🧾 Cheapest Small Business Payroll Solution
📌 Quick Key Takeaways
| ❓ Critical Question | ✅ Straight Answer |
|---|---|
| Is the lowest sticker price always the cheapest? | No. Add-on fees can flip the value equation. |
| Which payroll is truly cheapest for very small teams? | Square Payroll (contractors only) or Patriot Full Service (W-2 teams). |
| Best for multi-state employees? | OnPay—multi-state is included, no surprise fees. |
| Best free option? | Payroll4Free.com, but only if you’re tech-savvy and don’t mind filing taxes yourself. |
| Best value if you want HR + automation? | Gusto—more expensive, but saves time and admin overhead. |
💵 What Is the Cheapest Payroll Service for a Solo Business with Contractors?
For businesses that only pay freelancers or 1099 contractors, pricing models shift dramatically. You don’t need tax filing or W-2 forms, and direct deposit is often enough.
| 📦 Provider | 💰 Monthly Cost (3 Contractors) | ✍️ Key Details |
|---|---|---|
| Square Payroll | $18 (no base fee) ✅ | Contractor-only plan, no base fee, includes 1099s and direct deposit. |
| Gusto (Promo) | $18 (6-month discount) 💸 | Free base fee first 6 months, then rises to $53/month. |
| Payroll4Free.com | $0 (DIY filing) ⚠️ | Free unless you need direct deposit/tax filing (~$40/month). |
💡 Tip: If you’re organized and don’t need hand-holding, Square Payroll wins with predictable pricing and zero fluff.
🧠 What’s the Smartest Choice for a Small Local Team?
Let’s say you’ve got 3–5 employees, all in one state. You want full tax compliance, maybe direct deposit—but no fluff like HR dashboards or benefits portals.
| 👷 Provider | 🧾 Total Monthly Cost (5 W-2 Employees) | 🛠️ Hidden Costs? |
|---|---|---|
| Patriot Full Service | $62 ✅ | Includes tax filings, but HR/time tools cost extra. |
| SurePayroll | $64.99 ⚠️ | Add-ons for integrations & multi-state inflate TCO. |
| OnPay | $70 💼 | All-included: multi-state, integrations, HR tools. |
| Gusto Simple | $79 💡 | Better UI & employee experience; more expensive. |
💡 Tip: Patriot is ideal if your business is straightforward. If you’ll ever grow out of “local-only,” go with OnPay from day one.
🗺️ Cheapest Payroll for Multi-State or Remote Teams?
Hiring remote workers across different states? That’s where “cheap” gets expensive—unless your provider includes multi-state filings in the base price.
| 🌐 Provider | 💲 Total Cost (8 Employees, 3 States) | 📎 Multi-State Fees |
|---|---|---|
| OnPay | $88/month = $1,056/year ✅ | Unlimited multi-state included. |
| SurePayroll | $95.98/month = $1,152/year ⚠️ | $9.99/month per extra state. |
| Patriot Full Service | $101/month = $1,212/year 🔁 | $12/month per state after the first. |
| Gusto Plus | $176/month = $2,112/year 💼 | Multi-state + HR tools bundled. |
💡 Tip: If your team is distributed across states, go with OnPay. It offers bulletproof pricing with no gotchas.
⚙️ Are Add-Ons Draining Your Budget? Here’s What to Watch For
The advertised price is rarely what you’ll actually pay unless you know which features cost extra. Hidden fees add up fast—especially for:
| 🔍 Feature | 🧨 Potential Hidden Fees |
|---|---|
| Multi-State Filing 🌎 | +$9.99/month/state (SurePayroll), +$12/month (Patriot) |
| Accounting Software Sync 🧾 | +$4.99/month (SurePayroll) |
| Time Tracking 🕒 | +$6/month + $2/user (Patriot) |
| W-2/1099 Mailing ✉️ | +$10/form (OnPay) |
| Direct Deposit Speed 🏦 | Upgrade needed for faster ACH (Gusto) |
| HR Tools & Onboarding 👥 | Add-ons unless you’re on a premium plan |
💡 Tip: If you plan to scale or want clean books, pick a provider that bundles integrations and compliance tools by default.
📈 Which Payroll Systems Give the Best Value for Growing Businesses?
When growth is on the horizon—new hires, new locations, more complexity—you need a platform that won’t nickel-and-dime you at each milestone.
| 🚀 Provider | 🧭 Best For Scaling | 🛡️ Why It Wins |
|---|---|---|
| OnPay | All-around scaling | No added cost for states, employees, or features. |
| Gusto | HR-focused growth | Great for adding health plans, onboarding, and compliance tools. |
| QuickBooks Payroll | QuickBooks users | Saves time with built-in accounting sync; pricey for others. |
| ADP Roll | Micro-teams <10 | Brand trust with modern UI and flat pricing. |
💡 Tip: Choose OnPay if you’re not sure how fast you’ll grow—its flat-fee structure gives you breathing room.
🧮 Cheapest Overall Payroll? It Depends on Your Priorities
| 🎯 Business Type | 🏆 Best Payroll Provider | 💰 Why |
|---|---|---|
| Contractor-only, 1099s | Square Payroll | $6/contractor/month—no base fee. |
| Local business, single state | Patriot Full Service | $37 + $5/person, basic but reliable. |
| Remote or multi-state team | OnPay | Flat rate, all states included—no nasty surprises. |
| Freelancer w/ no payroll filing | Payroll4Free.com | Only if you’re willing to file taxes yourself. |
| Retail using Square POS | Square Payroll | Seamless sync with tips, hours, timecards. |
| Growing HR-centric company | Gusto | Costs more but integrates HR, onboarding, and benefits. |
📌 Final Pro Tips: How to Get the Most from Any Payroll Service
| 💡 Expert Tip | 📋 Action |
|---|---|
| Avoid à la carte traps | Use the TCO chart to factor in all “hidden” services. |
| Re-evaluate every year | Growth, headcount, and location can make one-time cheap services expensive long-term. |
| Bundle where it matters | If you use QuickBooks or Square, the operational savings often outweigh a cheaper standalone tool. |
| Try before you switch | OnPay and Gusto offer free trials—use them to test integrations and UI. |
| Never skip W-2/1099 filing support | Penalties for tax mistakes can erase years of savings. |
FAQs
❓ “My contractor count fluctuates between 1 and 4 per month—do I need to switch plans?”
Flexibility without fuss is achievable—choose a model that aligns with your highest monthly payee count for best cost-efficiency:
| 🧠 Plan Type | 🏷️ Monthly Cost (at 4 Contractors) | 🔁 Cost If Only 1 Payee | 💡 Ideal For |
|---|---|---|---|
| Square Contractor | $24 | $6 | Pay-as-you-go; auto-scaling. |
| Gusto Contractor | $24 (6×$4) | $6 | Stay under 6 contractors to avoid base fee. |
| Patriot Basic | $17 + $4 = $21 | $21 | No filing support—DIY tax work. |
🔑 Insight: If your monthly highest is ≤6, Square or Gusto keeps base fees to zero. Otherwise, Square’s zero-base model remains the simplest.
❓ “If I add benefits like health or 401(k), where’s cheapest to manage?”
Payroll that integrates perks saves admin hassles and extra bills:
| 🤝 Provider | 🏥 Health Insurance Admin | 💰 401(k) Administration | 📌 Perks Cost Insight |
|---|---|---|---|
| Gusto | ✅ Included (no extra fee) | ✅ Seamless w/fiduciary support | Premium platform w/out-of-box service. |
| OnPay | ✅ Added with optional HR bundle | ✅ Via 3rd party | Some mild fee bump on 401(k) but easy to integrate. |
| Patriot | 🚫 Add-on ($6+/mo) | 🚫 Add-on module needed | Cheapest base but no built-in perks. |
💡 Takeaway: If you’re serious about offering benefits, Gusto’s included bundles often cost less in time and money long-term.
❓ “Are there real downsides to picking a ‘free’ payroll tool?”
Free tools come with hard limitations and risks:
| 🕵️ Risk Factor | 🛑 Why It’s a Challenge | 🎯 Who It Matters To |
|---|---|---|
| Limited compliance backup | You’re on your own for tax errors. | Smaller firms without HR/legal staff. |
| No multi-state support | Must adjust for remote workers manually. | Businesses hiring across borders. |
| No auditing trail | Hard to provide records during IRS or DOL inquiry. | Companies setting up financial controls. |
| No vendor support | No help desk if payroll breaks. | Owners who rely on prompt issue resolution. |
✅ Smart Strategy: Use free tools only if you’re legally-savvy, tech-proficient, and manage under 10 payees in a single state.
❓ “Do any of these suppliers include payroll tax guarantees?”
Yes—and it’s more than a comfort feature; it’s risk mitigation:
| 🛡️ Provider | 🧾 Tax-Filing Guarantee | 🔍 Coverage Notes |
|---|---|---|
| Patriot (Full-Service) | ✅ Included | Covers penalties up to fee amount. |
| OnPay | ✅ Included | Zero additional cost. |
| Gusto | ✅ Included | Protects errors for base taxes only. |
| SurePayroll | ❌ Extra fee likely | Guarantees may be only in higher tiers. |
💡 Pro Safety Tip: A tax-filing guarantee saves headaches—and dollars—if deadlines are missed or filings go awry.
❓ “How easy is switching providers without losing data/history?”
Switching need not be painful, but you must plan for smooth data migration:
| 🔄 Switch Factor | ✅ Easy Process? | ⚙️ Details |
|---|---|---|
| Historical paystubs & year-end forms | Yes | Export/import CSV or PDF—standard across providers. |
| Employee self-service setup | Yes, but needs refresh | Staff reset passwords at next login. |
| Tax account re-registration | Yes, but slow | New state IDs could take 1–2 weeks to activate. |
| Benefit plan integration | Varies | ONPAY & Gusto reconfigure perks; others may leave gaps. |
⏳ Time Saver: Allow 1–3 payroll cycles for full data transition—and inform staff to expect login changes.
❓ “What payroll mistakes cost the most in hidden admin time?”
Tiny inefficiencies add up fast—look out for these:
| 🛠️ Task | 🕒 Time Wasted Monthly | 🚩 Avoid by using |
|---|---|---|
| Manual QuickBooks import | 1–2 hrs | A fully integrated payroll tool (OnPay, Gusto) |
| Re-key tips/payouts | 30–60 mins | Square Payroll that auto-syncs POS |
| Reconciling multi-state filings | 1–3 hrs per state | All-state support included |
| Post-payroll corrections | 30 mins–2 hrs | Pre-run previews and validation tools |
🔍 Observation: A $10–$20 spend to eliminate each bottleneck is a bargain compared to your time or imperfect financial oversight.
❓ “Which payroll solution scales best if I plan to grow fast—10 employees now, 50+ within a year?”
Rapid scaling requires tools that don’t charge punitive add-ons as complexity rises.
| 🚀 Provider | 🧮 Cost Predictability | 🌐 Multi-State Support | 🛠️ HR & Time Tracking | 📈 Scalability Score |
|---|---|---|---|---|
| OnPay | 🔒 Flat rate | ✅ Included, unlimited | ✅ Basic suite included | ⭐⭐⭐⭐⭐ |
| Gusto (Plus) | 📊 Tiered | ✅ Included | ✅ Integrated tools | ⭐⭐⭐⭐ |
| Patriot Full Service | ⚠️ Variable with add-ons | ❌ $12/state extra | ❌ HR & Time tools are extra | ⭐⭐ |
| SurePayroll | 🔄 Add-on dependent | ❌ $9.99/state | ❌ SureHR = extra cost | ⭐⭐ |
🔍 Expert Insight: OnPay is architected to absorb complexity without introducing surprise costs. For fast-growing firms, it provides structure without budget chaos.
❓ “Is there a benefit to choosing a payroll provider with built-in time tracking?”
Absolutely—integrated time tracking cuts payroll prep by hours and reduces errors caused by double entry.
| ⏱️ Provider | 🔄 Time Tracking Integration | 👨💼 Payroll Sync | 📉 Error Prevention |
|---|---|---|---|
| Gusto (Plus) | ✅ Native time tracking | ✅ Real-time sync | ✅ Overtime/autopay validated |
| Square Payroll | ✅ Via Square Team App | ✅ POS-to-payroll auto pulls | ✅ Accurate tip reporting |
| OnPay | ✅ With integrations (TSheets, Deputy) | ✅ Seamless | ✅ Conditional pay logic available |
| Patriot | ❌ Only with add-on | ❌ Manual sync | ❌ Prone to double entry |
💡 Efficiency Tip: If your workforce is hourly or earns variable pay (tips, commissions, shifts), native or tightly integrated tracking is essential to avoid regulatory missteps.
❓ “How do termination payments and final paychecks affect payroll costs or timing?”
States like California and Massachusetts require same-day final pay—so your payroll system must support off-cycle payments at no extra fee.
| ⚖️ Requirement | 🏁 Fast Payroll Flexibility | 🧾 Cost to Run Off-Cycle Payroll | 💡 Recommended Provider |
|---|---|---|---|
| Immediate final paycheck (CA, MA) | ✅ Gusto, OnPay, Square | ❌ ADP often charges per run | ✅ Gusto & OnPay—unlimited payrolls |
| Voluntary termination pay | ✅ Can delay 72 hrs in some states | ✅ Still should issue promptly | ✅ Square—good for POS-linked layoffs |
| Severance, bonuses | ✅ Run off-cycle with no limit | ✅ Built into monthly cost | ✅ OnPay allows flat and % pay mixing |
🧠 Compliance Reminder: Choose a system with unlimited pay runs included. Providers that charge for off-cycle payrolls create costly legal risks when rapid terminations occur.
❓ “Do I need to file payroll taxes in multiple states if my team is remote?”
Yes. Where your employee works, not where you are, governs payroll tax responsibilities.
| 🌎 Employee Location | 🧾 Filing Required? | 🧮 Hidden Cost Impact | ✅ Best Platforms |
|---|---|---|---|
| Same state as business | 🟢 Yes | 💲 Base cost only | ✅ All full-service providers |
| Different state | 🔴 Yes | ⚠️ Add-on with Patriot/Sure | ✅ OnPay (unlimited) |
| Local taxes (e.g. NYC, Philly) | 🔴 Yes | 💲 Often separate charge | ✅ Gusto, Square—auto-file locals |
| No income tax state (e.g. FL, TX) | 🟢 Yes (unemployment tax) | ✅ Minimal change | ✅ Any provider |
🧾 Tax Truth: Remote hiring = multi-state payroll complexity. Without unlimited state support, add-ons can turn a $49 plan into a $99+ burden.
❓ “Which payroll system provides the best support if I make a filing mistake?”
Support during compliance errors is crucial—it can save thousands in fines.
| 🛡️ Provider | 🤝 Filing Guarantee | 📞 Support Access | 🧠 Best For |
|---|---|---|---|
| Gusto | ✅ Full-service tax protection | ✅ Live chat + phone | All-in-one coverage |
| OnPay | ✅ 100% compliance backing | ✅ Real U.S.-based reps | Growing teams, multi-state |
| Patriot (Full) | ✅ Limited guarantee | ⚠️ Email only, slower | DIY-minded, single-state |
| ADP (RUN) | ✅ Extensive, backed by reputation | ⚠️ Must go through account rep | Complex orgs with legal counsel |
🛑 Avoidable Pitfall: Don’t just ask if a mistake is covered—ask how fast they’ll correct it. A responsive team is as valuable as the guarantee itself.
❓ “What’s the best payroll provider for restaurants with tipped employees?”
Restaurants face dual-layer complexity: accurate tip reporting and variable pay schedules. Choose a provider with POS integration and daily payroll flexibility.
| 🍽️ Provider | 🔄 POS Integration | 💵 Tip Reporting | 🛠️ Custom Shift Pay | 🔍 Best Use Case |
|---|---|---|---|---|
| Square Payroll | ✅ Native with Square POS | ✅ Auto-imports declared tips | ✅ Overtime + shift modifiers | Quick-service, POS-driven eateries |
| Gusto (Plus) | 🔄 Integrates with 7Shifts, Toast | ✅ Manual entry or import | ✅ Custom roles/rates | Mid-sized restaurants with complex staff |
| OnPay | 🔁 3rd-party POS (e.g., Clover) | ✅ Tracks declared & allocated | ✅ Configurable time tracking | Multi-location or high turnover venues |
| Patriot | ❌ No POS tie-in | ❌ Manual entry required | ⚠️ Needs add-on for scheduling | Only feasible for very small cafés |
🧾 Expert Tip: IRS tip compliance (Form 8027) and tip credit calculations require audit-ready accuracy—automated syncing from the POS to payroll is not optional, it’s essential.
❓ “How can nonprofits lower payroll costs while meeting compliance rules?”
Nonprofits must comply with IRS rules for grant-funded payroll, 941 filings, and tracking exempt vs. non-exempt staff. Cost control doesn’t mean cutting corners.
| 🕊️ Provider | 🧾 Form 990 & Audit Support | 💲 Pricing Transparency | ⚙️ Restricted Fund Segmentation | ✅ Best For |
|---|---|---|---|---|
| OnPay | ✅ Supports 501(c)(3) rules | ✅ Flat pricing, no markups | ✅ Track by job code/fund | Charities & community orgs |
| Gusto (Plus) | ✅ Integrates with Aplos, Church Windows | 🔄 Tiered, can be costlier | ✅ Classes/depts with reporting | Nonprofits with complex budgets |
| Patriot | ⚠️ Manual mapping required | ✅ Affordable for basic use | ❌ No nonprofit-specific tools | Small teams with minimal complexity |
| ADP RUN | ✅ Full grant cost tracking | ⚠️ Custom quote required | ✅ Fund allocation tools | Larger institutions & churches |
📚 Pro Insight: Look beyond just payroll—audit trail tools, fund allocation tagging, and exemption reporting reduce risk during grant audits and 990 filings.
❓ “What happens if I pay employees late because payroll didn’t process on time?”
Late payments violate federal and state labor laws, with fines ranging from $100 to $10,000+. Your payroll provider must offer fast or same-day direct deposit options.
| ⏰ Risk Area | 🚨 Consequence | 💡 Payroll Feature Needed | ⚙️ Provider Match |
|---|---|---|---|
| Missed pay date | FLSA violation; penalties per employee | ✅ Next-day or same-day pay | ✅ Gusto, QuickBooks (Premium) |
| Holiday delays | Late paycheck risk if runs not adjusted | ✅ Holiday run scheduling | ✅ OnPay, ADP |
| Cash flow gaps | Inability to cover gross payroll | ✅ Built-in cash reserve alerts | ✅ Square Payroll (POS sync shows cash on hand) |
🔐 Avoidance Strategy: Providers like Gusto offer same-day direct deposit only on higher tiers—factor that cost into your TCO if you operate close to payroll dates.
❓ “Does it matter if a payroll provider outsources customer service?”
Yes. Outsourced or chat-only support adds resolution time to urgent tax issues, especially with local or multi-state filing deadlines.
| 📞 Provider | 🧠 Support Source | ⏱️ Avg. Response Time | 🔍 Escalation Support | 💬 Ideal For |
|---|---|---|---|---|
| OnPay | ✅ U.S.-based payroll pros | 🕐 Under 30 mins | ✅ Dedicated account reps | Teams needing real-time help |
| Gusto | ✅ In-house + chat | 🕑 30–60 mins | ✅ Tiered phone support (Plus) | Tech-savvy users |
| Patriot | 🟡 Email first, phone later | 🕒 Up to 24 hrs | ❌ Limited escalation path | Cost-sensitive users |
| ADP RUN | ✅ Dedicated reps by client tier | 🕑 Depends on package | ✅ 24/7 with premium | Multi-entity firms |
💬 True Cost Insight: A slow answer during a quarterly tax period can trigger IRS penalties—speed and knowledge are just as important as feature sets.
❓ “Can I switch providers mid-year without losing tax compliance?”
Yes, but only if your new provider offers mid-year onboarding with historical import, including wage and tax data already reported.
| 🔄 Provider | 📊 Historical Tax Import Support | 🛠️ Assisted Onboarding | 💵 Transition Cost |
|---|---|---|---|
| Gusto | ✅ Yes, even post-Q1 | ✅ Specialist-led setup | ❌ Free |
| OnPay | ✅ Import W-2, 941, 940 history | ✅ Live setup call | ❌ Free |
| Square Payroll | ⚠️ Self-service only | ❌ Limited onboarding tools | ✅ Free |
| Patriot | ✅ Manual entry available | ❌ No guided support | ✅ Free, but slow |
📅 Timing Tip: The ideal window to switch is at the start of Q3—you avoid duplicate W-2s and can reset calendar-based limits like FUTA more cleanly.
