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Should You Pick the Cheapest Payroll Service?

Simone Johnson
Simone Johnson

If you're a budding business owner, you may need an affordable payroll service, but is it wise to choose the cheapest one you can find?

Operating a business comes with many costly expenses, but hiring a payroll service doesn’t have to be one of them. Many of the best payroll services for small businesses are affordable. Just because you’re looking for a budget-friendly payroll processing service doesn’t mean you need to settle for a bare-bones solution. On the flip side, paying more for payroll processing doesn’t always mean you’re getting the best value for your money. You can find options that fit your budget and match your business’s model and expectations when you know what to look for and what to expect from a payroll processing solution.

Editor’s note: Looking for the right payroll service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

Cheapest payroll providers


Intuit is a global technology platform that offers QuickBooks, an online payroll and tax service for businesses of all sizes.

  • QuickBooks is a cloud-hosted service, so it doesn’t require you to purchase any software. You simply log in to the system to process payroll, review and pay payroll taxes, and view detailed labor reports.
  • It’s helpful for your employees as well. Using QuickBooks online payroll, employees can also log in to the system to view their pay stubs, pay history and accrued paid time off (PTO).
  • Intuit provides access to QuickBooks accounting services in addition to the payroll offering. For more information, read our review of the QuickBooks accounting software.

QuickBooks Online Payroll has three plans that cover payroll processing and payroll tax preparation: Core, Premium and Elite.

Plan Cost Features
Core$45 per month, plus $4 per employeeFull-service payroll, 1099 electronic filing and payment, and next-day direct deposit
Premium$75 per month, plus $8 per employeeEverything in Core, plus same-day direct deposit, access to HR support, mobile time tracking and an expert startup review
Elite$125 per month, plus $10 per employeeEverything in Premium, plus custom setup, a dedicated HR advisor, project tracking and a tax penalty protection of up to $25,000

It also offers three desktop payroll plans: Enhanced, Assisted, and Assisted + QuickBooks Enterprise Diamond. You can learn more in our complete review of QuickBooks Payroll.


Rippling is a company that has produced a uniquely user-friendly employee management software platform. It also has HR and IT software products, including payroll processing software designed to make the administrative work of running a business more efficient.

  • The system organizes and tracks vital business information, such as the total number of hours an employee worked, PTO and total labor expenses. It also allows you to manage direct deposits and paychecks. These records are accessible to your employees as well as admins.
  • To use the payroll processing service, you need to subscribe to Rippling’s Employee Management Platform, broader HR software that includes onboarding, benefits management, promotions tracking, time tracking and device management.
  • Rippling’s payroll processing software is customizable to your specific needs. It is also possible to generate reports with visual aids such as graphs and charts on different financial and business data.

Rippling integrates with more than 400 apps to expand the payroll software’s capabilities.

Rippling offers custom pricing based on the services your business needs, but plans start at $8 per month per employee.


Gusto boasts an all-in-one HR platform, which includes payroll processing services. It currently serves more than 100,000 businesses all over the world.

  • In addition to providing payroll processing and handling all of your payroll tax needs, Gusto can manage employees’ PTO and administer health insurance. You will also have access to certified HR professionals from all over the world for advice and guidance.
  • Running payroll with Gusto is a simple process. Log on to the system from anywhere online, enter an employee’s hours (plus any PTO and any bonuses or commissions they’ve earned), and click “submit p” You also have flexibility with payment methods(direct deposit, paychecks, prepaid debit cards, etc.).

Gusto has four available service plans: Core, Complete, Concierge and Contractor.

  • The Core plan has a base fee of $19 per month for the first six months, plus $6 per employee. Six months after you sign up, the base fee increases to $36 per month.
  • The Complete plan costs $36 a month, plus $12 per employee.
  • The Concierge plan is the most expensive at $149 a month, plus $12 per employee.
  • The Contractor plan is for businesses that work with contractors and freelancers, and only costs $6 per contractor per month, with no base fee.

You can learn more in our comprehensive review of Gusto.


Zenefits is a software technology company that provides HR and payroll software to small and midsize businesses.

  • The Zenefits payroll system offers unlimited payroll processing, wage garnishment support, direct deposits, multiple pay schedules, 1099 contractor payments, general ledger reporting and mobile paystubs.
  • Zenefits Payroll integrates with all of the other Zenefits HR programs. It works best when purchased along with all of the Zenefits modules, such as Time Tracking, Benefits, and HR, as these programs expand the software’s functionality.

Zenefits Payroll must be purchased as part of a larger suite of HR software, which has three pricing plans: Essentials, Growth and Zen. The Essentials plan costs $8 per employee per month. The Growth plan costs $14 per employee per month and is useful for a growing business. The Zen plan costs $21 per employee per month. Meanwhile, Payroll is an add-on and costs $6 per employee per month.

How much does it cost to have a payroll service?

There’s a wide range of payroll service costs, depending on the features you need and the number of employees you have. Other factors include how many times your employees are paid, whether you pay by direct deposit, how many of your employees live out of state, and the tax filing services you use. You can also buy a monthly subscription at a set rate or pay per payroll run. The set rate is typically the payroll base fee plus the per-employee fee. In our testing to find the best online payroll services, we found base fees ranging from $29 to $150 and per-employee fees from $2 to $12.

What makes it cheaper?

Like more expensive options, cheaper payroll services are usually automated and can help you transform hours of work into minutes – which saves you money as well as time. However, a cheaper payroll service may lack some of the nicer features that more expensive plans include, such as overtime hour calculations, tax filing, reimbursement payments, commission calculations or any service that goes beyond the basic needs of payroll management. If you choose a cheaper payroll plan and the company offers these services, you may need to pay an additional fee to use them.

What are the advantages of a cheap service?

An advantage of using a cheaper payroll service, besides the lower cost, is the quick access you have to your information. Cheaper services are usually software or apps that you and your team can manage yourselves, eliminating the middleman. This is especially useful when you discover mistakes that need immediate correction.

What are the disadvantages of a cheap service?

It’s difficult to find a cheap payroll that offers automated tax filing and service deals, which are typically a bundle of features for a set price. A cheaper service may take more manual operation to process your workers’ hours. Sometimes updates about new hires or terminations are also manual, which can eat up your time.

It’s uncommon for cheap payroll services to offer assurance checks – double-checking your payroll information to ensure it’s accurate. You probably won’t have access to the additional HR services and benefits that higher-priced suites offer either.

What are the cheapest options for payroll services?

Small businesses typically operate on a tight budget – especially when they are starting out. The last thing you want to do is sacrifice quality payroll service because you’re a little short on cash. If you can’t afford the costs of hiring and training HR specialists to run payroll, or if you prefer to outsource it, you have several options:

Remember that free or cheaper options may be missing a few features. Lack of customer support or inconsistent payroll reports can be a problem with cheap options.

Is payroll software a good cheap payroll option?

Do you know what’s cheaper than payroll services? Payroll software. If you find that even the cheapest payroll services are bleeding your wallet dry, payroll software may be for you. You can manage, organize and compute your employees’ payments with this software. It holds all your payment records and is more affordable than payroll services.

Benefits of payroll software

Payroll apps automatically calculate taxes based on state and federal regulations. The software also manages deductions and calculates the taxes for payroll, Social Security and Medicare.

As an employer, you want to avoid violations and fees. Payroll software helps you electronically file W-2, W-4, 1099, 1095 and any other payroll forms you’ll need for your business.

Payroll software gives you and your team more payroll management freedom. You can address mistakes quickly without going through someone else. You can monitor your information from your phone. No middleman or third-party user means fewer people have access to your company’s private information. It’s also easy to calculate bonuses and PTO and to automate end-of-year reports.

Are bookkeeping services an affordable payroll option?

A bookkeeping service does what an in-house bookkeeper or accountant would do. This service handles your transaction coding, accounts payable, accounts receivable, payroll and financial reports.

How to choose the right bookkeeping service

Before you pay for a bookkeeping or accounting service, inquire about the company’s payment structure. Are there annual fees? How long does it take to process your company’s data? How much experience does the company have in employment law compliance, and how often will someone from the company check in with you? With an outsourced service, you may not have as much interaction or communication with the company as you’d like, so it’s important to understand what you are getting into before you decide to work with one.

Is a payroll processing company affordable?

A payroll processing company handles your payment of wages to your employees by providing payroll and HR operations management.

How to choose the best payroll processing processor

Do your research on a payroll company before hiring it to manage your company’s data, said Rick Fish, a payroll professional certified by the American Payroll Association. Ask for references. Remember your company’s needs and evaluate whether the payroll provider matches your expectations. Look into the company’s credentials and see if it has experience working with a company like yours, Fish said.

To avoid using the wrong payroll processing company, there are several things you should make sure the company manages and offers. At the very least, the company should automatically run and calculate payroll for each pay period. Inquire about the level of contact you’ll have with the payroll data and what the process of gaining access to your data is like. Does it take a couple of business days? Are there many forms to fill out or steps to take beforehand?

Check if the company offers tax filing services, like managing deductions and W-2 and 1099 forms for employees. Does the system flag issues, and how does the company notify you of those issues? Does it send alerts for employee benefits eligibility or overtime?

“Make sure you have a way of confirming your taxes are being filed [in a] timely [manner],” said Alexia Matak, sales and marketing director at Payroll Experts.

Matak also encourages business owners to find out who is liable for payroll errors, because it’s usually themselves. “Be careful of companies that say, ‘We’re taking full responsibility,’ because payroll taxes are the biggest liability.”

Analysis reports are a good way to get updates and information on your company. It is also important to have the function of PTO requests and a web-based system so you can check in when you want.

It’s good to get references for your prospective payroll providers before hiring one. You should also take advantage of free trials so you know what to expect and can assess the service’s reliability before you pay.

Understanding the service your payroll processing company offers is key to saving money. Asking the right questions will help you avoid paying added fees later.

What are the benefits of payroll processing companies?

Many U.S. businesses outsource their payroll responsibilities to payroll processing companies. Here are four of the benefits payroll processing companies may offer.


A payroll processing company shifts some of the administrative weight off your shoulders. Payroll sometimes needs to be reviewed more than once, so outsourcing this task can save you time and money. Instead of spending funds and effort on calculating wages; printing, signing and sending checks; and preparing and paying payroll taxes, you can hire a payroll company to handle all that for you. This gives you more time to work on your actual business operations.

In addition to being a timesaver, outsourcing is a safer option. Payroll processing companies have features like backup systems and multiple servers to keep your company’s information secure.

Compliance with tax laws

Keeping up with compliance can be a pain, especially with payroll tax laws constantly changing. With a payroll processing company by your side, there is no need to keep track of those regulations, because your provider does it for you. As a result, you maintain compliance with laws and avoid violations and fees.

Feature flexibility

Some features of affordable payroll processing companies allow you to add payroll services through your accounting software. You can also choose how much service you want based on your budget and business – full-service or self-service payroll or anything in between.

Automated payments

Same-day direct deposit is another service payroll companies offer; however, Fish warns employers not to get swept up in the “same-day pay” craze if it’s not something you need. Some companies also provide flexible payment options, like automatic payroll processing for salaried and hourly employees, and varied payment schedules like weekly, biweekly and monthly. They can also set up automatic adjustments for tips, child support or other court-ordered deductions.

What are the disadvantages of payroll processing companies?

Vendors with a one-size-fits-all pricing system do not consider your company’s size or specific needs in the price. You might not need all the services they provide in their base plans, which could feel like a waste of money. See if you can cherry-pick what you like and just buy what works best for you.

The tricky thing about dealing with a payroll company is that it might offer a really low price, but only at first. Before you partner with the service, do your research to avoid sneaky added fees. Sometimes prices are subject to change after a year, so look out for that.

Regardless of the service, a payroll processing company is a separate entity that handles your company’s information. For the same reason, if you need to correct a payroll error, your payroll processing company may not respond as quickly as you like.

How does a PEO affect your payroll?

PEOs work specifically with small and midsize companies. They manage payroll taxes, HR operations and benefits through a co-employment model. Your employees will be on the PEO’s books, but still under your management. If you need to outsource other HR tasks, like administering benefits, a PEO might be a cost-saving option for you. If the company you use also offers payroll, it may be convenient and cost-effective to add these services to the ones it already performs for your business.

What are the advantages of full-service payroll?

A full-service payroll company is typically larger and operates almost like a tech company, said George Kocher, CEO of Brand North. Processing companies can offer a platform for time tracking and time-off requests through easy-to-use smartphone applications.

“Because of their size, they also have strategic relationships,” Kocher told “For instance, they might be able to help you create your HR handbook and have free access to online hiring platforms or even attorney services.”

Although full-service payroll companies are usually larger, they can provide dedicated payroll specialists to assist you. A full payroll service also provides flexibility for submitting payroll information. You often have the option of submitting it by phone or email at any time of the day. Many companies offer automated tax filing, and some even give you access to other HR and benefits services.

What are the disadvantages of full-service payroll?

A full-service payroll company has a lot to offer, but if you’re a small business, it might cost more than you have at the moment. You should also be on the lookout for hidden charges like setup or account maintenance fees.

Cost isn’t the only drawback of using a full-service payroll company. If the company doesn’t assign a payroll specialist to your account, your working relationship can feel impersonal. Liability for payroll tax filing errors may also be a problem. Some full-service payroll companies take responsibility on your behalf, but some do not. This means you could be hit with fees for mistakes your payroll provider makes.

How do you choose between cheaper and full-service payroll?

When choosing between cheap and full-service payroll, assess what you need as a company. A full-service payroll company may have everything you need and more, but that can be costly compared to a free or cheap payroll service that’s a bit more limited. The best way to decide is to weigh what you need against what you want but can do without.

Plan on testing out a service if a free trial is available. When using the trial, ask yourself the following questions:

  • Is it easy to navigate?
  • Does it offer tax services?
  • What self-help resources are available on the company’s website?
  • Is its tax service management as complete as you’d like?

Sean Peek contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

Image Credit: Philip Steury / Getty Images
Simone Johnson
Simone Johnson
Staff Writer
Simone Johnson is a and Business News Daily writer who has covered a range of financial topics for small businesses, including on how to obtain critical startup funding and best practices for processing payroll. Simone has researched and analyzed many products designed to help small businesses properly manage their finances, including accounting software and small business loans. In addition to her financial writing for and Business News Daily, Simone has written previously on personal finance topics for HerMoney Media.