Payroll Software for Small Business: Costs and How to Choose

By Office Stack Guide Editors · Updated 2026-11-12

As of 2026, list prices for small-business payroll software run $17 to $50 a month plus $4 to $7 per person. That works out to $77 to $155 a month for a 15-person team on the payroll-only plans named below. Even after you pay a provider, the tax stays your responsibility: if the money it debits from your account never reaches the IRS, you owe it again, and the withheld share can be collected from you personally.

At a glance

What payroll software does, and what stays your legal responsibility

Payroll software calculates pay, withholding and employer taxes, then pays employees by direct deposit. Full-service plans also make your federal and state tax deposits and file the returns: Form 941 (the quarterly federal payroll return), Form 940 (federal unemployment) and year-end W-2s.

The provider does the paperwork, but the legal duty stays with you. The IRS page on outsourcing payroll says the employer remains liable for employment taxes even if the provider fails to deposit them. In practice, the provider has already taken the tax out of your bank account. If it never reaches the IRS, you pay it a second time.

This has happened. In September 2019, MyPayrollHR, a New York payroll company, stopped processing payroll for about 4,000 clients, and about $35 million went missing, according to BenefitsPro. As Covington noted, the client employers could still owe the diverted withheld taxes plus penalties and interest.

The Trust Fund Recovery Penalty (TFRP) makes this personal. It equals 100% of unpaid withheld income tax plus the employees' share of Social Security and Medicare. The IRS can assess it against any "responsible person": owners, officers, employees and third-party payroll providers. The IRS says "no evil intent or bad motive is required."

Three jobs stay with the owner at every price tier:

• Worker classification. The software pays each person the way you set them up, as an employee or as a contractor.
• Funding the account. The money for wages and taxes has to be in the bank when the provider debits it.
• Checking deposits. The IRS recommends an EFTPS Inquiry PIN. EFTPS is the Treasury's tax payment system, and the Inquiry PIN gives you read-only access. It is the only way to see for yourself that the tax your provider debited actually arrived at the IRS under your employer ID number.

How much payroll software costs in 2026: 5, 15 and 40 people

Published plans charge a monthly base fee plus a fee per person paid. To estimate your bill, multiply the per-person rate by your headcount and add the base fee.

Every row below is a list price checked on the vendor's own site in November 2026. Gusto and Intuit both repackaged their plans in 2026, so recheck the vendor's page before you budget.

OnPay's price includes federal, state and local filings, W-2s, 1099s and multi-state payroll. On Intuit's own pricing page in November 2026, QuickBooks Workforce appeared only in bundles with QuickBooks accounting, such as Workforce Payroll plus Simple Start at $88 a month + $6.50 per employee, and those bundles carried 50%-off promotions. To price QuickBooks, enter your real headcount on Intuit's site.

What you get at each tier, and who carries which risk

Moving up a tier mostly reduces the number of tasks you can get wrong. This map shows who does each job.

The bottom three rows never move. A full-service provider can file a perfect Form 941, but if your account was short on the debit date, the deposit is late and the penalty is yours.

Full-service payroll protects you from forgetting a date yourself. Here is the math. A self-service monthly depositor owes $10,000 by the 15th and pays it three days late. Under the IRS 2% tier, the penalty is $200. Patriot charges $25 a month more for Full Service than for Basic at 5 people, so that one missed date costs eight months of the price difference. At 15 people the difference is $35 a month, and at 40 it is $60.

What changes the price: contractors, states, add-ons and quotes

At larger headcounts, the per-person fee makes up most of the bill. At 40 people, Gusto Premium's $22 rate accounts for $880 of its $1,060 monthly total.

Gusto's October 1, 2026 plan changes show where costs are moving: the base and per-person fees are the same as before, but more of the extras are billed separately. These details come from Gusto's Help Center:

• Contractors. Gusto's Contractor Only plan ended on October 1, 2026, so contractors are paid inside a full plan. Square, by contrast, sells contractor-only payroll at $6 per person with no base fee, and OnPay includes 1099 filing in its base plan.
• Compliance by state. Business Compliance (state registrations and filings) costs $85 per state per month on Simple and Plus, with a 12-month term. It is included in Premium.
• Benefits connections. Gusto says Premium customers on the plan as of October 1, 2026 keep broker integration at no extra cost. If you are signing up now, ask whether it is included.

Other add-ons follow the same pattern. OnPay's pricing page lists HR at $15 + $2 per worker and time tracking at $15 + $4 per worker. For 15 people, adding both raises OnPay from $139 to $259 a month.

Promotions also expire. Intuit's 50%-off offers end after the promo period, so ask for the regular monthly price in writing.

ADP RUN, Paychex and Rippling don't publish prices. Paychex's small-business payroll page lists Basic, Foundations, Advanced and Complete tiers with no prices. Estimates for ADP and Rippling from third parties have not been confirmed by the vendors. Get an itemized written quote at your headcount and compare it line by line with the table above.

The payroll tax mistakes software prevents, and the ones it can't

Software handles math and deadlines well. It can't fix a decision you entered wrong.

What it prevents:

• Calculation errors. Withholding tables, wage bases and rate changes update automatically.
• Missed dates (full-service only). The provider tracks the Form 941, Form 940 and W-2 deadlines and your monthly or semiweekly deposit schedule, listed on the IRS employment tax due dates page.
• Form errors. Returns are filled in from the same data that ran payroll.

What it can't prevent:

• Late deposits from an empty account. According to the IRS, the failure-to-deposit penalty depends on how late the deposit is:
  • 2% at 1 to 5 days late
  • 5% at 6 to 15 days late
  • 10% at more than 15 days late
  • 15% if the tax is still unpaid more than 10 days after the first IRS notice
  The tiers don't stack. You pay the one rate that applies.
• Misclassification. The IRS decides employee or contractor status with three factors:
  • behavioral control: who directs how the work is done
  • financial control: who controls expenses and how the worker earns a profit
  • the relationship: contracts, benefits and permanence
  Software asks which type a worker is but does not apply the test. A worker set up as a contractor gets no withholding and no overtime.
• Wrong overtime status. If you mark a worker exempt from overtime when they aren't, the software won't pay overtime. In fiscal 2025, overtime violations under the Fair Labor Standards Act produced $146.4 million in back wages for 110,551 workers, about $1,324 each, per the Department of Labor's data. That was part of $259 million the DOL's Wage and Hour Division recovered across all the wage laws it enforces, the highest total since 2019, as HR Dive reported.

If a worker's status is unclear, you can file Form SS-8 and ask the IRS to decide. The IRS says those decisions take six months or more. For a specific case, ask a CPA or employment attorney.

How to choose a payroll provider: questions to ask before you sign

Shortlist two or three vendors and ask each the same questions. Use free trials where they exist, and get answers from quote-based vendors in writing.

1. Which federal, state and local returns do you file and deposit for my business, and which do I handle?
2. What is my total monthly price at my current headcount, including contractors, every state I pay in, and any add-ons?
3. What is the regular price after any promotion ends, and is there a contract term?
4. Are W-2s and 1099s included, or extra?
5. If you make a late or wrong deposit, who pays the penalty, and what does your guarantee exclude?
6. When do you debit my account for taxes, and what happens if the funds aren't there?
7. Can your software meet the IRS reporting requirements for qualified tips and qualified overtime?

On question 5, read the fine print on penalty guarantees. Intuit's payroll page advertises "tax penalty protection up to $25,000." Its terms page sets several limits:

• It applies only to the Elite tier.
• It covers penalties and interest, not the tax itself.
• It caps out at $25,000 a year.
• It excludes penalties caused by insufficient funds or worker misclassification, which are two of the three risks that stay with you.

On question 7, a 2025 federal law created deductions for qualified tips and qualified overtime, with new W-2 reporting being phased in. Check the IRS's current guidance on these deductions, and get the vendor's confirmation in writing. This matters most for restaurants and hourly teams.

Red flags:

• No itemized quote. The vendor won't separate the base fee, per-person fee and add-ons in writing.
• Vague filing scope. "We handle taxes," with no list of the forms and states covered.
• No deposit visibility. The vendor discourages the EFTPS Inquiry PIN, which the IRS recommends.

Switching payroll providers mid-year without breaking your W-2s

You can switch payroll providers in the middle of the year. The risk shows up on January 31, when each employee's W-2 must show correct totals for the whole year.

These steps come from Patriot's and Gusto's switching guides. They are vendor advice, not independent research.

1. Switch at a quarter start (January 1, April 1, July 1 or October 1) if you can, so each quarter's Form 941 comes from one provider.
2. Carry over exact year-to-date figures for every employee: wages, withholding, Social Security, Medicare and deductions. Match them to the cent against the old provider's reports.
3. Get it in writing which provider files the 941s for completed quarters and which files the year-end W-2s, so employees don't end up with two W-2s or none.
4. Keep the old account open until it has filed every return it owes and you have downloaded all reports.
5. Confirm the first deposits in EFTPS after the new provider takes over.

Have your bookkeeper or CPA check the year-to-date totals before the first payroll on the new system.

FAQ

Does a payroll provider take on my tax liability?

No. The IRS says the employer stays liable even if the provider fails to deposit. Under the Trust Fund Recovery Penalty, owners and other responsible people can be personally liable for 100% of unpaid withheld taxes.

Does a penalty guarantee protect me?

Only partly. Intuit's guarantee covers penalties and interest on its Elite tier, up to $25,000 a year. It excludes penalties caused by insufficient funds or misclassification. No vendor guarantee changes who the IRS holds liable.

Is self-service payroll ever the right choice?

Yes, if an owner or bookkeeper already files Form 941 and state returns on time every quarter. Patriot's self-service plan saves $25 to $60 a month at 5 to 40 people. A single missed deposit can cost more than that.

When does a business outgrow basic payroll?

Common signs are hiring in several states, offering health or retirement benefits, and tracking PTO across a growing team. At that point an HR tier such as Gusto Plus is worth pricing. A PEO (professional employer organization) becomes a co-employer for benefits and HR compliance, so get quotes for both.

Key takeaways

• Budget with the formula: base fee plus per-person fee times headcount. Full-service plans cost $112 to $155 a month for 15 people as of 2026.
• Pick full-service unless someone already files payroll taxes reliably.
• Set up an EFTPS Inquiry PIN and check deposits every quarter.
• Switch at a quarter start, with exact year-to-date totals and written answers on who files W-2s.

The bottom line

The next price increase you face is likely to come as an add-on rather than a higher base price. Gusto kept its base and per-person fees on October 1, 2026 while closing its contractor-only plan and billing state compliance separately, and Intuit sells payroll inside accounting bundles behind promotions. Price two full-service plans at your real headcount, states and contractors, including every add-on, and get itemized quotes from any quote-based vendor. Before the first payroll runs, activate your EFTPS Inquiry PIN. Then confirm that your provider applies the FUTA credit-reduction list the IRS and DOL publish each November, and that it can produce January 31 W-2s with the new tips and overtime reporting.

Sources

• IRS: Failure to Deposit Penalty (Internal Revenue Service, 2026)
• IRS: Employment Taxes and the Trust Fund Recovery Penalty (TFRP) (Internal Revenue Service, 2026)
• IRS: Outsourcing Payroll and Third-Party Payers (Internal Revenue Service, 2026)
• IRS: Employment Tax Due Dates (Internal Revenue Service, 2026)
• IRS: Independent Contractor (Self-Employed) or Employee? (Internal Revenue Service, 2026)
• DOL: Wage and Hour Division FY2025 enforcement release (U.S. Department of Labor, 2026)
• DOL: Fair Labor Standards Act enforcement data (U.S. Department of Labor, 2026)
• DOL Wage and Hour FY2025 enforcement data (HR Dive, 2026)
• DOL recovers $259M in back wages for workers (BenefitsPro, 2026)
• DOL FY2025 wage recovery report (Law360, 2026)
• Payroll company vanishes with $35 million (BenefitsPro, 2019)
• MyPayrollHR scandal serves as reminder to verify employment tax deposits (Covington & Burling, 2019)
• QuickBooks Payroll (Intuit, 2026)
• QuickBooks: Tax penalty protection terms (Intuit, 2026)
• Gusto: Pricing (Gusto, 2026)
• OnPay: Pricing (OnPay, 2026)
• What's new with Gusto plans starting October (Gusto Help Center, 2026)
• Patriot: Payroll pricing (Patriot Software, 2026)
• Square Payroll: Pricing (Square, 2026)
• QuickBooks Payroll: Pricing (Intuit, 2026)
• QuickBooks Payroll Elite (Intuit, 2026)
• Patriot: Best payroll software for small businesses (Patriot Software, 2026)
• Patriot: Switching payroll companies (Patriot Software, 2026)
• Gusto: How to switch payroll providers (Gusto, 2026)