Cheapest Payroll Software for Small Business 2026
The cheapest full-service option is Patriot at $37 + $5/employee. The cheapest free option is Payroll4Free. Here is what you sacrifice at each tier, honestly.
Quick verdict:
- Cheapest overall: Square Payroll contractor-only plan ($0 base + $6/contractor) - but only if you have zero W-2 employees
- Cheapest self-service for W-2: Patriot Basic at $17 + $4/employee (you file taxes yourself)
- Cheapest full-service for W-2: Patriot Full-Service at $37 + $5/employee
- Cheapest full-service single-state at 5 employees: Patriot Full-Service at $62/month vs Gusto Simple at $79/month
Free Payroll Options
Three options offer genuine free (or near-free) payroll. Each has a catch that makes them unsuitable for most businesses.
Up to 25 employees
Payroll4Free
$0
Included:
- +W-2 and 1099 payroll
- +Direct deposit ($25/month add-on)
- +Tax calculations
Not included:
- -Tax filing (you file)
- -Modern integrations
- -Clean UI
The catch: Ad-supported interface. Limited to 25 employees. Manual tax filing required. Not SOC2 certified.
36 states only
Wave Payroll (self-service states)
$20/month + $6/employee
Included:
- +Payroll calculations
- +Wave Accounting integration
- +Direct deposit
Not included:
- -Tax filing (self-service states)
- -Benefits admin
- -Phone support
The catch: You file and remit taxes yourself in 36 states. Only integrates with Wave Accounting (not QBO or Xero).
Contractor-only
Square Payroll (contractors only)
$0 base + $6/contractor
Included:
- +1099 contractor payments
- +W-9 collection
- +1099-NEC filing
- +Direct deposit
Not included:
- -W-2 employees
- -Benefits admin
- -Advanced HR
The catch: This plan cannot process W-2 employees at all. Switch to the W-2 plan ($35 base) the moment you hire a full-time employee.
Budget Tier: $17 to $40 Base
These four providers cover the $17 to $40 base price range. All four are legitimate, full-featured payroll software options for single-state small businesses.
Patriot Basic
$17/month + $4/employee
Best for price-sensitive businesses with prior payroll tax experience. You do the filing; they do the math.
Strengths
- +Lowest base fee of any provider
- +30-day free trial
- +Clean modern interface
- +Add-on full-service available later
Weaknesses
- -Self-service filing (you file taxes)
- -No contractor-only plan
- -Multi-state costs $12/state/month extra
- -Limited integrations
Patriot Full-Service
$37/month + $5/employee
Cheapest full-service payroll (taxes filed for you). Best choice for single-state businesses up to 20 employees that want to minimise cost without doing their own tax filings.
Strengths
- +Taxes filed automatically
- +5 employees at $62/month vs Gusto's $79
- +30-day free trial
- +US-based support
Weaknesses
- -$12/month per extra state
- -No contractor-only plan
- -Limited HR features
- -No QuickBooks native sync
Square Payroll (W-2)
$35/month + $6/employee
Competitive at the budget tier, especially for businesses already using Square POS. Tip reporting and hourly worker support built in.
Strengths
- +Native Square POS integration
- +Tip reporting built in
- +Contractor-only plan available
- +Clean mobile app
Weaknesses
- -Limited accounting integrations (no QBO native)
- -No benefits administration
- -No 401k integration
OnPay
$40/month + $6/employee
Best value in this tier if you need to cover both W-2 employees and 1099 contractors without paying for two separate plans.
Strengths
- +Unified pricing (W-2 and contractors same rate)
- +All 50 states included
- +Partner sync with QBO and Xero
- +Strong compliance support
Weaknesses
- -Mobile app limited
- -No native QBO sync (partner only)
- -Benefits are add-on only
The Real Cost of "Cheap" Payroll
Free or self-service payroll can cost more than a paid full-service option when you factor in your time and the risk of errors. Consider the math for a typical small business owner who values their time at $50 per hour:
| Option | Software cost | Hours/month | Time cost (@$50/hr) | True monthly cost |
|---|---|---|---|---|
| Manual (no software) | $0 | 6 | $300 | $300 |
| Payroll4Free | $0 | 4 | $200 | $200 |
| Patriot Basic (self-service) | $37 | 2 | $100 | $137 |
| Patriot Full-Service | $62 | 0.5 | $25 | $87 |
| Gusto Simple | $79 | 0.5 | $25 | $104 |
Based on 5 employees, bi-weekly payroll. Time estimates are averages; experienced owners may be faster.
Where "Cheap" Becomes Expensive
Three scenarios where the cheapest option becomes the most expensive:
Multi-state with Patriot
Patriot charges $12/month per state beyond the first. At 3 states, that is $24 extra per month ($288/year). Patriot Full-Service at 3 states and 5 employees costs $62 + $24 = $86/month, compared to Gusto's $79. Patriot is no longer cheaper.
Contractor businesses on Patriot
Patriot Basic does not support contractor payments at all. Patriot Full-Service supports contractor payments but at $5/contractor, not a dedicated contractor-only plan. If your team is mostly contractors, Square Payroll ($0 base + $6/contractor) or OnPay ($40 + $6 unified) are significantly cheaper.
The Wave self-service risk
Wave Payroll in self-service states calculates taxes but you file and remit them yourself. One missed quarterly deposit costs a minimum 2% penalty on the unpaid amount. For a $10,000 quarterly tax liability, that is $200. Patriot Full-Service at $62/month costs $744/year - less than two missed-deposit penalties on a typical small business payroll.
Our verdict for cost-conscious owners
Patriot Full-Service at $37 + $5 is the rational minimum for most W-2 employers in a single state. Free payroll is genuinely free only for very disciplined solo founders using Wave who are comfortable filing their own taxes. Gusto Contractor-Only at $35 + $6 is the best all-in deal for 1099-only businesses that need 1099 filing included. Do not use Patriot Basic unless you are confident in self-service tax filing.
FAQ: Cheap Payroll Options
Is there truly free payroll software?
What is the difference between Patriot Basic and Full-Service?
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When does Patriot become more expensive than Gusto?
Related: contractor-only payroll | full-service vs self-service explained | cost calculator | dedicated cheapest payroll guide at cheapestpayrollservice.com