Full-Service vs Self-Service Payroll: What's the Difference?
Full-service means the software files taxes for you. Self-service means you file them yourself. The IRS does not care which you choose - but the penalties for late filing do.
Full-Service Payroll
The software handles all tax obligations automatically.
- +Federal tax deposits remitted automatically
- +State income tax withheld and remitted
- +FUTA and SUTA deposits handled
- +Form 941 filed quarterly
- +W-2s filed by January 31
- +No missed-deadline risk for tax filing
Providers: Gusto, OnPay, QuickBooks Core+, ADP, Paychex, Rippling
Self-Service Payroll
The software calculates taxes; you file and pay them yourself.
- +Lower monthly cost ($15-20 less than full-service)
- +Full control over filing timing
- -You remit federal deposits on IRS schedule
- -You file Form 941 quarterly
- -You handle state deposits and filings
- -Penalty risk if you miss a deadline
Providers: Patriot Basic, Wave Payroll (non-tax-service states)
What Full-Service Covers
Full-service payroll handles the complete payroll tax lifecycle:
- Federal deposits: Social Security and Medicare taxes (employer and employee shares), federal income tax withholding. Due semi-weekly for larger payrolls, monthly for smaller ones.
- FUTA (federal unemployment): Due quarterly. Rate is 6% on first $7,000 of wages per employee, reduced by SUTA credit.
- State income tax withholding: Filed and remitted on the state's schedule (varies by state - monthly, quarterly, or semi-annual).
- SUTA (state unemployment insurance): Rate varies by state and your claim history. Due quarterly.
- Form 941: Quarterly federal payroll tax return. Reconciles deposits with withholding. Due April 30, July 31, October 31, January 31.
- W-2 filing: Annual. Employer copies to SSA by January 31, employee copies distributed by January 31.
Cost Comparison at 5 Employees
| Option | Monthly cost (5 emp.) | Annual cost | Tax filing responsibility |
|---|---|---|---|
| Patriot Basic (self-service) | $37 | $444 | You file and pay all taxes |
| Patriot Full-Service | $62 | $744 | Software files and pays |
| Wave (self-service state) | $70 | $840 | You file and pay all taxes |
| OnPay | $70 | $840 | Software files and pays |
| Top PickGusto Simple | $79 | $948 | Software files and pays |
| QuickBooks Core | $80 | $960 | Software files and pays |
Last verified April 2026. Single-state pricing.
The Penalty Math: When Self-Service Goes Wrong
The IRS Failure to Deposit penalty:
| Days late | Penalty rate | On $5,000 deposit | On $15,000 deposit |
|---|---|---|---|
| 1-5 days | 2% | $100 | $300 |
| 6-15 days | 5% | $250 | $750 |
| 16+ days | 10% | $500 | $1500 |
| 10+ days after IRS notice | 15% | $750 | $2250 |
The annual cost of Patriot Full-Service over Patriot Basic at 5 employees is $300 (the $25/month difference x 12). A single late federal deposit on a $10,000 payroll tax liability costs $100 to $1,500 depending on how late it is. For most businesses, the insurance value of full-service easily exceeds its cost.
Who Should Choose Self-Service
- +Owners with prior payroll tax filing experience who know the schedules
- +Single-state, simple payroll (no multi-state, no tips, no complex scenarios)
- +Very small teams (1-3 employees) where saving $20/month is meaningful
- +Business owners with a bookkeeper or accountant who handles the tax filings
Who Should Choose Full-Service
- +First-time employers with no payroll tax filing experience (almost everyone)
- +Multi-state businesses (multiple filing deadlines across states)
- +Growing businesses (complexity increases with headcount)
- +Anyone who has missed a payroll tax deadline before
Related: cheapest payroll options | state tax coverage by provider | cost calculator