Bottom Line Up Front
Winner for most small businesses: Gusto Simple ($40/mo + $6/employee). Not the absolute cheapest, but best value when you factor in auto tax filing, direct deposit, and ease of use.
Actual cheapest: Patriot ($17/mo + $4/employee) or Wave (free for contractors). But you sacrifice features and UX.
The Truth About Cheap Payroll Software
When you search for the cheapest payroll software, you are really asking two different questions. First, what is the lowest price I can find? And second, what is the best value for my money? These are not the same thing at all.
The cheapest option might save you $20/month but cost you 2 hours of manual tax filing every payroll run. That is a terrible trade if your time is worth more than $10/hour. This guide covers both angles: the actual cheapest options with rock-bottom prices, and the best value options that are cheapest while still doing the job well.
The Actual Cheapest Options (If Price Is Everything)
1. Wave Payroll — $0-20/month + $6/employee
Price: Free for contractors (1-10), $20/mo + $6/employee for W-2 payroll (first state only)
What you get: Basic payroll, direct deposit, W-2/1099 generation, auto tax calculations (but not filing in free tier)
What you DO NOT get: Automatic tax filing (you file manually), benefits admin, HR tools, good support
Best for: Solopreneurs with 1-2 contractors who do not need tax filing automation. If you have W-2 employees, you will quickly realize manual tax filing is painful and time-consuming.
Reality check: Wave is technically free for contractors, but the moment you need W-2 employees or auto tax filing, you start paying. And their support is email-only with slow response times that can leave you hanging during tax season.
2. Patriot Payroll — $17/month + $4/employee
Price: $17/mo base + $4/employee (Basic plan), Full-service with tax filing is $37/mo + $4/employee
What you get: Payroll processing, direct deposit, tax calculations, W-2/1099s. Full-service adds auto tax filing.
What you DO NOT get: Benefits admin, modern UX, mobile app, integrations beyond basic accounting software
Best for: Very small businesses under 10 employees that want cheap payroll and are okay with a clunky, dated interface.
Reality check: Patriot works. It is not pretty, it is not fun to use, but it gets the job done reliably. If you are running a 3-person landscaping company and just need to pay people every two weeks, this is a solid choice that will not break the bank.
3. OnPay — $40/month + $6/employee
Price: $40/mo base + $6/employee (unlimited payroll runs, auto tax filing included)
What you get: Full payroll with auto tax filing, direct deposit, W-2/1099s, benefits admin (basic), HR tools
What you DO NOT get: Premium benefits brokerage, modern UX (it is functional but not sexy), advanced HR features
Best for: Small businesses with 5-25 employees that want full-service payroll without paying Gusto prices.
Reality check: OnPay is the Gusto but cheaper option. Same price structure as Gusto Simple, but you get auto tax filing included. The trade-off? Less polish, fewer integrations, and no benefits brokerage services.
The Best VALUE Options (Cheapest That Actually Work Well)
1. Gusto Simple — $40/month + $6/employee (Our Pick)
Price: $40/mo + $6/employee
What you get:
- Full-service payroll with automatic tax filing (federal, state, local)
- Direct deposit, contractor payments, next-day deposits available
- W-2/1099 generation and filing
- PTO tracking and management
- New hire reporting to state agencies
- Modern, beautiful interface that employees actually like
- Excellent mobile app for both admins and employees
- Email and chat support with fast response times
- 100+ integrations with accounting and HR tools
Example cost: 10 employees = $40 + (10 x $6) = $100/month
Why it is worth it: You could save $20-30/month with Patriot or OnPay, but you would lose Gusto user experience, integrations, and employee experience. For most small businesses, those 30 extra dollars per month are absolutely worth it in time savings and reduced headaches.
Who should use it: Any small business under 50 employees that wants payroll to just work without thinking about it every two weeks.
2. QuickBooks Payroll — $50/month + $8/employee
Price: $50/mo + $8/employee (Core plan with auto tax filing)
Why it is here: If you already use QuickBooks for accounting, the integration is seamless. No data entry, no syncing issues, no reconciliation headaches. Payroll flows straight into your books automatically.
Catch: As standalone payroll, it is not cheaper than Gusto. But if you are already paying for QuickBooks anyway, the bundled cost can be more efficient than running two separate tools.
3. Square Payroll — $35/month + $6/employee
Price: $35/mo + $6/employee (includes auto tax filing)
Why it is here: If you use Square for payments (retail, restaurants, service businesses), Square Payroll integrates perfectly. Employees can clock in and out on the Square POS, and hours flow directly to payroll.
Catch: It is really designed for hourly workers in retail and food service. If you are running a professional services firm with salaried employees, Gusto is the better choice.
Price Comparison: Real-World Examples
| Provider | 5 Employees | 15 Employees | 30 Employees |
|---|---|---|---|
| Wave (contractors) | $30 | $90 | $180 |
| Patriot Basic | $37 | $77 | $137 |
| Patriot Full-Service | $57 | $97 | $157 |
| OnPay | $70 | $130 | $220 |
| Gusto Simple ⭐ | $70 | $130 | $220 |
| Square Payroll | $65 | $125 | $215 |
| QuickBooks Core | $90 | $170 | $290 |
Hidden Costs to Watch For
1. Tax Filing Fees
Some cheap providers charge extra per tax filing or require you to file manually:
- Wave: Manual filing (you do it yourself, which takes hours)
- Patriot Basic: $37/month upgrade required for auto filing
- Gusto/OnPay/Square: Auto filing included in base price
If you are in multiple states, manual tax filing can take 2-4 hours per month. At $25/hour, that is $50-100 of your time—more than you would save with the cheaper provider.
2. Year-End Fees
Some providers charge extra for W-2/1099 generation:
- Most providers: Included in your subscription
- Wave: $1.50/form if you do not pay for premium
3. Multi-State Fees
If you have employees in multiple states:
- Gusto, OnPay, Square: Multi-state payroll included
- Wave: First state free, $6/mo per additional state
- QuickBooks: Multi-state included
DIY Payroll: The Free Option (That Is Not Actually Free)
You might be tempted to do payroll yourself in Excel or Google Sheets. After all, it is free software, right?
Reality: DIY payroll is free the way building your own car is free. Sure, you do not pay for software, but you will spend 3-5 hours per payroll run calculating everything manually. Every two weeks equals 78-130 hours per year.
You also risk tax penalties. The IRS penalties for late or incorrect filings average $1,000-5,000 per year for small businesses that make mistakes. You have to manually calculate federal, state, local, FICA, Medicare, SDI, SUI taxes for every employee, every pay period.
Our take: If your business is making less than $20K/year and you have unlimited free time, maybe DIY makes sense. Otherwise, pay the $40-70/month for software. The time savings and risk reduction are absolutely worth it.
When to Choose Which Provider
Choose Gusto Simple if:
You want the best overall experience for under $150/month (for 5-15 employees). Modern UX, auto tax filing, integrations, mobile app. It just works without headaches.
Choose OnPay if:
You want Gusto features but $10-20/month cheaper. You are okay with a less polished interface and fewer integrations.
Choose Patriot if:
You are truly bootstrapping (under $50K revenue) and need to keep costs under $100/month. Accept that you will sacrifice UX and features.
Choose Square Payroll if:
You already use Square for payments and have mostly hourly employees in retail, food service, or service businesses.
The Bottom Line
If we were starting a business tomorrow with 5-20 employees, we would use Gusto Simple. It is $30/month more than the absolute cheapest options, but the time savings, compliance peace of mind, and employee experience are worth every penny.
If we were truly broke (under $30K revenue, bootstrapping hard), we would use Patriot Full-Service and accept the clunky UX as the price of saving $30-50/month.
What we would NOT do: DIY payroll in Excel. The risk of tax penalties alone makes even the cheapest software worth it. Do not be penny wise and pound foolish.