Payroll and HR software

What does payroll and HR software do?

It pays people and files the taxes that come with paying them. Payroll software calculates wages and withholds tax. It deposits that tax and files the federal, state and local returns, plus year-end W-2s and 1099s. Behind that sits a calendar most owners never see: federal tax deposits on a monthly or semiweekly schedule, Form 941 every quarter, Form 940 once a year, and state unemployment returns. HR tools add onboarding paperwork, time off, time tracking and benefits enrollment.

Three models sit in this category. Know which one you’re buying. A full-service provider such as Gusto, OnPay or Patriot runs payroll while you stay the only employer. A professional employer organization (PEO) such as Justworks co-employs your staff. That lets them join its pooled health and 401(k) plans. An employer of record such as Deel legally employs workers in other countries on your behalf.

Which payroll service fits you?

The default for a US business with 2 to 50 employees is Gusto. Simple costs $49 a month plus $6 per person. That comes to $79 at five people, with tax filing in all 50 states. Switch when one of these is true:

• If staff work in several states, choose OnPay. Same price as Gusto. Its single $49-plus-$6 plan includes multi-state filing, which Gusto’s Simple plan leaves out.
• If your books already run on QuickBooks Online, use QuickBooks Payroll. It lives inside the ledger, from $50 a month plus $6.50 per employee.
• Tight budget? Patriot’s Full Service plan costs $37 plus $5 per worker, or $62 at five people. Each extra state adds $12 a month.
• If benefits are how you hire, Justworks’ PEO pools health, 401(k) and workers’ comp from $79 per employee a month.
• Hiring abroad? Deel’s employer of record costs $599 per employee a month, month to month.

Service	Price formula	Monthly cost at 5 people	At 20 people
Gusto Simple	$49 + $6/person	$79	$169
OnPay	$49 + $6/worker	$79	$169
Patriot Full Service	$37 + $5/worker	$62	$137
QuickBooks Payroll	$50 + $6.50/employee	$82.50	$180
Justworks Payroll	$50 + $8/employee	$90	$210

When don’t you need payroll software?

When nobody is on payroll yet. A single-member LLC that pays only contractors can skip the full plan: QuickBooks offers contractor payments for $25 a month for up to 20 contractors, and Deel charges $49 per contractor. Don’t use a contractor plan to dodge payroll, though. The IRS decides employee status on behavioral control, financial control and the type of relationship, not on the label in your contract. If you’ve got doubts about a worker, ask an employment lawyer or CPA before the first payment. And don’t bother with a PEO before you have two W-2 employees; Justworks requires at least two.

What do most employers miss?

1. The per-person fee is the real price. Gusto and OnPay both reach $169 a month at 20 people. That’s more than three times the $49 base. When you compare, use your real headcount.
2. Plans hide states and speed. Patriot charges $12 a month for each extra state. Gusto’s next-day deposit starts on Plus, at $80 a month plus $12 per person.
3. The tax liability stays with you. Per the IRS, “the employer is ultimately responsible for the deposit and payment of federal tax liabilities” even when a provider files for you. The IRS page on outsourcing payroll duties recommends your own EFTPS login so you can check that deposits arrive. Don’t skip that step.

How should you read our payroll & HR software reviews?

Each score is a research score from official pricing, product and policy pages, help-center documents, court and regulator records and dated independent reviews. We don’t run payroll accounts ourselves. In practice, look at price and tax accuracy first. Together they carry half the score. Then read support. Most people miss it, and a payroll problem on a Saturday can’t wait for a weekday-only queue. Gusto ranks first overall, yet its phone and chat support runs on weekdays only, while ADP and Paychex answer 24/7.

These pages compare services. They are not tax or legal advice. The Gusto review covers the top pick in depth, and the QuickBooks Online review explains the bookkeeping side that payroll feeds into, from wage expense to the payroll tax liabilities on your balance sheet. Both sit in our business and finance section, next to accounting and invoicing.