The Rise of Niche Payroll Companies Catering to Small Business Needs

Not all small business owners are well-versed in payroll, whether setting up direct deposit, payroll taxes, or trying to run payroll for employees.

According to the National Small Business Association (NSBA), most small business owners spend at least $100 monthly on payroll services, whether internally or using a firm. If you’re a small business owner or run payroll, you may not have the capacity to manage payroll services, tax filings, or payroll processing on top of your other responsibilities.

What are small payroll companies used for?

According to NSBA, more than 20% of small businesses use a third-party platform or payroll software to run payroll for employees and manage taxes. Small payroll companies cater to small businesses and self-employed folks, giving them accounting and bookkeeping services that tend to cost less than hiring a CPA, accountant, or external firm.

While larger companies might prefer having an in-house payroll processing team or using accounting firms, small payroll companies are a good option for small businesses and companies with a few employees.

How to choose small payroll companies for your business

Choosing a payroll company depends on your payroll taxes and small business payroll needs. Some business owners may want to automate every step of payroll processing, while others focus on a strong mobile app to manage on the go. It comes down to your most significant needs and goals.

1. Basic payroll processing

Look for small payroll companies that manage both salaried and hourly employees. This includes issuing paychecks or direct deposit and pay stubs, managing workers’ compensation, and tracking paid time off and sick leave. Wage garnishment and contractor payments should be included in payroll processing options.

2. Manage payroll taxes

The top payroll companies for small business go beyond covering your basic payroll needs and handle tax filing on your behalf. The NSBA says most small business owners spend more than 20 hours a year managing federal taxes, with almost half spending 40 hours per year.

Find a small payroll company that complies with federal, state, and local tax regulations. Depending on your setup, your payroll service provider should implement updates as often as tax laws change and help you file taxes every quarter or year. See if managing health benefits is also included.

3. Easy integrations

Find the best payroll service for small businesses by looking for user-friendly companies that easily integrate into your existing workflow. Integrations help streamline your setup and make payroll processing easier. If you have a payroll company that makes bookkeeping and accounting difficult, it might be time to move to the best payroll services for small businesses.

4. Scales as you grow

The basic functionality of small payroll companies should include scaling as your company grows. Think about how often you run payroll and your employees. What if you want to branch into other districts and states? What if you want unlimited payroll runs? Your payroll service should be able to accommodate these options if you’re looking to scale up.

Also, think about full-service human resources customer support with managing health insurance and retirement plans. Even if startups don’t use those services now, there’s a chance they would be beneficial down the road.

5. Do-it-yourself or full-service options

If you’re spending a lot of time in payment processing and taxes, you might want the peace of mind that comes with a full-service payroll company. The top payroll companies for small business can take over all your bookkeeping needs, giving you the chance to get back to working on your company.

If you process payroll for a company and don’t mind the DIY approach, find small payroll companies that allow you to manage these tasks independently but make them easier to handle.

6. Affordability

Prices for payroll services vary by company. Because there’s no set pricing structure that all companies follow, you’ll need to compare different options based on how much you’ll pay, whether that’s per month, annually, or by payroll service.

7. Data and software tracking

What type of data do you want to collect? For instance, do you need time-tracking apps, 401(k) deductions, or specialized circumstances, like accounting for tipped employees?

If you’re a business that needs certain data collection, you’ll need to find a payroll company that caters to your company. Not all software options offer specialized data collection, so when you’re reviewing small payroll companies, make sure they have these available.

Some companies offer free payroll options with add-on payroll features, like HR tools, POS integrations, and a dedicated support team. In some cases, less-expensive options don’t offer the same robust tools as options that cost more.

Comparing the best payroll services for small business

As you’re doing your research on some affordable payroll services for small business options, it’s important to compare your choices based on your needs. Try to look for different options based on:

• Trial runs: See if there are options that offer free versions so you can get a feel for what services the company offers and how you like the user experience. If possible, see if they have trial services so you can try paid options for a limited time to see if it’s worth it.
• Cloud vs. software: How will you be handling your payroll — through the cloud or will you need to install software? And regardless of the option, do you have all the tools ready to handle it?
• Robo-help vs. personal assistance: If you need specific help, are you OK with your payroll company offering limited human assistance? In some cases, there might not be any human customer service at all. When comparing niche payroll options, see what the customer service options are before selecting your choice.

FAQs about small payroll companies

What's an ideal payroll for a small business?

There are a lot of different affordable payroll services for small business owners and workers. The best online payroll services for small businesses include ADP, Gusto, Intuit Quickbooks, Wave, and others. Popular ones like Gusto, Intuit Quickbooks, and ADP all offer similar services, so you’ll want to compare different features to determine which works best for you.

How much does payroll cost for a small business?

How much you pay for payroll depends on what you’re paying for. Having an in-house staffer or hiring an outside firm may cost more than using payroll software.

Should a small business owner put themselves on payroll?

Owners can put themselves on payroll depending on the setup of their business structure. S-corps require owners to take a salary while sole proprietorships have an owner’s draw, or when owners use business funds for personal use.

What percentage should payroll be for a small business?

Generally, payroll should account for 15% to 30% of a company’s gross revenue. How much you pay might depend on how you outsource your payroll services and your business structure.

Can I do my own payroll for free?

Some small payroll companies have free options, depending on your needs and the number of employees you have. For instance, Payroll4Free lets businesses with 10 employees or less run payroll and use other basic services for free.

Frequent searches leading to this page