The 6 Best Payroll Software for Small Business in 2021

Today’s savvy business owner finds their time is better spent on managing core activities. And while additional tasks, such as those related to human resources (HR) and payroll, are important, every minute they take up leaves less time for your core business. It’s best to delegate those tasks to a vendor that specializes in providing them.

To help you select a payroll service for your business, we’ve reviewed the best payroll software for small business in 2021. We hope our review will make it easier for you to decide which payroll service is best for you.

Top Payroll Service 2021

Recommended: Having an efficient and easy to use payroll service can save your business lots of time and money each year.

ADP Payroll Service


Our Review of the Best Payroll Software

Our Approach:

Our review of the best payroll services for 2021 looked at a number of factors that small businesses need to operate smoothly. These include:

  • Ease of use
  • Service plans that scale with their business
  • Accounting system integration
  • Responsive customer support
  • Competitive payroll software pricing
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Recommended: We recommend ADP's payroll service because of its combination of outstanding features, including its ease of use, advanced tools, and affordable pricing.

6 Best Payroll Software for Small Businesses

1. ADP: Best Small Business Payroll Software

ADP's payroll service is the largest full-service payroll provider in the United States. The IRS actually recommends small businesses to do business with ADP because they have a 99.99% accuracy rate for small businesses and they provide the most number of W2s in the country. The advantage of this is that you’re going to them, a stable provider, and not taking a chance going with a smaller provider that is not as well recognized, which could present problems later on down the road for you.  They handle every aspect of your business. And having one umbrella with ADP helps you manage your business better.

Features

Services ADP offers:

  • Payroll
  • Human resources
  • Worker’s compensation
  • Retirement plans
  • Time and attendance (especially important to have prior hours of employees hours worked)
  • Health benefits

Important note: All of the above services integrate into the payroll service, making them effortless to manage.

Payroll features:

  • ADP uses a program called “Run” to manage payroll
  • Cloud-based software (access it from anywhere you have Internet)
  • Time tracking records automatically records employee hours
  • Outlines gross wages, taxes, deductions, net pay the employee will receive and also breaks down what the employee is responsible for paying
  • Before you approve payroll ADP will show you the exact dollar amount of what you will need in your business bank account so you’ll always know if you have the money to cover payroll or not. (Please note: It won’t allow you to run payroll if the funds are not available.)
  • ADP deducts the funds the day you run payroll and issues payment the very next day to employees, so employees get paid for their hours the day up to payday, making it easy for you to calculate and keep track of what’s owed to your employees.
  • ADP will send paper checks and they do direct deposit (it is a very “next day” payment)
  • Easy to add and subtract employees from your payroll (per employee cost is only $1.40 - $1.50 each)
  • Dedicated onboarding representative to help you set up your payroll with ADP
  • Dedicated account specialist to help you learn the system, add employees, etc.
  • What you need to get started with ADP

How ADP’s Run software works:

  1. Click on "Run Payroll" on your Run dashboard
  2. Click on Start Payroll
  3. Review your employee's time cards
  4. Click next
  5. Make changes by editing any of the pre-populated fields
  6. Click next
  7. Review changes
  8. Click approve
  9. And, you're done.

Price

ADP assesses each business' needs individually, on a case-by-case basis. To get a fair quote, and find out about their promotional offers you'll need to contact ADP directly.

ADP Pros and Cons

Pros:

  • ADP is completely transparent
  • User friendly, easy for you to run payroll
  • ADP partners with ZipRecruiter to receive 2 free job slots to help you with hiring future candidates, streamlining your hiring ($450+ savings)

Cons:

  •  If you haven't registered your business as an LLC or c-corp, you'll probably want to do this ahead of time to take advantage of all the benefits ADP can offer you.
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Recommended: ADP's payroll service offers a combination of outstanding features, including its ease of use, advanced tools, and affordable pricing.

2. Gusto: Most User-Friendly Payroll Software

Gusto's payroll service extends far beyond payroll. Actually, it's a lot to put into words all that Gusto offers its clients. Gusto's platform is clean, modern, and user-friendly. It has a contractor-only version, and its mobile app has both an admin and employee version.

Features

Here is a quick summary of Gusto's payroll solution and is all that Gusto can do independently:

  • Payroll Services (automatic deductions and filings, pay employees through direct deposit, handles 1099s and W-2s, withholds garnishments)
  • Employee Benefits (401k(s), health plans, automatic savings plans)
  • Hiring and Onboarding (offer letters, checklists, software help)
  • Time Management (track time, PTO policies, and time off requests)
  • Access to HR Experts (certified HR professionals available to assist and answer questions)
  • Gusto Wallet (Free app for employees that helps them save money and manage spending)
  • Mobile app for remote admin control
  • Calculation of all federal, state, local, and payroll taxes

Gusto's platform also integrates with all the top third-party apps. Of particular interest is its accounting integrations which include:

  • Xero
  • Freshbooks
  • QuickBooks Online
  • QuickBooks Desktop
  • Aplos
  • Zip Books
  • Auto Books
  • Synder
  • Sunrise by Lendio

Other integrations include accounting tools like Jirav, learning and development tools like Easy Llama (sexual harassment training), and legal compliance tools.

Price

Gusto currently has four pricing plans (three focus on hiring employees and one for self-employed independent contractors):

Core: $39 per month base price and $6 per month per person

  • Full-service payroll across all 50 states
  • Employee self-service and profiles
  • Workers’ comp administration
  • Two-day direct deposit
  • Paid-time-off policies
  • Best-in-class support
  • Employee onboarding tools
  • Accounting and time tracking integrations
  • Payroll on Autopilot®
  • Health insurance administration
  • Employee access to Gusto Wallet
  • Employee offers and document management

Complete: $39 per month base price $12 per month per person

  • Full-service payroll across all 50 states
  • Employee self-service and profiles
  • Workers’ comp administration
  • Next-day direct deposit
  • PTO policies and time-off requests
  • Best-in-class support
  • Customizable employee onboarding tools
  • Accounting and time tracking integrations
  • Payroll on Autopilot®
  • Health insurance administration
  • Employee access to Gusto Wallet
  • Employee offers and document management
  • Permissions
  • Employee directory and surveys
  • Time tracking
  • Project tracking and workforce costing

Concierge: $149 per month and $12 per month per person

  • Full-service payroll across all 50 states
  • Employee self-service and profiles
  • Workers’ comp administration
  • Next-day direct deposit
  • PTO policies and time-off requests
  • Dedicated best-in-class support
  • Customizable employee onboarding tools
  • Accounting and time tracking integrations
  • Payroll on Autopilot®
  • Health insurance administration
  • Employee access to Gusto Wallet
  • Employee offers and document management
  • Permissions
  • Employee directory and surveys
  • Time tracking
  • Project tracking and workforce costing
  • Certified HR pros
  • HR resource center

Contractor: $6 per month per person

  • Unlimited contractor payments
  • Contractor self-service
  • Form 1099 creation and filings

Gusto Pros and Cons

Pros:

  • Ease of use
  • Time and attendance tracking
  • A variety of employee records
  • Employee and contractor versions
  • Reports that can be customized
  • Mobile app with both admin and employee versions

Cons:

  • Gusto's platform can run sluggish at times
  • Fewer dashboard features
  • Some reports require downloading to see
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Gusto’s payroll service is easy to use, has every feature, and is scalable so that as your business grows you won't need to look elsewhere for another payroll solution.

3. Zenefits: Best Low-Cost Payroll Software

Though Zenefits is the best low-cost payroll software on our list, they do offer solid solutions to fit most small to midsize businesses (SMBs). Apart from basic payroll functions, it incorporates features for benefits administration (BA) and human resources (HR) management.

And besides being the lowest-priced payroll software, what stands out about Zenefits is the logical thinking that went into their HR, payroll, and benefits solutions. For example, staying compliant, hiring and retaining top talent, improving productivity and employee experience. These are all solutions built around this thinking and a contributing factor for why it takes second on our list.

Features

Here is a quick summary of what Zenefits Payroll offers:

  • New hire onboarding sync
  • Time tracked and hours worked sync
  • Automatic salary changes
  • Benefit deductions sync
  • Employee mobile app
  • Admin of federal, state, local, and payroll taxes
  • W-2 admin capability
  • 1099 option
  • Time tracking

Price

Essentials: $8 per month per employee

  • Core HR (hiring and onboarding, employee management, time off tracking, business intelligence, and documentation management)
  • Time and Scheduling
  • Integrations
  • Mobile App

Growth: $14 per month per employee

  • Core HR
  • Time and Scheduling
  • Integrations
  • Mobile App
  • Compensation Management
  • Performance Management

Zen: $21 per month per employee

  • Core HR
  • Time and Scheduling
  • Integrations
  • Mobile App
  • Compensation Management
  • Performance Management
  • Well-being
  • Employee Engagement Surveys
  • People Hub

Zenefits Pros and Cons

Pros:

  • Built-in benefits and HR administration
  • Easy system to navigate
  • Wide range of employee records available
  • Advanced business intelligence (BI) reporting
  • Exceptional employee mobile app

Cons:

  • Advanced features may confuse the simplest businesses
  • Mobile app doesn't show all admin tasks
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Open an account with Zenefits to get low-cost payroll for your small business.

4. OnPay: Best Payroll Software for Larger Businesses

OnPay is a small business payroll software having many features. It is ideal for businesses that want more than basic payroll processing. Run unlimited payrolls with OnPay, and create various employee reports.

OnPay calculates all payroll and income taxes and remits the deducted amounts to the relevant parties owed, including the Internal Revenue Service (IRS). In the latest version, an HR dashboard has been added.

Features

Here is a quick summary of what OnPay offers:

  • Unlimited monthly payroll runs
  • Mobile access through iOS and Android devices
  • Multiple pay rates and pay schedules
  • Automatic W-2 and 1099 filings
  • Automatic withholding, payments, and filing of state and federal payroll taxes
  • Direct deposit, debit card, and physical check payments
  • HR add-ons
  • Software integrations, such as QuickBooks and Xero

Price

OnPay pricing starts at $36 per month plus an additional $4 per employee per month. For example, the cost for one employee is $40 per month, two employees cost $44, and so on. Here are some of the highlights:

  • One-month free trial
  • One employee: $40
  • 100 employees: $436
  • 1000 employees: $4,036

OnPay Pros and Cons

Pros:

  • Fast responsive system
  • Unlimited payroll reports
  • Customized reports
  • Clean mobile user interface
  • Employee and admin versions
  • New HR tools and data
  • Great employee versions

Cons:

  • Faint text on the website when accessed through Android devices
  • Mobile versions missing some functionality present on desktops
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Open an account with Onpay to get payroll for your large business. 

5. Intuit QuickBooks: Best Payroll Software for Very Small Businesses

QuickBooks Payroll is easy-to-understand, easy-to-use payroll software. It integrates well with the Intuit QuickBooks accounting system, so payroll-related book entries are posted automatically. You can also add HR features through third-party providers.

Features

Here is a quick summary of what Intuit QuickBooks payroll offers for all plans:

  • Mobile app
  • Calculation of all applicable taxes
  • Preparation and filing of W-2s
  • Time tracking

Price

QuickBooks payroll offers the first three months at 50% off or a 30-day free trial.

Simple Start: $12.50 to $25 per month

  • Track income and expenses
  • Invoice and accept payments
  • Maximize tax deductions
  • Run general reports
  • Capture and organize receipts
  • Track miles
  • Manage cash flow
  • Track sales and sales tax
  • Send estimates
  • Manage 1099 contractors

Essentials: $20 to $40 per month

  • Includes three users
  • Track income and expenses
  • Invoice and accept payments
  • Maximize tax deductions
  • Run enhanced reports
  • Capture and organize receipts
  • Track miles
  • Manage cash flow
  • Track sales and sales tax
  • Send estimates
  • Manage 1099 contractors
  • Manage and pay bills
  • Track time

Plus: $35 to $70 per month

  • Includes five users
  • Track income and expenses
  • Invoice and accept payments
  • Maximize tax deductions
  • Run comprehensive reports
  • Capture and organize receipts
  • Track miles
  • Manage cash flow
  • Track sales and sales tax
  • Send estimates
  • Manage 1099 contractors
  • Manage and pay bills
  • Track time
  • Track inventory
  • Track project profitability

Advanced: $75 to $150 per month

  • Includes 25 users
  • Track income and expenses
  • Invoice and accept payments
  • Maximize tax deductions
  • Run most powerful reports
  • Capture and organize receipts
  • Track miles
  • Manage cash flow
  • Track sales and sales tax
  • Send estimates
  • Manage 1099 contractors
  • Manage and pay bills
  • Track time
  • Track inventory
  • Track project profitability
  • Business analytics and insights
  • Batch invoices and expenses
  • Customize access by role
  • Exclusive premium apps (NEW)
  • Dedicated account team
  • On-demand online training
  • Automate workflows
  • Restore company data

Quickbooks Pros and Cons

Pros:

  • Simple user interface
  • Well-integrated with QuickBooks Online
  • TSheets that allow time-tracking
  • HR support through third-party providers

Cons:

  • Online help could be more extensive
  • Have to pay extra to handle 1099s
  • Poor experience with mobile apps
  • Costly

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Open an account with Intuit QuickBooks to get quickgooks payroll for your business.

6. Square: Best Payroll Software for Payment Processing

Square Payroll is a bare-bones system that even a payroll novice will find easy to use. It can handle all the essential tasks your payroll administrator will require, such as adding employees, taxes, reports, and payroll runs. It can also be easily integrated with other Square products.

Examples of business types that might be best suited to Square Payroll software include restaurants, bars, grocery stores, and other retail establishments with higher employee turnover rates or that mostly employ part-time help.

Features

Here is a quick summary of what Square Payroll offers:

  • Mobile admin app
  • Computation of all payroll and income taxes
  • W-2 capability
  • 1099 capability
  • Time tracking

Price

Pay Employees & Contractors: $29 per month + $5 per month per person paid

  • Unlimited pay runs per month
  • Flat pricing and cancellation anytime
  • No additional fees
  • Full-service payroll
  • Payroll for employees and contractors
  • Automatic payroll tax calculations
  • All tax filings and payments
  • Live support for account setup
  • Timecards and employee app
  • Track and import tips and commissions
  • Mailed W-2s and 1099-MISC forms
  • Pay by check, direct deposit, or Cash App
  • US-based customer support
  • No commitment; can cancel anytime
  • Unlimited pay runs per month
  • Free seasonal inactivity

Pay Contractors Only: $5 per month per person paid

  • Unlimited pay runs per month
  • Flat pricing and cancellation anytime
  • Mailed 1099-MISC forms
  • US-based customer support
  • Pay by check, direct deposit, or Cash App
  • Free seasonal inactivity
  • All features included, with no hidden fees
  • No commitment; can cancel anytime

Square Pros and Cons

Pros:

  • Unlimited payroll runs
  • Contractor-only version
  • Integrates with other Square apps: Appointments, Payments, Point of Sale
  • Offers services, such as health insurance and retirement plans, from third-party benefits providers
  • Low price

Cons:

  • Just two earnings types: hourly and salaried
  • Few reports online
  • Limited help online
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Open an account with Square to get payment processing payroll for your business.

What Is a Payroll Service?

Many companies find out at some point in their business life that they will need to hire a payroll services company. This is because every company has its own unique payroll needs, which must be met on a timely basis. In essence, a payroll outsourcing service is a single team or firm that manages all of the payroll processes for a company. These services will typically include the calculation of employees' payroll to include overtime pay, as well as the processing of payslips and checks for employees. Additionally, these services provide accounting and bookkeeping services.

Even though a payroll service can save time and money, some business owners choose to take care of payroll on their own. For more information on taking care of payroll, check out our How Does Payroll Work for a Small Business guide.

Benefits to Hiring a Payroll Provider

There are many benefits to hiring a payroll provider. These benefits vary based on the type of service a company chooses. In general, a payment provider is an expert in the field of employee benefits, including retirement plans, medical benefits, 401k accounts, employer-provided insurance plans, life insurance policies, etc. Therefore, these types of services can run payroll smoothly and accurately, as well as provide employees with information about their pay periods and what taxes they may owe. Payroll software providers also have payment systems in place to make sure that employees only receive what they are owed.

However, one of the most important functions for any payroll service company is the preparation of tax forms. Because employees often have complicated tax forms, using an expert can really help to make the process easier. In essence, an outsourcing company will take care of all the tedious work, such as setting up the tax forms, getting the tax forms certified, and then helping manage the payments associated with these forms.

One aspect of these services that often confuses small businesses is the use of payroll software. If you have never used payroll software before, it can seem quite overwhelming. Fortunately, this is not the case at all. When you decide to outsource your payroll processing, the payroll company will provide you with a comprehensive payroll software package that will help you manage your employees and calculate the taxes you need to pay on your behalf. In addition, some payroll software even has the option of giving you options on how you would like the software to operate, including creating, managing, and printing reports. You can also easily track your employees' hours using this software.

One reason so many small businesses think about outsourcing their payroll is because of the time involved in doing it themselves. It is important to note that the time saved using an outside service provider can be quite substantial. For example, Zenefits claims that it saves business owners up to 90% of their time when outsourced to them. This is especially true if your business has many employees.

Because of the time involved in having to manually complete payroll taxes for each employee, running payroll can become a very time-consuming process. Outsourcing this process can allow you focus on income-producing activities like making sales and bringing new products to market.

Payroll services offer payroll processing to businesses and other types of organizations. Services provided include calculating employee pay and deducting withholding tax. Good payroll software will also take into account paid time off, overtime, benefits, and deductions under the Federal Insurance Contributions Act (FICA), such as Social Security and Medicare taxes. Rather than having to deal with all these calculations themselves, it can be simpler for an organization to outsource these responsibilities by using a payroll service instead.

Final Thoughts

Our review of the best payroll software for small businesses has highlighted some of the key features that will help you manage your payroll responsibilities efficiently.

All the systems we’ve reviewed handle the basic payroll functions of running payrolls, calculating income, and payroll taxes.

Some of these services go further by submitting W-2s and 1099s, as well as adding ways for you (and employees) to track time. Our review also included payroll services that add HR capability or can integrate with an accounting system.

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Recommended: We believe ADP's payroll service is the best because of its combination of outstanding features and affordable pricing which makes it our top choice for small businesses. 

Frequently Asked Questions

What is small business payroll software?

What is small business payroll software? Small business payroll software is a program that manages payroll processing for small businesses. The software can help eliminate errors in payroll processing and streamline employee benefits administration. The software also reduces the risks of human error and minimizes time spent doing paper-based processing.

To start with, you need to decide whether to go for an on-site or online payroll system. You will have different options to select from depending upon your small business's structure, its needs, and its budget. If you are looking for a payroll system that is simple to use and easily available to your employees, you should go for an on-site payroll solution. However, if you are looking for something more robust and flexible, then you should go for an online payroll system. Here are a few factors that you need to consider when you are choosing small business payroll software:

  • There are many benefits that you can enjoy when you choose a simple online payroll processing service.
  • Small business owners can save time, money, and energy by automating payroll processing, eliminating paper, avoiding payroll penalties, and claiming for appropriate benefits administration related to employees.
  • There is no better option than small business payroll software for helping you manage your payroll in a hassle-free, cost-effective manner. Also note, that as your business grows, you should expect to see payroll costs increase.

What is the best payroll software for small businesses?

For any business that deals with payroll, finding out what is the best payroll software for small businesses can be a tricky task. Small businesses generally have limited resources to work with when it comes to money, time, and payroll. They are also much more prone to going through payroll several times in a month and can use software that has an easy interface for running their payroll.

Remember that a reputable business, like those mentioned in this review, will give you accurate and up-to-date information without problems. They will also help you manage and track all payroll data, including deductions, bonuses, taxes, and more which makes your life much easier.

The first step you should take when looking at payroll software for small businesses is to research the different options available. You should look at several programs and see if they have the features that you want and need. There are a number of programs that offer basic accounting capabilities like sending out payments and tracking time spent working on various projects, but the most popular programs have advanced features for managing payroll, accounting data, and setting up deductions and other tax forms. You should also look for software that has a clean user interface because this will make it easier for you to input required information when needed and have it automatically saved to return to later as needed.

Your final decision should come down to your own business needs. If you know your employees well enough, you may not need as many features as someone who doesn't. You need to take the time to look at each program and see how easy it is to use and navigate. You also should choose a software program that will fit into your budget and still meet your goals. There are a number of options out there so take the time to compare all the features and benefits before deciding on which is right for your business.

What basic functions can I expect from a payroll service?

A payroll service should, at the very least, be able to process paychecks, handle tax deductions, maintain employee records according to law, and allow employees access to check their earnings, enter time, etc.

What are payroll taxes?

Payroll taxes, known officially as employment taxes, are the taxes, required by state and federal law, that an employer must deduct or “withhold” from an employee’s earnings. Payroll taxes are made up of income tax, social security taxes, and Medicare taxes.

As an employer, do I have any payroll taxes to pay?

Yes. As an employer, you are required to pay an amount that matches the social security and Medicare taxes paid by your employees. In addition, you must pay state and federal unemployment taxes.

What are FICA taxes?

FICA taxes are the taxes levied by the Federal Insurance Contributions Act (FICA) to fund the Social Security and Medicare programs. Together with local, state, and federal income taxes, FICA taxes make up the deductions required by law from earnings.

What is a W-2?

A Wage and Tax Statement, IRS Form W-2, is a form that employers must file annually for every employee. The W-2 reports income and deductions, including various taxes.

What is a 1099?

IRS Form 1099 is used for reporting “miscellaneous income” and income paid to contractors. From tax year 2020, payments to contractors must be reported on Form 1099-NEC (nonemployee compensation).

What is the current social security tax rate?

The current Social Security tax rate is 6.2%. As an employer, you must withhold 6.2% of an employee’s wages for this tax and pay a matching amount until the employee’s income reaches the wage base limit for the Social Security tax. For income year 2020, the wage base limit is $137,700. This means you will be required to pay no more than $8,537.40 for that employee in 2020.

What is the current Medicare tax rate?

The current Medicare tax rate is 1.45%. There is no wage base limit for the Medicare tax.

What is full-service payroll?

Full-service payroll is a method of collecting payments, maintaining accurate records, and administering payroll on behalf of a business or company. There are many different types of online payroll systems available to employers, but one type that is growing in popularity is remote employee payroll processing. This process allows companies to replace paper payroll with an electronic system via the Internet. With this type of payroll, an employee's hourly earnings are added to their corresponding computer file. This file is then sent to the payment recipient, who will then print their paycheck in person at their place of employment, or they can choose to receive it electronically, which is usually more convenient for both employers and their employees.

One of the key advantages of this method is the ability to make adjustments to payroll without having to inform everyone involved. For small business owners, making changes to payroll can be difficult, as most people don't know how a specific change made to one employee affects another employee. For small business owners, hiring a payroll representative who can help make these adjustments easily is crucial. If an employee has requested a vacation, for example, they might not realize that they won't be able to take their time off until the following payday, which could result in them missing out on their planned vacation. This is why it is so important that employees understand what will happen to their paycheck and have a complete understanding of how the entire process works.

Other great benefits of this new type of payroll include the addition of available customer support and the ability to keep current on any changes made to payroll laws or regulations. Online customer support is provided through a dedicated toll-free number, and representatives can answer any questions customers might have about the new payroll process, including any advice on reducing their tax bill. They can also help small businesses keep up with any regulatory compliance requirements and give advice on obtaining new employee insurance policies. For a small business owner, getting full-service payroll is a smart way to streamline the process and cut down on the amount of time spent processing payroll.

What is the best free small business payroll?

Payroll software review sites, like this one, will usually list the best programs as being those that have all of the features you need at a reasonable price. So what is the best free small business payroll? There are literally hundreds of different types and brands available on the internet, and it can be difficult to know which one to purchase. Here is some helpful advice.

Make sure the free payroll software is compatible with your current payroll system. Most payroll software packages available for purchase are compatible with most systems, but there are a few exceptions. Make sure if your company does not currently use Windows payroll, then you will probably want a program that is compatible with the operating system you're using. Many software companies offer a free trial that will allow you to try their software without having to commit to purchasing it. It is always a good idea to try out various payroll packages before making a final decision.

Payroll software review sites will usually contain opinions from actual customers of the programs, not just software companies. Be sure to listen to what they have to say about what is the best free small business payroll. Many customers will post their experiences, whether they are good or bad, and you will gain a better understanding of exactly what you should look for when you begin your search for software. By taking the time to do a little research on payroll software, you will soon be able to make an informed decision.

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