Most small business owners shop for payroll software by comparing feature lists. That is backwards. At ten employees, nearly every tool runs the same pay run, and the real differences are billing structure, state coverage, and what happens when a filing goes wrong.
This guide covers what payroll software small business teams actually need, how to compare pricing honestly, and where two real tools fit badly. If you only care about free plans, our specialist piece on free payroll goes deeper.
What Payroll Software for a Small Business Actually Does
Picture a Friday at 4 p.m. You have eight hourly staff, two salaried managers, and a pay deadline tonight. Without software, you calculate gross pay, withhold taxes, and file forms by hand.
Payroll software handles that chain. It calculates gross-to-net pay, withholds federal, state and local taxes, and sends payments by direct deposit. It also files quarterly forms such as 941 and annual forms such as 940 in the U.S., and produces year-end W-2s.
Some tools stop there. Others add PTO tracking, benefits, and onboarding. The core job is the same.
Four Questions to Ask Before You Compare Tools
Run these before opening a single pricing page. They narrow the field fast.
- How many people will you pay in twelve months, including contractors?
- Which states do your employees work in today, and which might they work in next year?
- Who files your tax forms, the software or you?
- Do you need HR tools now, or only a pay run?
Write the answers down. A founder with six employees in one state needs a different tool than one with twelve remote hires across five states.
Tip for your notes: “We pay [number] people in [states]. We need filing included: yes/no. HR tools needed now: yes/no.”
How Payroll Software Pricing for a Small Business Adds Up
Most vendors charge a monthly base plus a fee per person. The base looks small. The per-person fee decides your bill as you grow.
Take a 15-person company. On Gusto’s Simple plan, that works out to $49 plus $6 times 15, or $139 a month. Move up to the Plus plan at $80 plus $12 per person, however, and the same team pays $260. In other words, the difference comes from the plan tier rather than the headcount.
Watch for charges outside the headline. Multi-state setup, benefits premiums and add-ons can bill separately. Ask for a written quote that lists every line item before you sign.
Gusto: Tiered Plans for Growing Teams
Gusto sells in tiers. Simple starts at $49 a month plus $6 per employee and is aimed at teams paying in a single state. Plus is $80 plus $12 per employee and adds PTO tracking and basic HR tools. Premium is $180 plus $22 per employee and adds dedicated support and analytics. A Contractor Only plan runs $35 a month plus $6 per contractor, for U.S.-based contractors.
Gusto fits small U.S. teams that expect to add HR features later. However, the fit is poor if you have staff in several states, because Simple covers one and multi-state setup fees are charged separately. Businesses paying contractors abroad are also a weak match.
OnPay: One Price, Everything Included
OnPay takes the opposite approach. There is one plan at $49 a month base plus $6 per person, with all features included. That covers unlimited monthly pay runs, automated federal, state and local filings, garnishment deductions, and a full suite of HR tools.
Multi-state payroll costs nothing extra, setup and data migration are free, and billing is month to month. It suits owners who dislike tier upgrades and want a predictable bill.
It fits badly if you want a plan that starts cheaper and lets you pay only for what you use. Because every feature is bundled, a business that needs only a bare pay run pays for the full set.
Gusto vs OnPay at a Glance
| Gusto | OnPay | |
|---|---|---|
| Entry price | $49/mo + $6/mo per employee (Simple) | $49/mo base + $6/mo per person |
| Pricing model | Three tiers plus contractor plan | One plan, all features |
| Multi-state | Simple is single-state; setup fees extra | Included at no extra cost |
| HR tools | Basic on Plus; more on Premium | Included |
| Fits badly | Multi-state teams on a budget | Teams wanting a minimal pay-run-only plan |
Both tools target U.S. employers. If you run payroll outside the U.S., neither verified plan here covers you.
Payroll Software Compliance for a Small Business: Where It Stops and You Start
Software files forms, but you still own the accuracy of what goes in. Worker classification, overtime rules, final-pay timing and local taxes vary by state and country. Treat the software’s defaults as a starting point, and confirm your setup with an employment lawyer or a payroll accountant.
Here is a note you can paste into your onboarding file:
“Payroll setup confirmed on [date] with [accountant name]. Classifications reviewed for [state]. Next review: [date].”
That one line gives you a paper trail if an auditor ever asks.
Choosing Payroll Software for Your Small Business This Week
Pick two tools, run the 15-person math above with your own headcount, and ask each vendor for a written quote. If HR needs are growing alongside payroll, see how HR software for small business handles the work payroll tools skip.
The cheapest sticker price rarely wins. The tool that covers your states, files your forms, and bills in a way you can predict usually does.
Cost is rarely the thing that goes wrong. Setup is. Spend one afternoon entering employee data carefully, run a test pay period, and compare the results against your last manual run before going live.
Pricing verified 2026-10-24. Check the vendor site for the latest.
Frequently asked questions
How much does payroll software cost for a small business?
It depends on headcount and plan. The two verified tools here start at $49 a month plus $6 per person. A 10-person team pays about $109 monthly at that rate, before any add-ons.
Can payroll software handle contractors as well as employees?
Some can. Gusto offers a Contractor Only plan at $35 a month plus $6 per contractor, limited to U.S.-based contractors. Confirm any tool’s contractor coverage before paying overseas workers.
Do I still need an accountant if I use payroll software?
Usually yes, at least for setup and year-end review. Software calculates and files, but classification and local rules differ by state and country. Confirm your setup with counsel or an accountant.
Is multi-state payroll more expensive?
Often. On Gusto, Simple covers a single state and multi-state setup fees are charged separately. OnPay includes multi-state payroll at no extra cost.
When should I switch payroll providers?
Switch when your headcount, states or HR needs outgrow the plan. Start the change right after a quarter closes so tax records stay clean.
