Paychex Alternatives: 10 Payroll Providers for Small Business

Paychex is one of the biggest names in US payroll, and plenty of small businesses use it happily. Others want a simpler online tool, payroll that connects to their rotas, or benefits through a PEO.

The ten tools below are listed alphabetically and in no particular order. Each description comes from the tool's own site, read this week. If you're thinking about what payroll does for staff loyalty, my piece on how payroll software helps with employee retention is worth reading.

Paychex alternatives at a glance

In the free plan column, Yes means the tool's own site describes free use or a free plan, Trial only means a time-limited trial and No means neither is stated on the pages we read. Payroll providers rarely offer free plans, so trials and new client offers are the usual way to test them.

Tool	Type	Good for	Free plan
Gusto	Payroll and HR	First-time employers	No
Homebase	Payroll with scheduling	Hourly teams	Trial only
Hourly	Payroll with workers' comp	Contractors and trades	No
Justworks	PEO and payroll	Benefits through a PEO	No
OnPay	Online payroll	Switching without the hassle	No
Patriot Software	Online payroll	Do-it-yourself payroll	No
Paycor	HR and payroll suite	Growing mid-size companies	No
Paylocity	HR and payroll suite	Companies wanting HR, finance and IT unified	No
Square Payroll	Point-of-sale payroll	Square point-of-sale users	No
Wave Payroll	Small business payroll	Wave accounting users	Trial only

Ten Paychex alternatives to consider

Gusto

Best for: Small US businesses hiring their first few people who want payroll, benefits and onboarding guided step by step.

Homebase

Best for: Restaurants and shops with hourly staff who want rotas and timesheets flowing straight into payroll.

Hourly

Best for: Construction and trade businesses that want payroll and workers' comp handled together so cover matches the hours people work.

Justworks

Best for: Small businesses that want access to bigger-company benefits through a PEO along with payroll and compliance.

OnPay

Best for: Owners ready to leave a big provider who want help moving their payroll history across.

Patriot Software

Best for: Owners happy to run payroll themselves who want a plain online system with direct deposit and unlimited runs.

Paycor

Best for: Mid-size companies that want payroll, HR, talent and analytics from one provider as headcount grows.

Paylocity

Best for: Mid-size employers who want payroll joined up with HR, finance and IT tools in a single platform.

Square Payroll

Best for: Cafes and retailers already using Square who want payroll and payroll tax handled inside the same system they know.

Wave Payroll

Best for: Very small businesses already using Wave for invoicing and bookkeeping who want payroll in the same place.

The IRS deposit rule every employer must know

Here's the deadline detail that catches out new employers. The IRS says there are two deposit schedules, monthly and semi-weekly, and you must work out which one applies before the beginning of each calendar year.

A payroll provider that handles deposits and filings for you takes most of that deadline risk off your plate. When you compare options, check which tax filings each provider handles, whether it covers every state you employ people in and what happens if a filing is late.

DIY payroll, full service or PEO?

Do-it-yourself payroll tools let you run payroll online and handle the basics, which suits small, simple teams. Full-service providers file taxes, manage year-end forms and add HR tools. A PEO goes further by becoming a co-employer, which can give small businesses access to benefits normally reserved for larger companies.

Your choice depends on how much you want to hand over. If you're happy checking numbers yourself each pay period, a simple tool works. If you'd rather never think about tax filings, choose full service or a PEO.

Switching payroll providers safely

1. Switch at the start of a quarter, or ideally the start of the year.
2. Gather year-to-date payroll totals for every employee.
3. Collect tax registration numbers for every state you employ people in.
4. Run a parallel payroll to check the new provider's numbers match.
5. Confirm direct deposit details with each employee before the first run.
6. Keep access to your old provider for year-end forms.

Features small employers use most

• Automatic tax filings. Federal, state and local filings handled for you.
• Employee self-service. Staff can view payslips and update their details.
• Time tracking links. Hours flow into payroll without retyping.
• New hire reporting. Onboarding paperwork collected online.

Questions to ask before you sign

Ask who your contact is when something goes wrong, how quickly errors are fixed, what happens if a tax filing is late and how you'd leave if you wanted to. The answers tell you far more about life with a payroll provider than any feature list.

Contractors and employees are handled differently

Paying contractors and employees through the same provider is convenient, but the tax treatment is different. Make sure your payroll tool can separate the two, collect the right forms from contractors and produce year-end paperwork for both. Getting worker classification wrong causes headaches, so check with your accountant if you're unsure how someone should be treated. It's a common mistake, and it isn't one you'll want to discover during an audit.

Do you make a payroll or HR tool? Tool makers can ask to be considered for a featured place on this list.

My plain advice on Paychex alternatives

Timing is everything with payroll. Switching mid-quarter means extra work reconciling tax filings across two providers, so plan your move for a quarter start if you can. Ask each provider how they handle the switch and what they'll do for you.

Then think beyond payroll. If you also need hiring, onboarding and time off tracking, a provider with HR built in saves another login. My comparison of the best HR software for small businesses helps if you want to look at that side separately.

Frequently asked questions

Why do businesses switch from Paychex?

Common reasons include wanting a simpler online tool, payroll linked to scheduling, or benefits through a PEO.

Is there free payroll software in the US?

Free payroll plans are rare among providers, but some offer free trials or new client offers. Check the table.

What are the IRS deposit schedules?

The IRS says there are two deposit schedules, monthly and semi-weekly, and you must work out which applies before each calendar year.

What is a PEO?

A professional employer organisation becomes a co-employer for your staff, handling payroll, benefits and compliance.

When is the best time to switch payroll providers?

The start of a quarter, or ideally the start of the year, keeps tax filings simpler.

Do payroll providers handle state taxes?

Most full-service providers do, but check that each one covers every state where you employ people.