The Best Payroll Services for One Employee

Payroll services take care of nearly the entire payroll process, eliminating time-consuming, error-prone work and ensuring your employees are paid correctly and on time. In addition, payroll services ensure you’re withholding the right amount of taxes and filing with the appropriate tax agencies on the local, state and federal levels. They’ll also stay up to date with changing regulations, ensuring your business remains compliant at all times.

Of course, not all payroll services are created equal, and not all businesses have the same needs. We studied dozens of vendors to help you find the best payroll services for one employee. Our best picks are based on criteria including pricing, mobile support, employee benefits inclusion and more.

Most payroll services are cost-effective, especially when you’re paying for only one employee. Among our best picks above, Rippling is the least expensive one-employee solution at $8 per employee per month with no additional flat fee. QuickBooks Payroll is the most expensive at $45 per month plus a $6 per employee monthly charge, bringing the total cost for one employee to $51 per month.

However, it’s important to consider the value for the cost, as the cheapest service isn’t always the best choice. Rippling’s payroll service requires you to pay extra to access employee benefits and time and attendance features, whereas QuickBooks Payroll includes both. It’s important to consider which features are your priority and whether they’re included in the monthly subscription cost or represent an additional expense.

In almost all cases, you won’t incur extra costs to set up your payroll software and onboard your employees. Some vendors, such as QuickBooks Payroll, also include free setup assistance with all plans, though this level of support isn’t universal. Consider it a nice-to-have but not a dealbreaker.

Look for most or all of these features in high-quality payroll software for one employee.

Employee Self-Service

Your employee should be able to log in to your software and easily update their contact information and review their pay stubs. This way, your employee gets what they need without you taking any extra action.

HR Services

Many one-employee payroll platforms offer HR services either as part of your pricing plan or as an add-on feature. These services primarily include employee benefits and compliance management.

Mobile App

Many payroll platforms are accessible via mobile apps you download to your smartphone. This way, you and your employee can access your payroll system from anywhere at any time.

New-Hire Reporting

When you hire your employee, you must file official paperwork to report this hiring to your state. Most payroll services entirely handle this compliance requirement on your behalf.

Pay Schedules

The best payroll services allow you to set up whichever of the major four pay schedules works best for your cash flow. These include weekly, biweekly, semimonthly and monthly payments.

Payment Options

If you’d like to pay your employee via direct deposit, you can set it up through your payroll service. The same is true if you want to pay by paper check or pay card.

Tax Calculation, Payment and Filing

You must withhold and pay federal income and FICA taxes on employee (but not contractor) payments. Depending on your state and municipality, you may also need to withhold and pay state and local taxes. Payroll services determine your requirements, then calculate, withhold, file and, often, pay these taxes each pay period.

Time and Attendance Tracking

Though sometimes an add-on rather than an included feature, time and attendance tracking goes hand in hand with payroll. After all, it’s quite logical to mark your employee’s paid and unpaid hours or days in the same system through which you calculate pay. Time and attendance tracking functionality in payroll software may also include paid time off (PTO) management so you can successfully administer your PTO policy.

Unlimited Payroll Runs

Most payroll services for one-employee businesses support an unlimited number of payroll runs. In rare cases, one-employee payroll providers charge per payroll run atop your monthly fees. Confirm that the service you’ve chosen offers unlimited payroll runs before signing on the dotted line.

Year-End Tax Forms

At the end of every year, you must file a W-2 tax form for your employee and share it with them. You must also file year-end 1099 forms for any contractors you pay more than $600 per year. In either case, one-employee payroll systems auto-generate – and often file – these forms for you.

As you compare payroll software options for one employee, take the below steps to narrow down your choice.

1. Assess your budget and needs.

Consider your payroll software budget and what types of add-ons might justify their price tags. Your costs will be low with just one employee on your payroll, but is the least expensive platform truly the right fit? Will paying for added HR services prove to be a worthwhile return on investment or an unnecessary extra spend? The latter question may lead you to realize that pursuing payroll vendors that primarily function as HR services may prove too costly.

From there, dig a little deeper and determine your priorities. Which features matter most to you? Are you more focused on setting up same-day deposits or implementing employee benefits at no extra cost? Order your needs from most to least important, then keep this list in mind as you compare payroll options within your budget.

2. Compare potential vendors’ pricing plans.

Most vendors’ websites include pricing pages with tables that detail the features of each package offered. Consider how much value you get per dollar spent, as well as whether the features meet all your needs. Compare your findings across vendors, and move the best fits toward the top of your list.

3. Read customer reviews.

Some of your best fits might turn out to have poor customer reviews. Unfortunately, in our research, we’ve found this to be especially true for payroll services. Although negative TrustPilot and Better Business Bureau reviews abound for these companies, angry customers are more likely to leave reviews than happy ones. As such, you may want to take negative reviews with a grain of salt. On the other hand, a rare payroll service with universally enthusiastic customer reviews is a great sign.

4. Pursue demos and free trials.

We always recommend opting in to a vendor’s free trial before fully committing to the service. There’s simply no better way to confirm that the platform works for your needs. In the event a free trial is unavailable, a guided demo is a solid alternative. Inquire about this with vendor sales reps, and you might get to see the software from the inside before you register an account. This inside view can help you feel more confident in your decision.

5. Set up your account.

At this point, you should have a gut feeling about which service best suits your needs. Review your notes to verify or challenge this instinct, then officially sign up for the service. As you do so, see if you can negotiate lower pricing or obtain a temporary discount. From there, you’re ready to move into the implementation phase.

Some key reasons to set up payroll software for your one-employee operation include the following.

Fewer Pay Errors

It’s easy to mess up your calculations when determining how much you owe an employee and how much tax to withhold. That’s just as true with one employee on payroll as with 1,000, and payroll software solves this problem. Fully automated calculations will be error-free by their very nature as long as your employee’s pay rate and hours worked are correctly recorded.

Superior Tax Compliance

From reporting your new hires to calculating and filing your payroll taxes, payroll software keeps you compliant with regulations. Any HR services that come with your software or as add-ons further streamline your compliance.

Substantial Time Savings

Reporting new hires requires you to fill out paperwork, and manually calculating employee pay and taxes involves doing math by hand. Neither of these tasks is directly related to day-to-day work offering the best possible products or services. Delegating these and all payroll tasks to software gives you invaluable time back for the work that counts the most.

Improved Employee Pay Record Accessibility

Payroll software stores and organizes all your employee pay records. In most cases, it includes an employee self-service portal as well. This combination of features allows employees to easily obtain their pay stubs and update their contact information – all without going through you.

Better Management of One Employee Alongside Contractors

If you pay only one employee but you pay many contractors, payroll software is a must. There’s no easier way to ensure that you’re collecting payroll taxes from your employee while not doing so for your contractors. Payroll software also allows you to pay your contractors on an entirely separate schedule from your employee. This way, the status of a payment to your employee doesn’t affect that of your contractor payments, or vice versa.