Best Payroll Software for 1 to 5 Employees (2026)

For 1 employee, Gusto is the best default at $55/month but Patriot Full-Service is the cheaper honest alternative at $42/month. At 5 employees, the gap widens.

1 employee

Patriot Full-Service

$42/mo

Gusto: $55, QuickBooks: $56

3 employees

Patriot Full-Service

$52/mo

OnPay: $58, Gusto: $67

5 employees

Patriot Full-Service

$62/mo

OnPay: $70, Gusto: $79

Cost at Every Team Size: 1-5 Employees

The effective cost per worker at very small headcounts is dominated by the base fee. At 1 employee, the per-employee fee is a minor component. Here's the real monthly total at each headcount for the main providers:

Provider	1 emp.	2 emp.	3 emp.	4 emp.	5 emp.
Patriot Full-Service	$42	$47	$52	$57	$62
OnPay	$46	$52	$58	$64	$70
Wave (tax-service states)	$46	$52	$58	$64	$70
Top PickGusto Simple	$55	$61	$67	$73	$79
QuickBooks Core	$56	$62	$68	$74	$80
Square (W-2)	$41	$47	$53	$59	$65
Gusto Plus	$92	$104	$116	$128	$140

Last verified April 2026. Single-state pricing. Patriot multi-state adds $12/state/month.

Recommendations by Exact Team Size

1 Employee

At one employee, the base fee matters most. Patriot Full-Service at $42 total is the cheapest full-service option. Gusto Simple at $55 is $13 more per month ($156/year) but includes better onboarding guidance, a stronger mobile app, and access to a benefits marketplace if you want to offer health insurance in the future. If you already use QuickBooks Online, QuickBooks Core at $56 is essentially the same price as Gusto with native accounting sync.

Best price

Patriot Full-Service

$42/month

Best overall

Gusto Simple

$55/month

If you use QBO

QuickBooks Core

$56/month

2-3 Employees

At 2-3 employees, Patriot Full-Service ($47-52) remains the cheapest full-service option. OnPay ($52-58) becomes competitive for businesses with a mix of W-2 and contractor workers, because OnPay's unified pricing covers both at the same $6 per worker rate. Gusto ($61-67) is the default recommendation if you want the best onboarding experience and plan to add benefits.

4-5 Employees

At 4-5 employees, the per-employee fee starts to matter more. Patriot Full-Service ($57-62) is still the cheapest. OnPay ($64-70) and Gusto ($73-79) are close in price, with Gusto winning on features. If you are in retail and already use Square POS, Square Payroll ($59-65) integrates natively and includes tip reporting. For restaurant and retail businesses, Square's native POS integration saves meaningful administrative time.

S-Corp and Single-Member LLC Owners

If you have elected S-corp taxation for your LLC (or operate as an S-corp), you are required by the IRS to pay yourself a "reasonable compensation" W-2 salary for the work you perform in the business. This is true even if you are the only worker. Failing to take a salary while distributing profits triggers IRS scrutiny and potential re-characterisation of distributions as wages, with full payroll tax liability.

Gusto is the best choice for S-corp owner-operators. It has a specific S-corp onboarding path that walks you through setting your reasonable compensation, sets up your own W-2 correctly, and handles the quarterly and annual filings. QuickBooks Payroll is a solid alternative if you already use QuickBooks for accounting. Patriot works mechanically but provides less guidance on the S-corp-specific requirements.

For S-corp payroll specifically, the $13/month difference between Patriot and Gusto is worth it. Gusto's compliance guidance for owner-operators reduces the risk of IRS disputes about reasonable compensation.

Common Pitfalls at 1-5 Employees

Skipping payroll software to save money

Manual payroll is legal but IRS penalties for errors are steep. At 1-2 employees the $42-55/month cost of basic payroll software is almost always less than the time and risk of manual filing.

Forgetting state registration for your first hire

Before running your first payroll, you need a state employer identification number and state unemployment insurance account. Gusto and OnPay both prompt you through this during setup. Patriot requires you to have these registered before adding an employee.

Underestimating total employer cost

Payroll software fee is separate from employer payroll taxes. For every employee, you also pay the employer's share of Social Security (6.2%) and Medicare (1.45%), plus federal and state unemployment insurance. These add 10-12% to every dollar of gross wages you pay.

FAQ: Payroll for Very Small Teams

Do I need payroll software for 1 employee?

Yes. With one W-2 employee you must withhold taxes, remit deposits, file Form 941 quarterly, and issue a W-2. Payroll software automates all of this for $42-55/month. The IRS Failure to Deposit penalty starts at 2% and rises to 15% - the software cost is nearly always less than the risk.

Can I pay myself without payroll if I own the company?

Sole proprietors and single-member LLCs take owner draws, not W-2 wages. S-corp and C-corp owners who work in the business must pay themselves W-2 wages. If you are an S-corp owner, yes, you need payroll software even if you are the only worker.

What is S-corp payroll and which software handles it best?

S-corp payroll means paying yourself a reasonable W-2 compensation. Gusto has a specific S-corp onboarding path. QuickBooks Payroll handles it well. Patriot works but provides less S-corp-specific guidance.

Growing? See 6-25 employees guide | payroll by entity type | cost calculator