Question 1

How much does payroll software cost per employee?

Accepted Answer

Most payroll software charges a base monthly fee plus a per-employee fee. Base fees range from $20 to $150 per month. Per-employee fees typically run between $4 and $12 per month. For a business with 10 employees using a mid-range provider at $40 base plus $6 per employee, the total would be $100 per month or $1,200 per year.

Question 2

Can I do payroll myself without software?

Accepted Answer

Technically yes, but it is risky and time-consuming. You would need to manually calculate gross pay, withhold the correct federal and state taxes, file Form 941 quarterly, send W-2s by January 31, and make tax deposits on the IRS schedule. Missing a filing or deposit deadline triggers penalties from the IRS. For most small businesses, payroll software costs less per month than the accountant time it would take to do it manually.

Question 3

What happens if payroll taxes are filed late?

Accepted Answer

The IRS charges a Failure to Deposit penalty of 2 to 15 percent of the unpaid tax, depending on how late the deposit is. A 1 to 5 day delay costs 2 percent, 6 to 15 days costs 5 percent, and over 15 days costs 10 percent. If you fail to file entirely, an additional 5 percent per month penalty applies, capped at 25 percent.

Question 4

How long does it take to set up payroll software?

Accepted Answer

For a new business with no prior payroll history, most providers can be set up in 1 to 3 hours. You will need your EIN, state tax ID numbers, employee bank details for direct deposit, and pay rates. If you are switching mid-year, you will also need year-to-date earnings and tax withholding data for each employee, which adds 2 to 4 hours.

Question 5

Do payroll companies handle 1099 contractors?

Accepted Answer

Not all of them do. Of the 8 providers compared, 6 support contractor payments. Contractor Payroll is the specialist option for businesses with a large 1099 workforce, supporting international contractor payments in 80+ countries and automated W-9 collection. Budget Payroll and Startup Payroll do not support contractor payments.

Question 6

What is the difference between payroll software and a payroll service?

Accepted Answer

Payroll software is a tool you use to run payroll yourself - you enter hours, approve runs, and the software handles tax calculations and filings automatically. A payroll service is a managed offering where a human team runs payroll on your behalf. Payroll services are more hands-off but cost significantly more, often $200 to $600 per month for a small business.

Provider	Pricing	Tax Filing	Direct Deposit	Benefits	Time Tracking	Mobile	Support
Cloud Payroll ProTop Pick Most PopularGrowing small businesses that need a full-featured solution	$40/mo + $6/employee	Y	Y	Y	Y	Y	Mon-Fri 8am-8pm
Simple Payroll Best for BeginnersFirst-time payroll users who want a straightforward setup	$35/mo + $5/employee	Y	Y	N	N	Y	Mon-Fri 9am-6pm
Full Service HR+PayrollTop Pick Best All-in-OneBusinesses that want payroll and HR managed in one platform	$85/mo + $12/employee	Y	Y	Y	Y	Y	24/7 phone and chat
Budget Payroll Lowest PriceCost-conscious owners with 1 to 5 employees and simple needs	$20/mo + $4/employee	Y	Y	N	N	N	Email only, 1-2 business days
Enterprise Payroll Best for ScalingFast-growing businesses planning to hire 20 or more employees	$150/mo + $10/employee	Y	Y	Y	Y	Y	24/7 dedicated account manager
Startup Payroll Free for Micro TeamsSolo founders or co-founders running lean before first hire	Free (1-2 emp) then $25 + $5/emp	Y	Y	N	N	Y	Mon-Fri 9am-5pm
All-in-One HR Best Benefits AdminBusinesses that offer health insurance and want one platform to manage it	$65/mo + $8/employee	Y	Y	Y	Y	Y	Mon-Sat 8am-10pm
Contractor Payroll Best for 1099sFreelancer-heavy businesses that primarily pay 1099 contractors	$30/mo + $5/employee	Y	Y	N	N	Y	Mon-Fri 9am-7pm

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