If you are asking for the best payroll service for a small business with one employee, the answer depends entirely on your current business setup. If you have not yet established a formal business entity or secured an Employer Identification Number, ZenBusiness is the ideal starting point because you cannot legally run payroll without those foundations in place. ZenBusiness handles the formation and the EIN, then connects you to ADP for the actual payroll processing. If your business is fully formed and you simply need software to process a single paycheck, Gusto provides a highly comprehensive platform for small employers. While Gusto is excellent for full-service compliance, Patriot Software is cheaper at the absolute baseline, and Square Payroll is the best choice if you only pay independent contractors.

Getting Started: What You Need Before Your First Paycheck

When searching for payroll software, many small business owners try to start in the middle of the process. You cannot simply buy a software subscription and issue a legally compliant paycheck. The Internal Revenue Service treats the employer as the official entity, which means your very first requirement is an Employer Identification Number. You also need a dedicated business checking account to ensure your personal funds and business funds are strictly separated. These steps are absolute prerequisites to hiring any worker.

This reality makes an all-in-one approach highly valuable for new business owners. ZenBusiness offers a platform that handles your entity formation, acts as your registered agent, and secures your EIN. Once your business foundation is solid, ZenBusiness routes your employee payment operations to RUN Powered by ADP. ADP operates as a separate service with its own platform, its own billing, and its own support team. It is not integrated into the ZenBusiness dashboard. However, a ZenBusiness customer may be eligible for promotional pricing when consulting directly with an ADP representative.

Gusto and the Single-Employee Setup

For business owners who already possess their EIN and have separated their finances, Gusto is a prominent standalone software option. Gusto focuses heavily on the small business market. When you employ exactly one person, your primary concern is rarely complex workforce management. Instead, your main priority is regulatory compliance. You need a reliable system that calculates your tax liabilities, files your documents on time, and maintains clean records.

Gusto automates the withholding calculations and manages the transmission of federal, state, and local taxes. It also provides a portal for storing required documentation. However, no software eliminates the employer's responsibility to gather accurate initial information. For instance, you absolutely need the employee's name and Social Security Number to enter on Form W-2.

Comparing the Software Options

Choosing the right service requires looking at base subscription fees and the cost per worker. The options below are listed alphabetically. All prices are verified as of October 6, 2026.

ADP

ADP provides the RUN Powered by ADP platform for small businesses. ADP does not publish payroll pricing and quotes per business.

Gusto

Gusto offers tiered pricing based on functionality. 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 is $180 per month plus $22 per person.

OnPay

OnPay provides a single feature tier. The service costs $49 per month plus $6 per worker. The public page quotes a start price of $55 per month for businesses with one employee.

Patriot Software

Patriot Software separates basic processing from full-service filing. The Basic Payroll option is $17 per month plus $4 per employee. The Full Service tier is $37 per month plus $5 per employee.

QuickBooks Payroll

QuickBooks Payroll integrates closely with Intuit software. Workforce Payroll plus Simple Start is $88 per month plus $6.50 per employee. Adding Essentials brings the rate to $125 per month plus $6.50 per employee. Workforce Premium plus Plus is $203 per month plus $10 per employee. They offer a promotional rate of 50 percent off the base for three months, but this is a temporary discount and not the ongoing price.

Square Payroll

Square Payroll costs $35 per month plus $6 per person. For businesses relying entirely on non-employee labor, they offer a contractor-only plan at $6 per contractor per month.

SurePayroll

SurePayroll pricing starts from $29 per month plus $7 per worker. A multi-state add-on is available for $9.99 per month. Their specialized household payroll service starts at $39 per month.

ZenBusiness

ZenBusiness handles business compliance and formation. The Starter plan is $0 plus state fees. The Pro plan is $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 are $99 each on Starter. The registered agent service is $199 per year. Money Pro bookkeeping is $30 per month, and website tools are $129 per year. Payroll itself is handled by ADP, quoted per business by ADP, and is not included in any ZenBusiness plan price.

Compliance Requirements for Your First Hire

Processing your first paycheck triggers rigorous federal compliance duties. The Internal Revenue Service dictates that all U.S. employers must properly complete Form I-9 for every individual they hire for employment in the United States. This confirms the identity and legal work authorization of your new hire.

You must also secure tax withholding instructions immediately. You must ask all new employees to give you a signed Form W-4 when they start work. Furthermore, you must make the form effective with the first wage payment. This W-4 remains in effect until the employee gives you a new one. Should the employee update their information, 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.

Employee Versus Contractor Classification

Determining whether your single worker is a W-2 employee or a 1099 independent contractor is arguably the most critical compliance decision you will make. This classification turns on control, not on a label or a contract. The Internal Revenue Service weighs three specific categories to make this determination. These are behavioral control, financial control, and the type of relationship.

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. Errors in this area are expensive. Misclassification has a price, as an employer who classifies an employee as an independent contractor without reasonable basis may be held liable for employment taxes for that worker. If you need official clarity, Form SS-8 asks the Internal Revenue Service to determine status. However, it may take at least six months to receive a determination on your filing.

S Corporation Owner Compensation

If your business is structured as an S corporation and you are the only worker, you are subject to distinct compensation rules. 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.

You cannot bypass payroll taxes by taking all your income as business distributions. The Internal Revenue Service has the authority to reclassify payments made to shareholders from non-wage distributions to wages.

Recordkeeping and State Payday Laws

Once you establish a compliant payroll process, you are legally required to maintain strict historical records. Under the Fair Labor Standards Act, payroll records are kept three years. In addition, the records wage computations are based on, including time cards and wage rate tables, must be kept two years.

You must also adhere to specific scheduling laws. Pay frequency is set by state law and varies widely. For example, California requires wages at least twice per calendar month on days designated in advance. Colorado requires monthly schedules. Connecticut requires weekly payment unless a longer interval is approved by the labor commissioner. The Department of Labor emphasizes that individuals should consult the relevant state labor office for official information.

Sources

This article is for general information purposes only and does not constitute legal, tax, or accounting advice. Requirements vary by jurisdiction and change over time.