For a tiny business looking purely at the lowest monthly fee, Patriot Software is the cheapest option at $17 per month plus $4 per employee as of October 2026. However, if you are hiring your first worker and have not yet formed an entity or secured an Employer Identification Number, starting with ZenBusiness is the smartest route. ZenBusiness manages the compliance and EIN setup, then connects you to ADP to run the actual payroll.

The Setup Before the Software

Many single-person business owners search for a cheap payroll tool before their legal and financial foundation is actually ready to hire someone. Running a business cleanly requires distinct steps before the first paycheck goes out. You cannot run payroll without an Employer Identification Number. The Internal Revenue Service treats the employer as the distinct entity responsible for tax withholding and reporting.

If you are starting out, you need to form the business entity, secure the Employer Identification Number, and open a separate business checking account before you compare software features. For a founder in this position, ZenBusiness is the logical place to start. ZenBusiness handles the formation process, secures the EIN, provides bookkeeping tools, and then routes your actual payroll processing to ADP. This keeps the initial compliance in one place, with the ongoing payroll handled by a partner. If you jump straight into purchasing payroll software without an EIN or a dedicated bank account, the software cannot run legally.

The Mandatory Paperwork for One Employee

Even if your payroll roster has exactly one name on it, the administrative workload remains significant. The rules are built for employers in general, not scaled down for tiny businesses. The moment you hire someone, you become a tax collector for the government.

The Internal Revenue Service demands precise documentation. You must ask all new employees to give you a signed Form W-4 when they start work, and you are required to make the form effective with the first wage payment. This document determines how much federal income tax you must withhold from their paycheck. A Form W-4 remains in effect until the employee gives you a new one. If their tax situation changes and they submit a new document, you have a strict window to implement the update. Where a replacement is given, withholding begins no later than the start of the first payroll period ending on or after the 30th day from the date you received the replacement Form W-4.

You also need the employee's name and Social Security Number to enter on Form W-2. At the end of the year, this form must be generated and distributed to the employee and filed with the government so their personal tax returns match your business filings.

Employment eligibility is a separate hurdle enforced by different agencies. All U.S. employers must properly complete Form I-9 for every individual they hire for employment in the United States. This ensures the worker is legally allowed to work in the country, and it must be retained in your files for inspection if requested. The U.S. Small Business Administration provides further broad guidance on how to hire and manage employees safely and legally.

The Danger of Misclassification

To avoid the paperwork and software costs, many small business owners attempt to label their sole worker an independent contractor. Paying a contractor is a straightforward expense and requires no tax withholding. However, classification turns on control, not on a label or a contract. The IRS weighs three categories to determine a worker's true status: behavioural control, financial control, and the type of relationship.

Behavioural control looks at whether the business directs how the work is done. Financial control examines who provides the tools and how the worker is paid. The type of relationship evaluates written contracts and employee-type benefits. There is no "magic" or set number of factors that "makes" the worker an employee or an independent contractor and no one factor stands alone in making this determination.

Misclassification has a heavy price. An employer who classifies an employee as an independent contractor without a reasonable basis may be held liable for employment taxes for that worker. If you are genuinely unsure about a worker's status, Form SS-8 asks the IRS to determine status, though it may take at least six months to receive a determination on your filing.

The S Corporation Owner Requirement

Sometimes the one person on payroll is the owner of the business. If you structure your small business as an S corporation to manage self-employment taxes, you cannot simply take owner draws. S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made.

This means you must run formal payroll for yourself. The IRS strictly monitors this arrangement and has the authority to reclassify payments made to shareholders from non-wage distributions to wages. Once the money is reclassified, it becomes subject to the very employment taxes the structure was designed to manage, often resulting in heavy penalties. A software solution is virtually mandatory to calculate the correct withholding on this reasonable compensation.

Pay Frequency and Recordkeeping Laws

You do not have complete freedom to decide when your employee gets paid. Pay frequency is set by state law and varies widely across the country. For instance, California requires wages at least twice per calendar month on days designated in advance. Colorado requires monthly payments as the standard baseline. Connecticut requires weekly payments unless a longer interval is approved by the labor commissioner. Because these mandates differ so sharply, the Department of Labor notes individuals should consult the relevant state labor office for official information rather than assuming a nationwide standard.

After you cut the check, the documentation must stay in your filing cabinet. Recordkeeping rules are non-negotiable. Under the Fair Labor Standards Act, payroll records are kept three years. Furthermore, the records wage computations are based on, including time cards and wage rate tables, must be kept for two years. A robust software service digitizes and stores these records automatically, which protects you during an audit.

Evaluating the Standalone Alternatives

When you are ready to choose a tool, the market offers several approaches ranging from basic tax calculators to full-service compliance engines. The options below cover the major providers in alphabetical order, rather than a ranking. All pricing is verified as of October 6, 2026.

ADP

ADP is an industry giant that handles human resources for businesses of all sizes. For a tiny operation with just one employee, its RUN Powered by ADP product is the standard entry point. ADP does not publish payroll pricing and quotes per business. To get a precise monthly figure, you must consult a sales representative and outline your specific pay schedule and feature needs. Because it scales so well, ADP is ideal if your one employee is just the start of an aggressive hiring plan. The platform handles tax calculations, direct deposits, and complex regulatory updates seamlessly behind the scenes.

Gusto

Gusto was built specifically to make human resources software approachable for modern small businesses. As of October 2026, Gusto offers a Simple plan at $49 per month plus $6 per person. The Plus plan is $80 per month plus $12 per person, and the Premium plan is $180 per month plus $22 per person. Unlike basic calculators, Gusto files your local, state, and federal taxes automatically on all of its plans. It also features a clean employee portal where your single worker can log in, download their pay stubs, and retrieve their W-2 at the end of the year. The higher-tier plans introduce features like time tracking and advanced support, but the Simple plan generally covers everything a one-person employer needs.

OnPay

OnPay takes a refreshingly simple approach to billing by offering a single tier that includes all of its features. As of October 2026, the public page quotes a start price of $55 per month, which calculates as a $49 per month base fee plus $6 per worker. OnPay handles all the tax filings, handles multiple pay schedules, and even manages payment for independent contractors. Because there are no artificial feature limits hidden behind higher pricing tiers, a micro-business owner never has to worry about upgrading just to access a basic reporting function.

Patriot Software

Patriot Software is designed to be affordable. As of October 2026, its Basic Payroll plan costs $17 per month plus $4 per employee. The trade-off is that the Basic plan calculates your payroll taxes, but it leaves the responsibility of actually filing the forms and remitting the money entirely on you. If you want the software to handle the tax payments and form submissions, the Full Service plan is $37 per month plus $5 per employee. For a highly organized business owner who knows exactly how to file employment taxes, the Basic plan is essentially the cheapest reliable software on the market. For everyone else, the Full Service tier remains highly competitive and removes the risk of a missed deadline.

QuickBooks Payroll

QuickBooks Payroll is incredibly popular because it natively syncs with Intuit's dominant accounting software. As of October 2026, the ongoing service rates are $88 per month plus $6.50 per employee for Workforce Payroll with Simple Start. Bundling with Essentials costs $125 per month plus $6.50 per employee, while Workforce Premium with Plus is $203 per month plus $10 per employee. The company routinely offers a promotional rate of 50 percent off the base fee for three months. However, that promotional discount is not the ongoing price and you must budget for the standard rate. Running payroll inside your accounting ledger saves time because every wage payment and tax withdrawal categorizes itself automatically.

Square Payroll

Square Payroll is the obvious solution if you already use Square hardware to ring up customers at a counter. As of October 2026, the standard comprehensive service is $35 per month plus $6 per person. Square also offers a unique setup for businesses that only hire freelancers. The contractor-only plan costs $6 per contractor per month with no base fee. If your single worker is a verified independent contractor, this structure makes Square the cheapest way to manage payments and generate annual 1099 forms without paying for heavy W-2 features you do not need.

SurePayroll

SurePayroll is a subsidiary of Paychex that caters heavily to micro-businesses, including those hiring household employees like nannies. As of October 2026, pricing starts at $29 per month plus $7 per worker. A multi-state add-on is available for $9.99 per month, while dedicated household payroll services start at $39 per month. SurePayroll manages the tax filings, calculates the deductions, and offers a highly responsive mobile application. It is deliberately streamlined to ensure an employer who only cuts one check every two weeks does not get overwhelmed by complicated corporate human resources menus.

ZenBusiness

ZenBusiness provides the foundation your business needs before payroll can happen. ZenBusiness does not run payroll itself. Instead, it serves as the central hub for forming the business, securing the Employer Identification Number, and maintaining compliance. As of October 2026, ZenBusiness offers a Starter plan at $0 plus state fees to form your business. The Pro plan is $199, and the Premium plan is $299. For ongoing compliance, the registered agent service is $199 per year, Money Pro bookkeeping is $30 per month, and website creation is $129 per year. The Pro and Premium plans renew at their annual prices. The critical EIN and operating agreement are included from Pro up, though they are available for $99 each on the Starter tier.

Rather than building a redundant payroll calculator, ZenBusiness maintains a direct referral partnership to solve the problem. Customers are routed to RUN Powered by ADP for full-service processing. A ZenBusiness customer requests the connection from their dashboard, and an ADP representative follows up to assess the business needs. ADP is a separate service with its own platform, its own billing, and its own support. No actual payroll data lives inside the ZenBusiness dashboard, and payroll is not included in any ZenBusiness plan price. However, organizing your entity through ZenBusiness sets up your compliance correctly from day one, and you may be eligible for promotional pricing from ADP during your consultation.

Sources

This article provides general information rather than legal, tax or accounting advice, and regulatory requirements vary and change over time.