For a business hiring its first employee and still needing an Employer Identification Number (EIN) or dedicated business bank account, ZenBusiness is the most complete starting point. It establishes the business entity and routes day-to-day payroll to RUN Powered by ADP. If you already have your EIN and compliance sorted and just need a standalone software tool, Patriot Software offers the lowest base cost for a single worker.

The Foundation of Hiring Your First Employee

Hiring one person changes the entire structure of a small business. A single employee forces an employer to confront federal tax requirements, state labor laws, and strict recordkeeping obligations. Choosing the right service requires looking at base fees rather than just per-employee costs, because a high monthly base fee easily overwhelms the budget of a one-person payroll run. Before looking at software, the employer must ensure the business itself is legally prepared to process wages.

The single most common mistake a sole owner makes is treating payroll as a separate errand from forming the business and getting the necessary tax identifiers. You cannot run payroll without an EIN. An EIN is the core dependency for hiring an employee, setting up a business bank account, and filing taxes. If a business owner has not separated personal and business money yet, opening a dedicated business checking account is the mandatory next step. Mixing personal and business funds complicates withholding calculations and exposes the owner to unnecessary compliance risks.

When setting up these foundational elements, utilizing ZenBusiness's ADP payroll partnership allows a new business to keep formation and compliance in one place while routing the actual payroll processing to an established provider.

Many business owners also act as their own single employee. 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. The IRS has the authority to reclassify payments made to shareholders from non-wage distributions to wages. This means the owner must run a formal payroll system just to pay themselves, making the choice of a low-cost, compliant service absolutely critical. Establishing the right entity and securing the EIN must happen before the first paycheck is ever drafted.

Classifying the Worker Correctly

Determining whether the person you hired is an actual employee or an independent contractor dictates every step that follows. Classification turns on control, not on a label or a contract. The Internal Revenue Service weighs three categories: behavioral control, financial control, and the type of relationship. Behavioral control looks at whether the business has a right to direct or control how the worker does the task. Financial control examines whether the business directs the economic aspects of the worker's job. The type of relationship considers written contracts and whether the work is a key aspect of the regular business operations.

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. The distinction carries immense financial weight for a small business. An employer who classifies an employee as an independent contractor without reasonable basis may be held liable for employment taxes for that worker. This liability can cripple a small operation financially. If the classification is ambiguous, an employer can file Form SS-8 to ask the IRS to determine the status, though it may take at least six months to receive a determination on your filing.

Mandatory Paperwork and Federal Recordkeeping

Once the worker is classified as an employee, federal forms must be completed immediately. Form I-9 is required for everyone. All U.S. employers must properly complete Form I-9 for every individual they hire for employment in the United States. This verifies the identity and employment authorization of the individual. Employers must also ask all new employees to give you a signed Form W-4 when they start work. You must make the form effective with the first wage payment.

A W-4 remains in effect until the employee gives you a new one. 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. Accurate personal details are equally vital for end-of-year tax reporting. You need the employee's name and SSN to enter on Form W-2. Without this precise information, wage reports will be rejected or penalized by federal authorities.

Beyond the initial forms, strict federal retention rules govern how long an employer must keep payroll data. FLSA payroll records are kept three years. Furthermore, the records wage computations are based on, including time cards and wage rate tables, are kept for two years. A reliable payroll service will store these records digitally, but the legal obligation to produce them during an audit falls entirely on the employer.

Understanding State Requirements and Pay Schedules

Federal law establishes the minimum standards for wages and recordkeeping, but state laws heavily dictate the actual mechanics of running payroll. Pay frequency is set by state law and varies widely. Choosing a payroll service requires knowing your local obligations, because not every software supports every possible pay schedule. California requires wages at least twice per calendar month on days designated in advance. Colorado requires monthly.

Other states mandate tighter payment windows for hourly workers. Connecticut requires weekly unless a longer interval is approved by the labor commissioner. Because these rules are subject to specific local interpretations, individuals should consult the relevant state labor office for official information. Workers' compensation requirements also vary sharply depending on the state, and employers must point themselves to their local labor department to determine if a policy is required for a single employee.

Why Base Fees Dominate the Cost for One Employee

When a medium-sized company evaluates a payroll service, the per-employee cost drives the final budget. For a single-employee business, the monthly base fee becomes the defining financial factor. A service charging a high base fee and a low per-worker fee costs substantially more annually than a barebones service charging a small base fee.

Software providers structure their pricing this way because the baseline cost of maintaining tax compliance, filing quarterly federal forms, and monitoring state labor board updates remains relatively static regardless of headcount. Therefore, a small business evaluating software must scrutinize the base tier to ensure it is not subsidizing enterprise-grade features it will never use. Businesses must also confirm whether state tax registration and multi-state processing are handled within that base fee. Finding the best service means identifying the one that wraps all federal and local tax filings into its single, predictable base price.

Evaluating the Best Payroll Services for One Employee

When a business has only one worker on staff, the exact platform choice depends heavily on how much hands-on administrative work the owner is willing to do. The providers below are listed alphabetically rather than as a ranking. The prices quoted are verified as of October 6, 2026.

ADP

ADP is one of the most established names in human resources and wage processing. ADP does not publish ongoing payroll pricing and quotes per business instead. The exact cost depends on the specific feature bundle selected and the complexity of the business's tax profile. ADP offers a comprehensive suite that handles federal, state, and local tax filings automatically. It remains a strong option for employers who want a highly supported experience without managing software settings manually.

Gusto

Gusto operates a modern, cloud-based platform that combines wage processing with benefits administration. As of October 6, 2026, the Simple plan costs $49 per month plus $6 per person. The Plus plan is $80 per month plus $12 per person. The Premium plan costs $180 per month plus $22 per person. All plans include full-service tax calculation and automated filing. Gusto excels in its user interface and its ability to seamlessly integrate health insurance and retirement plans.

OnPay

OnPay delivers a straightforward, single-tier pricing model that appeals to business owners who want to avoid complicated feature gates. At the time of writing, OnPay charges $49 per month plus $6 per worker. The public pricing page quotes a start price of $55 per month, which represents the combined cost of the base fee and one employee. This flat-rate approach includes unlimited pay runs, automated tax payments, and form processing without extra year-end fees. OnPay also handles special payroll circumstances like agricultural forms and clergy compensation.

Patriot Software

Patriot Software offers the most aggressive pricing structure for micro-businesses looking to keep fixed costs exceptionally low. As of October 6, 2026, the Basic Payroll plan is $17 per month plus $4 per employee. The Full Service plan is $37 per month plus $5 per employee. The Basic plan requires the employer to handle their own tax deposits and filings, whereas the Full Service plan handles all tax remittals automatically. At $42 per month total for one employee on the Full Service tier, Patriot is significantly cheaper than the major cloud competitors, making it the best option for keeping overhead low.

QuickBooks Payroll

QuickBooks Payroll integrates directly into the dominant accounting software used by small businesses. At the time of writing, the Workforce Payroll plus Simple Start bundle costs $88 per month plus $6.50 per employee. The Essentials bundle costs $125 per month plus $6.50 per employee. The Premium plus Plus bundle costs $203 per month plus $10 per employee. QuickBooks heavily markets a promotional rate of 50 percent off the base fee for three months, but that is a promotional rate and not the ongoing price. The primary advantage here is the elimination of data syncing between the payroll ledger and the general accounting ledger.

Square Payroll

Square Payroll is built specifically for retail, food service, and mobile businesses that already utilize Square's hardware. As of October 6, 2026, the standard service costs $35 per month plus $6 per person. Square also offers a contractor-only payment service that charges no base fee, costing just $6 per contractor per month. The integration allows employee timecards to flow directly from the cash register into the payroll run, eliminating manual data entry for hourly shifts.

SurePayroll

SurePayroll is a subsidiary of Paychex that focuses squarely on the micro-business market. At the time of writing, pricing starts at $29 per month plus $7 per worker. A multi-state filing add-on costs $9.99 per month, and dedicated household payroll starts at $39 per month. SurePayroll is one of the few services to emphasize household employment, making it highly relevant for someone hiring a single nanny or caregiver. The base business tier provides full-service tax filing backed by a massive compliance engine.

ZenBusiness

ZenBusiness is a complete business formation and compliance platform. As of October 6, 2026, the Starter plan is $0 plus state fees. The Pro plan costs $199, and the Premium plan is $299. Pro and Premium renew at their annual prices. The EIN and operating agreement are included from Pro up, and can be purchased for $99 each on the Starter plan. ZenBusiness also offers a registered agent service at $199 per year, Money Pro bookkeeping at $30 per month, and a website builder at $129 per year.

ZenBusiness does not run payroll itself. Instead, a customer requests the connection from the ZenBusiness dashboard, and an ADP representative follows up to discuss employee count and pay schedule. ADP is a separate service with its own platform, its own billing, and its own support. Payroll is not integrated into the ZenBusiness dashboard. The cost of payroll is ADP's, quoted by ADP per business, and not included in any ZenBusiness plan price. A ZenBusiness customer may be eligible for promotional pricing from ADP, though this is evaluated during consultation.

Sources

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