Navigating the complexities of payroll can feel like a labyrinth, especially for small business owners already juggling a thousand other tasks. In 2020, for many small businesses, Gusto emerged as a top contender for the best payroll software, thanks to its user-friendly interface, comprehensive features, and competitive pricing. However, the “best” choice is always subjective, dependent on your specific needs, budget, and the unique structure of your business. While Gusto offers an excellent all-around solution, other platforms like QuickBooks Payroll, ADP Run, Paychex Flex, and OnPay also presented compelling options, each with distinct strengths tailored to different operational scales and preferences. This guide will delve into what made these platforms stand out in 2020, helping you understand the key features, benefits, and considerations for selecting the right payroll solution for your enterprise.

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Understanding the Landscape of Payroll Software for Small Business in 2020

In 2020, small businesses faced increasing pressure to automate and streamline their operations, and payroll was no exception.

The market offered a robust selection of software designed to simplify everything from calculating wages and taxes to direct deposit and compliance.

The primary goal for most small businesses was to find a solution that reduced administrative burden, minimized errors, and ensured timely and accurate payments to employees, all while remaining affordable.

Why Automation Was Key

For many small business owners, payroll was a time-consuming manual process prone to errors. Automation offered a way out.

Time Savings: Manual payroll could take hours, time better spent on core business activities. Software cut this down to minutes.
Accuracy: Human error in calculations, tax withholdings, and deductions could lead to penalties. Software virtually eliminated these risks.
Compliance: Tax laws and labor regulations are complex and ever-changing. Good software kept businesses compliant without constant vigilance.
Employee Satisfaction: On-time, accurate payments via direct deposit significantly boosted employee morale and trust.

Essential Features to Look For

When evaluating payroll software in 2020, certain features were non-negotiable for small businesses aiming for efficiency and compliance. Manage workful

Automated Tax Filing: This was paramount. The software should calculate, withhold, and file federal, state, and local payroll taxes automatically.
Direct Deposit: A standard expectation for employees, ensuring timely and secure payment.
New Hire Reporting: Automatic submission of required new hire information to relevant state agencies.
Employee Self-Service Portal: Allowing employees to access pay stubs, W-2s, and update personal information.
Time Tracking Integration: Seamless connection with timekeeping systems to automate wage calculations.
Benefits Administration: Capabilities to manage health insurance, retirement plans, and other deductions.
Reporting: Robust reporting tools for financial analysis, tax reconciliation, and auditing.
Customer Support: Accessible and knowledgeable support for troubleshooting and guidance.

Gusto: The All-Round Favorite for Many Small Businesses in 2020

Gusto consistently topped “best of” lists in 2020 for good reason.

It struck an impressive balance between user-friendliness, comprehensive features, and competitive pricing, making it an ideal choice for a vast majority of small businesses, from startups to those with dozens of employees.

Its intuitive interface and automated processes significantly simplified payroll management, even for those new to the task.

Key Features That Made Gusto Stand Out

Gusto’s feature set was designed with the small business owner in mind, offering a powerful yet accessible solution.

Full-Service Payroll: This was Gusto’s strongest suit. It handled all payroll tax filings federal, state, and local automatically, including year-end W-2s and 1099s. This level of automation significantly reduced compliance worries.
Unlimited Payroll Runs: Businesses could run payroll as many times as needed without extra charges, offering flexibility for off-cycle payments or corrections.
Employee Self-Service: Employees had their own portal to view pay stubs, update personal details, and access tax documents, reducing inquiries to HR.
Benefits Administration: Gusto offered integrated benefits administration, including health insurance, 401k plans, and workers’ compensation. This simplified the enrollment and deduction process.
HR Features: Beyond payroll, Gusto included basic HR tools like offer letters, onboarding checklists, and employee directory management, adding significant value.
Integrations: It seamlessly integrated with popular accounting software like QuickBooks Online, Xero, and FreshBooks, ensuring data consistency across platforms.
User Experience: Its dashboard was clean, modern, and easy to navigate, making payroll a less daunting task.

Pricing Structure and Value Proposition

Gusto offered tiered pricing in 2020, making it scalable for businesses of various sizes. Workful pay stub example

Core Plan: Ideal for basic payroll needs, covering full-service payroll, employee self-service, and new hire reporting. It was priced around $39/month plus $6/employee per month.
Complete Plan: Added features like time tracking integration, PTO management, and advanced HR tools, typically around $39/month plus $12/employee per month.
Concierge Plan: The premium tier offered dedicated HR support and HR-certified professionals for advice, priced higher at around $149/month plus $12/employee per month.

Data from various user reviews and industry analyses in 2020 indicated that Gusto users reported saving an average of 5 hours per month on payroll tasks, with 90% of users reporting increased compliance confidence. Its blend of features, intuitive design, and transparent pricing solidified its position as a top choice.

QuickBooks Payroll: The Integrated Powerhouse for QBO Users

For the vast number of small businesses already using QuickBooks Online QBO for their accounting, QuickBooks Payroll was often the natural and most integrated choice in 2020. Its seamless connection with QBO meant a single source of truth for financial data, minimizing manual data entry and reconciliation errors.

Tightly Integrated Features

The primary advantage of QuickBooks Payroll was its deep integration with QuickBooks Online, providing a holistic financial management solution.

Automatic Data Sync: All payroll data, including expenses and liabilities, automatically flowed into QBO, simplifying bookkeeping and financial reporting.
Full-Service Payroll: Like Gusto, it offered complete tax filing services federal and state and direct deposit. Some plans even covered local tax filings.
Health Benefits and 401k Options: Offered integrated benefit plans managed directly through the payroll platform, simplifying administration.
Time Tracking: Built-in time tracking features or seamless integration with QuickBooks Time formerly TSheets for accurate wage calculations.
Expert Support: Access to payroll experts for setup and ongoing support, particularly helpful for complex payroll scenarios.

Tiered Plans and Considerations

QuickBooks Payroll offered several tiers in 2020 to cater to different business needs and budgets.

Core Plan: Basic full-service payroll, automated tax filing, and direct deposit. Priced around $45/month plus $4/employee per month.
Premium Plan: Included all Core features plus QuickBooks Time Elite, HR support, and workers’ comp administration. Around $75/month plus $8/employee per month.
Elite Plan: The most comprehensive, offering all Premium features, a dedicated payroll expert, tax penalty protection, and same-day direct deposit. Roughly $125/month plus $10/employee per month.

While the integration with QBO was a major selling point, some users found QuickBooks Payroll’s interface slightly less intuitive than Gusto’s, particularly for those not already familiar with the QuickBooks ecosystem. However, for the over 80% of small businesses using QuickBooks for accounting, the convenience and efficiency gained from a unified system were often decisive. Payroll information system

ADP Run: Enterprise-Level Features Scaled for Small Business

ADP is a giant in the payroll industry, primarily known for its solutions for large enterprises.

However, ADP Run was its tailored offering for small businesses in 2020, bringing enterprise-level features and compliance expertise to smaller operations.

It was a strong contender for businesses seeking comprehensive HR support alongside robust payroll processing.

Comprehensive Payroll and HR Features

ADP Run’s strength lay in its broad suite of services, extending well beyond basic payroll.

Advanced Tax Compliance: Given ADP’s scale, its tax compliance capabilities were exceptionally robust, handling complex state and local tax regulations across all 50 states.
HR and Compliance Resources: A standout feature was access to a vast library of HR forms, legal guidance, and best practices. Some plans included HR advisors for personalized support.
Time and Attendance: Integrated timekeeping solutions to simplify hours tracking and wage calculation.
Benefits Administration: Offered a wide range of benefits options, including health insurance, retirement plans, and flexible spending accounts FSAs.
New Hire Onboarding: Tools to streamline the onboarding process for new employees, including electronic new hire forms.
Workers’ Compensation Payment Service: Simplified workers’ comp premium payments based on actual payroll.

Pricing Structure and Target Audience

ADP Run’s pricing was typically less transparent online, often requiring a quote. Workful tiers

However, general estimates in 2020 suggested starting prices for smaller businesses were comparable to competitors, though potentially higher for more advanced plans.

Essential Payroll: Basic payroll, tax filing, and direct deposit.
Enhanced Payroll: Added features like garnishment payment services, SUI management, and background checks.
Complete Payroll & HR Plus: Included HR support, employee handbook wizard, and legal guidance.
HR Pro Payroll & HR: Offered the most comprehensive HR support with a dedicated HR business advisor.

ADP Run was particularly well-suited for small businesses with growing HR needs, complex compliance requirements, or those expecting significant growth, as its scalable solutions could support them from a handful to hundreds of employees. Many users praised ADP’s reliability, with a reported 99.9% uptime for its payroll processing services.

Paychex Flex: Scalable Solutions for Evolving Business Needs

Similar to ADP, Paychex is another long-standing name in the payroll industry, and Paychex Flex was its primary offering for small to mid-sized businesses in 2020. It prided itself on providing scalable solutions that could grow with a business, offering a dedicated payroll specialist and a wide array of HR services.

Robust Features and Dedicated Support

Paychex Flex offered a comprehensive suite of features designed to handle various payroll and HR complexities.

Dedicated Payroll Specialist: This was a significant advantage for many users, providing a single point of contact for payroll questions and support, fostering familiarity and trust.
Comprehensive Tax Administration: Handled all federal, state, and local payroll tax calculations, payments, and filings, including quarterly and annual reports.
Time and Attendance Solutions: Integrated time clocks, web, and mobile time tracking options to accurately capture employee hours.
Employee Self-Service: Allowed employees to view pay stubs, W-2s, and manage personal information.
HR Solutions: Offered a wide range of HR services, including employee screening, onboarding, performance management, and HR consulting.
Benefits Administration: Managed various employee benefits, from health insurance to retirement plans.
Robust Reporting: Extensive reporting capabilities for financial analysis, compliance, and auditing.

Pricing and Ideal Fit

Like ADP, Paychex Flex’s pricing was often quote-based, but typical starting prices for small businesses were competitive. Workful tools

Its tiered structure allowed businesses to add services as they grew.

Paychex Flex Essentials: Covered core payroll, tax services, and new hire reporting.
Paychex Flex Select: Added more HR resources, such as state new hire reporting and online HR library.
Paychex Flex Pro: Included advanced HR features, pre-employment screening, and dedicated HR support.

Paychex Flex was a strong choice for small businesses that valued personalized support from a dedicated specialist and anticipated needing a wider range of HR services as they expanded. According to a 2020 survey, Paychex processed payroll for over 670,000 clients, demonstrating its significant market presence and reliability.

OnPay: The Hidden Gem for Flexible and Transparent Payroll

OnPay, while perhaps not as widely recognized as Gusto or QuickBooks Payroll, was a highly-rated payroll software in 2020, particularly lauded for its exceptional customer service, transparent pricing, and robust features for small to medium-sized businesses.

It positioned itself as a modern, user-friendly alternative to the larger players.

Customer Service and Feature-Rich Offering

OnPay’s commitment to customer satisfaction and a comprehensive feature set made it a compelling option. Workful help desk

Outstanding Customer Service: Users consistently praised OnPay’s responsive, knowledgeable, and friendly support team, often highlighting it as a significant differentiator.
All-Inclusive Pricing: OnPay offered a single, transparent pricing plan that included all core features, eliminating hidden fees and making budgeting straightforward.
Full-Service Payroll: Handled all federal and state tax filings, direct deposit, and year-end forms W-2, 1099. It also supported local tax filing.
Integrated HR Tools: Included basic HR features like offer letters, onboarding, PTO tracking, and an employee self-service portal.
Benefits Administration: Integrated with popular benefits providers for health insurance and 401k plans.
Unlimited Pay Runs: Allowed businesses to run payroll as often as needed without additional charges.
Payroll for Contractors and Employees: Supported both W-2 employees and 1099 contractors, simplifying different payment types.

Transparent Pricing and Value

OnPay’s pricing model in 2020 was refreshingly straightforward.

Single Plan: Typically priced around $36/month plus $4/employee per month. This single plan included all core payroll and HR features.

This transparency and the comprehensive nature of its single plan made OnPay an excellent value proposition for many small businesses, especially those that appreciated clear, upfront costs. Its focus on customer service led to high user satisfaction rates, with many reviews highlighting how easy it was to get started and manage payroll. OnPay boasted a 99% customer satisfaction rate in 2020, a testament to its support quality.

Key Considerations When Choosing Payroll Software in 2020

While the top contenders offered impressive features, the “best” payroll software in 2020 ultimately depended on a business’s unique circumstances.

Making an informed decision required careful consideration of several factors beyond just features and price.

Business Size and Growth Trajectory

The number of employees and anticipated growth played a crucial role. Workful money transfer

Startups/Very Small Businesses: Basic plans from Gusto, QuickBooks Payroll, or OnPay often sufficed, focusing on essential payroll and tax filing.
Growing Businesses: Solutions like ADP Run or Paychex Flex, with their scalable HR services, became more attractive as HR complexities increased.
Contractor-Heavy Businesses: Software that streamlined 1099 filings alongside W-2 payroll, like Gusto or OnPay, was beneficial.

Industry-Specific Needs

Certain industries had unique payroll requirements.

Restaurants/Retail: Needed robust time tracking, tip reporting, and multiple pay rates.
Construction: Often required certified payroll and job costing features.
Healthcare: May need specialized benefits administration and compliance support.

Integration with Existing Software

Seamless integration with accounting software was often a non-negotiable for efficiency.

QuickBooks Users: QuickBooks Payroll offered the deepest integration.
Xero, FreshBooks, or Other Accounting Software Users: Gusto and OnPay typically offered excellent integrations.
HRIS Systems: Larger businesses might need integration with dedicated HR information systems.

Budget and Pricing Model

Understanding the total cost of ownership was vital.

Fixed Monthly Fees vs. Per-Employee Fees: Some providers offered a flat fee, while most charged a base fee plus a per-employee fee.
Hidden Costs: Looked for extra charges for direct deposit, tax filing, year-end forms, or unlimited payroll runs.
Tiered Plans: Evaluated which plan truly met current and future needs without overpaying for unused features. A typical small business with 10 employees could expect to pay anywhere from $70 to $150 per month for full-service payroll, depending on the provider and plan.

Level of Required Support

The availability and quality of customer support varied significantly.

Self-Service Preferred: For tech-savvy owners, a comprehensive knowledge base might be enough.
Phone/Chat Support: Most businesses preferred direct access to support for quick resolution.
Dedicated Specialist/HR Advisory: For complex needs, a dedicated point of contact or HR experts were invaluable.

What’s Next After 2020: The Evolving Landscape of Payroll Software

Post-2020, we’ve seen continued advancements in artificial intelligence, deeper HR integrations, and an even greater emphasis on compliance and data security. A pay stub

Businesses continue to seek solutions that not only manage payroll but also contribute to a holistic employee experience.

Emerging Trends Beyond 2020

The market evolved rapidly, bringing new innovations.

AI and Machine Learning: Used to predict payroll trends, identify potential errors, and automate more complex tasks.
More Robust HRIS Functionality: Payroll software increasingly incorporated advanced HR functions, blurring the lines between pure payroll and comprehensive HR platforms.
Enhanced Cybersecurity: With data breaches on the rise, greater emphasis on multi-factor authentication, data encryption, and robust security protocols.
Global Payroll Capabilities: For businesses with international employees, solutions supporting multi-country payroll became more prominent.
Improved Mobile Accessibility: Even more intuitive mobile apps for both employers and employees to manage payroll on the go.

The core principles of accuracy, compliance, and efficiency remained paramount, but the tools to achieve them became increasingly sophisticated.

For small businesses, the focus remained on finding a solution that simplified their operations, allowed them to remain compliant, and freed them to concentrate on what they do best: growing their business.

Choosing the right payroll software in 2020 was an investment in efficiency and peace of mind, a trend that only accelerated in the years that followed. Workful support chat

Frequently Asked Questions

What was considered the best payroll software for small business in 2020?

Gusto was widely considered one of the best payroll software options for small businesses in 2020 due to its user-friendly interface, comprehensive features, and competitive pricing.

Did QuickBooks Payroll offer full-service options in 2020?

Yes, QuickBooks Payroll offered full-service options in 2020 across its Core, Premium, and Elite plans, including automated tax filing and direct deposit.

Was ADP Run suitable for very small businesses in 2020?

Yes, ADP Run was designed to cater to small businesses, offering scalable solutions that could support businesses with just a few employees up to several hundred.

What made OnPay stand out among payroll software in 2020?

OnPay stood out in 2020 for its transparent, all-inclusive pricing, excellent customer service, and robust features that catered well to small to medium-sized businesses.

Did Paychex Flex provide a dedicated payroll specialist in 2020?

Yes, Paychex Flex was known for offering a dedicated payroll specialist to its clients in 2020, providing personalized support and guidance. Workful support phone number

What was the average monthly cost of payroll software for a small business in 2020?

The average monthly cost for full-service payroll software for a small business with 10 employees in 2020 typically ranged from $70 to $150, depending on the provider and the specific plan chosen.

Could payroll software integrate with accounting software in 2020?

Yes, most top payroll software in 2020, including Gusto, QuickBooks Payroll, and OnPay, offered seamless integrations with popular accounting software like QuickBooks Online, Xero, and FreshBooks.

Did 2020 payroll software handle all federal, state, and local tax filings?

Yes, the leading payroll software solutions in 2020 e.g., Gusto, QuickBooks Payroll, ADP Run, Paychex Flex, OnPay typically handled all federal, state, and most local payroll tax calculations, withholdings, and filings automatically.

Was direct deposit a standard feature in 2020 payroll software?

Yes, direct deposit was a standard and expected feature in nearly all reputable payroll software solutions available for small businesses in 2020.

Did 2020 payroll software offer employee self-service portals?

Yes, employee self-service portals were a common feature in 2020 payroll software, allowing employees to access pay stubs, W-2s, and update personal information independently. Workful intuit

Were time tracking features integrated into payroll software in 2020?

Many payroll software solutions in 2020, such as Gusto, QuickBooks Payroll, and ADP Run, offered integrated time tracking features or seamless integrations with popular timekeeping systems.

Did any payroll software in 2020 offer HR support?

Yes, several payroll software providers in 2020, notably Gusto Complete/Concierge plans, ADP Run, and Paychex Flex, offered various levels of HR support and resources alongside payroll services.

Was it possible to process unlimited payroll runs with these software in 2020?

Yes, many top payroll software providers like Gusto and OnPay offered unlimited payroll runs as a standard feature in 2020, without charging extra for off-cycle payments.

Could 2020 payroll software manage benefits administration?

Yes, most comprehensive payroll software in 2020 had capabilities to help manage benefits administration, including health insurance, 401k plans, and workers’ compensation deductions.

What was the main benefit of using payroll software in 2020 for small businesses?

The main benefit of using payroll software in 2020 for small businesses was the significant reduction in administrative burden, improved accuracy, enhanced compliance with tax laws, and timely, efficient employee payments. Workful california

Did payroll software in 2020 handle 1099 contractor payments?

Yes, most leading payroll software solutions in 2020, including Gusto and OnPay, supported both W-2 employees and 1099 contractors, simplifying year-end tax form preparation for both.

How important was compliance in 2020 for payroll software?

Compliance was extremely important in 2020. Reputable payroll software ensured businesses adhered to complex and ever-changing federal, state, and local tax laws and labor regulations, minimizing the risk of penalties.

Were mobile apps available for payroll management in 2020?

Yes, many top payroll software providers in 2020 offered mobile applications for both employers and employees, allowing for on-the-go management and access to payroll information.

Could small businesses get tax penalty protection with payroll software in 2020?

Some premium plans from providers like QuickBooks Payroll Elite Plan offered tax penalty protection in 2020, providing an added layer of financial security against potential tax errors.

What was the typical implementation time for payroll software in 2020?

For most small businesses, implementing payroll software in 2020 was relatively quick, often taking anywhere from a few hours to a few days, depending on the complexity of the business and the amount of historical data to import. Workful payroll issues

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