photos on Punch: Employees take a photo of themselves — either with their computer, tablet, or smartphone — and it gets uploaded when they clock in. Your management/HR team can review the submitted photos. This helps guarantee that the right person is clocking in for their shift (and helps deter time theft, such as buddy punching).
• Geofencing: You can limit punches to a specific area, such as making it so no one can clock in for their shift unless they’re within 100 feet of their workstation.
• IP Address Locking: Employees can only clock in and out if they’re using the WiFi that you’ve designated.
• Punch rounding: Punch rounding helps you accurately track when your employees start or end their shifts/breaks.

For example, let’s say you have 15 employees all clocking in for their shift at 7 am. To deal with the line, some employees may clock in earlier, and some may clock in later. But you can set 

Buddy Punch to round punches up or down. So if someone punches in at 7:05 am, you can have it round down to 7:00 am, or if someone punches in at 6:52 am, you can round it up to 7:00 am.

• And much more.

Plus, you can easily edit anyone’s punches via your Buddy Punch dashboard.

People are always going to make time punch mistakes — such as forgetting to clock in from lunch. Not fixing these issues as they arise can lead to costly discrepancies in payroll — such as paying your employee too much or too little.

If you were using two separate tools for time tracking and payroll, then you’d need to jump back and forth between two platforms to reconcile these mistakes.

But with Buddy Punch, you can edit punches and re-submit payroll from the same dashboard.

Here’s how simple it is to fix a mispunch:

From your Buddy Punch dashboard, hover over “Timecards”, then click “View All”.

Then, click on the specific employee whose timesheet you want to edit.

Once their timecard is pulled up, you can edit their punches, such as adding a punch they forgot to enter.

And that’s it. Now you can run payroll with accurate time records.

Buddy Punch also tracks your team’s paid time off (PTO).

Your employees can request paid or unpaid time off via the Buddy Punch mobile app (iOS and Android). It’s important to especially track paid time off, as that info goes into your payroll.

If you want, you can set it up so PTO requests need to be approved by a manager.

Or you can have PTO requests get automatically approved, as long as your employee has enough PTO to use and they’re not requesting any dates on the calendar that you’ve restricted.

Note: If you want to learn more about this part of Buddy Punch, see our post on PTO tracking software.

How to Add Additional Earnings (Bonuses, Cash Tips, Severances, etc.) to Your Payroll

Finally, you can add additional earnings to your payroll, such as bonuses, reimbursements, and severances.

This helps keep everything issued through one platform and makes it easier for you to record your expenses and for your employees to record their earnings.

When you’re running payroll, you can click on “+ Additional Earnings” next to an employee’s name.

Then, you just input how much you want to add and categorize it (bonus, reimbursement, etc.). And that’s it.

Above we looked at the key features of using Buddy Punch as your small business’s payroll provider.

But there are other benefits, such as:

• Overtime alerts: See which employee is at risk of working overtime, so you can adjust the schedule as necessary.

• Adding company and employee benefits: Including 401ks, 125 medical, other health savings plans, and more.

• Employee accessible paystubs: Let your employees login and see their pay stubs, without having to reach out to their manager or HR rep.

• Sending out employee 1099s and W2s: Easily send your employees and contractors the tax information they need at the end of the year.

To learn more about how you can use Buddy Punch for your payroll, schedule a one-on-one demo.

Plus, Additional Buddy Punch Features

Above, we focused on how Buddy Punch can help your small business run payroll efficiently.

Buddy Punch is also a full-fledged clock-in and clock-out tool, a time-tracking system, and PTO-tracking software. Our features include, but are not limited to:

• Overtime Calculations 
• Employee Scheduling
• Job Codes/Project Tracking
• Multiple Punch and Login Options
• Time Card Approvals
• Adding, Editing, or Deleting Punches
• Accruals
• And more

What Customers Like About Buddy Punch

As of this writing date, Buddy Punch has 4.8 out of 5 stars and over 750 reviews on Capterra (a widely-used software review site).

Below are just a few reviews that highlight how Buddy Punch can streamline your payroll processes:

“After using paper time cards for over a year, spending many frustrating hours a week reviewing, verifying, inputting, and analyzing employee punches, and then finding a place to keep the paper cards for our records, we were fed up. We looked for an affordable and easy-to-implement payroll solution. We used the Buddy Punch trial, and within a week, we knew this was the solution we were looking for … Now the process is as simple as logging on, setting the date range, exporting a CSV, and migrating the data into an analysis template. What used to take over an hour, takes roughly 20 minutes.”

Click here to read the full review.

“In running payroll, since employees will punch in, being able to track their time as well as PTO in one place saves me time on my end. I simply run a report at the pay period end to access a summary for each employee. I still have to enter totals, but will no longer have to search spreadsheets each time for notes regarding time off. The reports are very helpful and can be downloaded in multiple formats.”

Click here to read the full review.

“The integration with QuickBooks has streamlined our payroll, which has been a huge plus. Most importantly to me as the administrator who’s been responsible for the complete setup and training of all staff – the Buddy Punch customer service team has been absolutely outstanding!”

Click here to read the full review.

“My staff loves that the software works seamlessly and I love the easy payroll reporting process. BEST of all, when I have a question, Buddy Punch really LISTENS and always walks me through the answer or offers to help themselves.”

Click here to read the full review.

“This was so user-friendly and easy to navigate. It’s very affordable and breaks the individual’s hours down to a report that I could merge with our payroll provider.”

Click here to read the full review.

“I like how easy it is to use and the time it has saved us each week on payroll. The employees like seeing their time live each day as well.”

Click here to read the full review.

“No more adding times, calculating, and then punching them in redundantly. Buddy Punch has taken the work out of payroll and timekeeping.”

Click here to read the full review.

“Love the PTO portion and that you have the opportunity to export information for payroll as well.”

Click here to read the full review.

Click here to see the full list of our Buddy Punch reviews on Capterra.

To learn more about how you can use Buddy Punch for your payroll, schedule a one-on-one demo.

2. OnPay

OnPay is a full service online payroll software, offering plenty of must-have payroll features, including:

• Unlimited monthly pay runs
• All tax filings and payments
• W-2 and 1099 workers
• Pay by direct deposit, debit card, or check
• Multiple pay rates and schedules
• Garnishments
• Unemployment insurance withholding
• Click here for a full breakdown

Here’s a lengthy, detailed video breakdown of all of OnPay’s features (not just payroll):

At the time of writing, OnPay has 4.8 out of 5 stars on Capterra with over 400 reviews.

3. Gusto

Gusto is full-service payroll software that also comes with HR features, such as hiring and onboarding.

For payroll, you can use Gusto to:

• Automatically file payroll taxes 
• Conduct unlimited payroll runs
• Track time worked
• Pay international employees
• And more

Here’s a short demo of how Gusto works as a payroll provider for small businesses:

At the time of writing, Gusto has 4.6 out of 5 stars on Capterra with over 3,000 reviews.

4. PayChex Flex

PayChex Flex is small business payroll software that you can use to:

• Enter and run payroll online for businesses (for businesses with 1-19 employees)
• Automatically calculate, pay, and file payroll taxes
• And more

Here’s a short demo of how PayChex Flex works:

At the time of writing, PayChex Flex has 4.1 out of 5 stars on Capterra with over 1300 reviews.

5. Roll by ADP

Roll by ADP is targeted specifically to small business owners.

Roll comes with features such as:

• Easy to file payroll and taxes
• Ways to add raises, bonuses, garnishments
• An employee self-service portal
• Payroll for 1099 contractors

Here’s a brief video detailing how Roll works:

At the time of writing, we couldn’t find any reviews specific to Roll by ADP on Capterra.

6. QuickBooks Payroll

QuickBooks Online Payroll is a cloud-based payroll solution that businesses can use to pay their employees and file payroll taxes.

Here are some of its features:

• Same-day direct deposit
• Employee health benefits
• 401(k) plans
• Automated payroll
• Click here for a full list

Here’s a video detailing how QuickBooks can help you run payroll:

At the time of this writing, QuickBooks Payroll has a 4.5 out of 5 stars on Capterra with over 750 reviews.

Why should you get payroll software for your small business?

Investing in payroll software for your small business offers several compelling benefits.

🚀 Efficiency and Time Savings: Payroll software automates the time-consuming and error-prone process of manual payroll calculations. 

This streamlines payroll management, reduces administrative tasks, and saves valuable time for small business owners and HR personnel.

💰 Accurate Tax Calculations: Payroll software ensures accurate tax calculations, deductions, and withholdings, helping small businesses maintain compliance with ever-changing tax regulations. 

This reduces the risk of costly tax penalties and errors in employee paychecks.

😃 Employee Satisfaction: Timely and error-free payroll processing enhances employee satisfaction and trust. 

When employees receive accurate and on-time payments, it positively impacts morale and fosters a positive work environment.

💲 Cost Savings: Payroll software can result in cost savings by minimizing the need for manual payroll processing, reducing the risk of errors that could lead to financial penalties, and providing insights into labor costs for informed decision-making.

🔒 Security and Data Management: Payroll software often includes data security features to protect sensitive employee information. 

It also maintains a historical record of payroll data, making it easier to access and reference information for auditing or reporting purposes.

How Does Small Business Payroll Software Work?

Small business payroll software simplifies the complex process of paying employees by automating various payroll tasks. 

Here’s how it typically works.

1. Employee Information

You start by inputting your employees’ information into the software. 

This includes their names, contact details, tax withholding information, and salary details.

2. Time Tracking

If your employees track their time, you can input their hours worked or let them enter this information directly into the system. 

Some software may offer integrations with time tracking tools.

3. Tax Calculations

The software calculates payroll taxes, deductions, and withholdings for each employee based on their earnings, tax brackets, and other relevant factors. 

It keeps up with changing tax laws to ensure compliance.

4. Direct Deposits or Paychecks

You can set up your preferred payment method, whether it’s direct deposits or paper checks. 

The software calculates the exact amount for each employee and generates paychecks or initiates direct deposits.

5. Reports and Recordkeeping

Small business payroll software often generates payroll reports, which are core for accounting, tax reporting, and other purposes. 

It also maintains historical payroll data for recordkeeping.

6. Tax Filing

Some payroll software offers the option to file payroll taxes electronically. 

This can save time and reduce the risk of errors in the tax filing process.

7. Employee Access

Many payroll software solutions allow employees to access their pay stubs, tax forms, and other payroll-related information through a self-service portal.

How to Integrate Payroll Software with Your Existing Systems?

Integrating payroll software with your existing systems can streamline your workflow. 

Here’s how to do it.

1. Choose the Right Software: Select payroll software that offers integration options with the systems you currently use. Look for compatibility with accounting software, time tracking tools, and HR systems.
2. Set Up Integrations: Follow the software’s instructions to set up integrations. This often involves connecting your payroll software to your existing systems by providing necessary information or using APIs.
3. Customize Settings: Configure the integration to meet your specific needs. You may be able to adjust settings to control how data flows between the systems.
4. Test Integration: Conduct tests to ensure that the integration is working as expected. Verify that data is accurately syncing between your payroll software and other systems.
5. Train Your Team: If your employees or team members will be using the integrated systems, provide training to ensure they know how to use the new setup effectively.
6. Monitor and Maintain: Regularly monitor the integrated systems to ensure they continue to work smoothly. Stay informed about updates and changes to the software that might impact the integration.

Benefits of small business payroll software

⏳ Time Savings: Payroll software automates payroll processing, saving you time on manual calculations, tax compliance, and data entry.

✅ Accuracy: Automated calculations reduce the risk of human errors, ensuring employees are paid correctly and accurately.

📊 Tax Compliance: Payroll software keeps up with ever-changing tax laws, helping you remain compliant and avoid costly tax penalties.

💳 Direct Deposit: The software offers direct deposit options, which are convenient for both employers and employees.

👤 Employee Self-Service: Many solutions provide self-service portals for employees to access pay stubs and tax forms, reducing administrative tasks.

💰 Cost Savings: By minimizing manual processing, payroll software reduces the cost associated with payroll errors and time-consuming tasks.

🔐 Data Security: Payroll software often includes data security features to protect sensitive employee information.

📜 Historical Records: It maintains a historical record of payroll data, which is useful for auditing and reporting purposes.

🛠️ Customization: You can tailor the software to your unique payroll needs, adapting it to your specific requirements.

📈 Reporting: Most payroll software generates payroll reports, offering insights into payroll and labor costs for informed decision-making.

How Effective Payroll Management Boosts Employee Morale?

Effective payroll management plays a pivotal role in boosting employee morale in several ways:

1. Timely and Accurate Pay

When employees receive their paychecks on time and without errors, it enhances their trust in the organization and fosters job satisfaction.

2. Transparency

Access to pay stubs and detailed information about earnings, deductions, and taxes through self-service portals creates transparency, which employees appreciate.

3. Compliance and Fair Treatment

Accurate and compliant payroll processing demonstrates the company’s commitment to treating employees fairly, contributing to a positive work environment.

4. Reduced Financial Stress

Accurate payroll management ensures employees receive the correct amount, reducing financial stress and anxiety.

5. Motivation

Employees who are paid fairly and promptly are more motivated and engaged in their work, leading to improved job performance.

6. Retention

High employee morale resulting from effective payroll management can contribute to higher employee retention rates, reducing recruitment and training costs.

7. Team Morale

When the entire team experiences accurate and timely pay, it creates a positive atmosphere and camaraderie among employees.

Are payroll software tax compliant and offer worker compensations?

Payroll software is typically tax compliant as it’s designed to automate payroll tax calculations, deductions, and withholdings in accordance with local, state, and federal tax regulations. 

Payroll software providers stay updated on tax laws and implement necessary changes to ensure accurate and compliant payroll processing. 

This helps small businesses avoid costly tax penalties and errors, making it a reliable tool for maintaining tax compliance. 

Additionally, some payroll software may offer features for managing worker compensation by allowing businesses to track and administer workers’ compensation claims and payments.

What’s the average price for a small business payroll software?

The average price for small business payroll software can vary depending on factors such as the number of employees, features included, and the software provider. 

Basic payroll software may cost as low as $20 to $50 per month, while more feature-rich solutions can range from $50 to $150 or more per month. 

Some software providers offer tiered pricing plans that scale with the size of your business. 

It’s essential to choose a pricing plan that aligns with your business’s specific needs and budget while providing the necessary features for efficient payroll management.

What is the easiest payroll software to use?

Buddy Punch is a user-friendly time tracking and workforce management software that can integrate with various payroll systems. 

It streamlines time tracking, making it easier to manage payroll. 

The software offers features like clocking in and out, PTO tracking, and reporting, ensuring accurate and compliant payroll processing. 

Buddy Punch’s intuitive interface and affordable pricing make it an excellent choice for small businesses looking for an easy-to-use solution to simplify payroll management and maintain tax compliance.

What is the best way to do payroll for a small business?

Small businesses face various challenges when it comes to payroll processing, such as staying tax compliant with the IRS, avoiding additional fees, and handling health insurance and benefits administration. 

HR tools and services play a crucial role in addressing these challenges, offering HR support, retirement plans, and new hire reporting. 

Small businesses can choose between in-house payroll management or outsourcing payroll services to best suit their needs, including time and attendance tracking, contractor payments, and payday processing. 

Reliable payroll software not only helps in accurate payroll processing but also simplifies tasks like filing taxes, managing local taxes, and making tax payments. 

It’s important to explore the best payroll options and consider partnering with a trusted payroll service provider or online payroll services to ensure seamless payroll management and compliance with tax regulations.

In our opinion, the best way to do payroll for a small business is to leverage payroll software like Buddy Punch. 

This type of software automates many aspects of payroll processing, reducing manual work and the risk of errors. 

By using Buddy Punch, small businesses can efficiently track employee work hours, manage time off, and generate reports, all of which contribute to streamlined and accurate payroll management. 

The software’s user-friendly interface and software integration capabilities make it an ideal choice for small businesses looking to simplify payroll processes.

Learn More About Buddy Punch

You’ve reached the end of our article on different payroll software for small businesses. If you’d like to explore Buddy Punch in greater depth, we invite you to:

• Visit our site.
• Start a free trial.
• View a pre-recorded demo video.
• Request a live one-on-one demo call.

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