The technology utilized by larger organizations is rapidly changing as organizations are combining their human resource, global identity management, and team finances into one operating system. The process of determining how to pay your employees has changed from simply a bookkeeping function to a serious strategic decision regarding international expansion and legal risk.
This guide will assist you in identifying which of the top platforms will meet your company's current and future needs.
We have assessed each of the platforms on several operational triggers and through comparisons of pricing, compliance weight, and real-world implementation paths.
The Quick Summary: Select by Growth Stage
When selecting a system for your company, you should focus on what your business is about to do next, rather than on the basic list of features available. While each of the major platforms will calculate your tax withholdings and direct deposit funds into your employee's bank account, each of them will cater to a different type of business.
For example, a startup company with only ten employees operating out of their home will have a significantly different requirement compared to a mid-market company that is hiring independent contractors throughout Europe and Asia.
In order to expedite the decision-making process, it is recommended to classify all of the platforms into four main categories:
US-only Early Stage: Hundreds of small platforms such as Gusto or OnPay provide the simplest way to manage tax filings and provide direct deposits to US-based teammates.
Fast Scaling as IT Heavy: Platforms such as Rippling connect employee records directly to software access and security, and facilitate physical device delivery.
Global and distributed Team/International Contractor: Platforms such as Deel and Papaya Global handle the majority of the legal responsibilities associated with international contracts, currency variations, and local entity legalities.
Outsource Compliance: Platforms such as Justworks assume the role of the co-employer of your team, allowing you to provide more comprehensive benefits as a part of a Professional Employer Organization (PEO).
Triggers for Upgrading Your Payment Infrastructure
Many companies sit on their financial systems for too long, even when they are hiring in multiple countries and require a significant amount of manual labor from the finance department as a result of continuing to use small business solutions.
The first step to avoiding this situation is to understand the three main triggers for requiring an upgrade to your software.
Understanding Who Owns Legal Compliance
The most critical question to ask about a platform is not if it supports legal compliance. The most critical factor is whether the vendor registers your accounts, files tax returns, tracks notices, and assumes financial responsibility.
Some vendors simply provide the software and shift the risk of noncompliance back on you; other vendors provide an end-to-end compliance solution. This distinction is essential because managed compliance is more than just a way to accept payments. If you are employing individuals across state or international borders, you will require managed compliance.
Calculating Total Software Cost Across Headcount Levels
A software platform that is inexpensive for a company with ten employees may become prohibitively expensive once that company reaches fifty employees. Many platforms charge a low base fee and then add additional costs for things like time tracking, enhanced employee benefits, international payments, and premium support.
The modular nature of pricing makes it difficult to estimate your total cost. You must estimate the cost of your SaaS payroll software based on the number of employees you expect to have a year from now, not just what your current employee count is.
Integrating Payment Information into the General Ledger
Potential buyers place a high priority on understanding how payment data will be integrated into other core systems and processes. You should make sure to ask whether the software can automatically populate the general ledger or not, to include department-specific codes, as well as the ability to synchronously update employees with real-time changes.
Inevitably, when payment systems and software (like NetSuite or QuickBooks) do not integrate properly with one another, the finance department is often required to spend hours correcting discrepancies. An effective integration allows for the management of failed data transmission, as well as a clear identification of who will be responsible for fixing the issue.
Evaluating Leading SaaS Payroll Software by Use Case
While there are many excellent options on the market today, they are not all designed to serve the same type of businesses. Below is an overview of the most viable solutions based on the type of company they are designed to support, their published pricing structures, each solution's overall strengths, and limitations.
1. Gusto
Gusto is designed for small and mid-sized businesses, typically in the United States, that want an all-in-one payroll platform with a complete set of functionalities available under one roof.
For both payroll and all-in-one solutions, Gusto offers integrated domestic payments, simple benefits administration, and basic human resource support through one-account access.
The pricing structure for Gusto is similar to what other companies in the industry are currently charging, currently starting at $49 per month plus $6 per employee for the basic plan, which is similar to many other SaaS payroll software services. The more feature-rich plans are priced at $80 per month (plus $12 per employee).
This structure makes pricing highly predictable for small teams; one recent case study highlighted Gusto being effectively leveraged by a rapidly growing company called VYRL, from zero employees to 20 employees within 15 months, by taking advantage of its highly flexible contractor payment options and simple tax forms. Gusto's strengths include automatic tax calculations, ease of onboarding, and a simple-to-use employee self-service area.
2. Rippling
Rippling is a unified platform that integrates human resources management, payroll management, IT management, and application management all into one comprehensive system.
The target market of Rippling is developing technology companies and distributed teams that must manage large amounts of administrative work. Rippling does so by automating such work.
Pricing for Rippling is based on a modular basis. The base payment module costs $35 per month, with an additional $8 for each employee added to the system. Companies that purchase Rippling generally do so to manage computers and software, therefore the cost of a fully deployed stack may range from $25 to $40 per employee per month.
A commissioned study of total economic impact, conducted on behalf of Rippling, demonstrated a 137% return on investment achieved by a composite organization using Rippling. The study points to an enormous amount of operational savings as the reason for the ROI. Even though these results are based on modeled data, it is clear from the study that the administrative time savings achieved by organizations using Rippling are substantial.
The primary benefit of Rippling is the capability to maintain a single employee file. When you hire an employee, you can order their laptop, set up their corporate email account, give them access to their software (including accounts payable), and add them into your payment system all at once. The only limitation to this is that the entire process of setting up the system does take time. Implementing all of the features may be difficult for a first-time administrator. The modular approach makes it difficult to know the final cost of a Rippling subscription until all modules are in use.
3. Deel
Deel is a payment processing and contractor management system that enables businesses to pay contractors and manage their workforce globally.
Deel was developed specifically to meet the needs of businesses with a distributed workforce, including those that hire internationally across multiple jurisdictions, where local laws prohibit standard employment for each jurisdiction.
The pricing structure for Deel varies depending on the type of worker being managed. For instance, to manage an international contractor, the monthly pricing for Deel is $49. If Deel is used as an employer of record (EOR), the monthly fee is $599 per employee. On the other hand, if you manage your own legal entities in multiple countries, the global version of Deel has a monthly fee of $29 per employee.
For the US, the pricing for Deel is $19 per employee. According to a commissioned study, businesses that utilize Deel experience an 80% reduction in the number of hours spent managing vendors. One company that utilized Deel reported saving 120 hours per month managing 160 salaries across four countries.
Deel's multi-country compliance capabilities, individual country contracts, and ability to pay multiple currencies limit its appeal to only businesses that hire contractors internationally. Deel is the ideal solution for businesses that hire engineers in Canada, designers in Asia, and their sales teams in Europe using a single dashboard.
The only significant drawback for Deel is its expense and complexity, particularly when it comes to purely domestic teams. Additionally, because Deel charges for currency conversion, the amount of take-home pay received by contractors may be negatively impacted due to currency conversion costs. Deel is the best option for companies that have an international focus for hiring.
4. ADP RUN and Workforce Now
ADP RUN and Workforce Now are both part of ADP, which has been a leading player in payroll and HR technology for decades.
RUN is intended for small companies while Workforce Now is geared towards mid-sized and larger firms that have the need to comply with federal, state, and local HR regulations as well as large enterprise software integration.
Typically, ADP pricing will be outlined in a custom quote. For small businesses, pricing typically ranges from $150-$200 and up, depending on the add-on services purchased with the base product. ADP has one of the longest histories of compliance data in the industry—over 75 years—therefore it is well-positioned to assist customers with complex tax situations and multi-state compliance issues.
ADP's main strength is its constant stability and reliability, as evidenced by its extensive history of providing HR and payroll management services. ADP can assist in handling all federal, state, and local tax requirements with an exceptionally high level of reliability and can be integrated with almost any large scale software solution.
ADP tends to be limiting in terms of user experience; it often has an outdated user interface compared to modern alternatives and typically requires consulting services for setup. The time to develop custom integrations can be extensive. As such, ADP may be an excellent resource when an extremely high level of auditability and compliance is more important than having a modern technology interface that responds quickly and efficiently.
5. OnPay
OnPay provides a flat rate monthly fee for full service payroll processing for small businesses, not-for-profits, and specialty industries such as agriculture. This provides the ability for organizations to accurately calculate payroll and have predictable costs, without surprises.
OnPay's pricing structure includes a $49 per month base fee plus $6 per employee processed. In addition, OnPay offers an attractive 50% discount on the base price for organizations that are registered as non-profit organizations.
OnPay has a very strong foundation for payroll processing. It offers assistance with taxes in all U.S states, allowing facilitated external auditor interaction, and provides HR tools. With a flat pricing model, basic add-on options do not incur additional fees.
However, a disadvantage is that OnPay does not provide advanced automation features, has limited time-tracking features for employees, and doesn't support global team members. Therefore, if you are a small domestic organization that values predictability of its payroll costs, then OnPay would be a great choice.
6. Square Payroll
Square Payroll is designed specifically for retail businesses, restaurants and hospitality businesses that have many hourly or seasonal workers. It directly integrates with Square’s point-of-sale platform.
It costs $35 per month and $6 for each employee.
The main advantage of Square Payroll is its ability to manage shift work. It seamlessly integrates sales data from the Square POS into your payroll calculation, which allows you to get paid from both tips and hourly wages. Employees can easily access their paychecks via the Square application.
The downside is that Square Payroll is heavily reliant on the Square platform, meaning it is not recommended for technology companies, remote knowledge workers or businesses with more complex requirements. If you are only concerned about managing shifts, tips and hourly wage data, Square Payroll would work well for your business.
7. Payroll4Free
Payroll4Free is exactly what it sounds like – a low-cost or completely free choice for very small businesses. Its target customers are micro-businesses with less than ten employees that will accept using manual processes for payroll due to cost concerns.
Payroll4Free provides full access to its base program for free for up to 10 employees. To use the system to automatically file your taxes for you, you have to pay an additional monthly fee of $35.
It can track time and create reports, perform basic calculations, and can be used as a temporary solution by startups. The drawbacks to it are quite significant. The mobile version is very basic, the user interface is low quality, and there is a limit on the number of employees that can be added. Additionally, a lot of data must be input manually. This software is appropriate only for businesses that are very sensitive to costs, and are not designed for growing businesses.
8. Papaya Global
Papaya Global is an enterprise-grade global workforce management and finance platform. Papaya Global was designed to help businesses manage multiple legal entities, countries, and local payment providers simultaneously.
Papaya's pricing structure starts at $29 per employee per month.
Papaya Global's main strength lies in the way that it integrates with a company's enterprise finance systems. The expense of international contractors and full-time employees are consolidated into a single report that can then be fed into large accounting systems like NetSuite.
One of the limitations of Papaya is that it is a difficult set up. It requires a complicated implementation process and there are risks associated with the API configuration process. Papaya is not suitable for early stage companies; however, Papaya Global is a great option to consider when a company's finance department needs to consolidate global data.
9. Justworks
Justworks functions differently than traditional software. Justworks is a PEO (Professional Employer Organization).
As such, Justworks technically becomes the legal co-employer for each of the employees that you hire. It is designed to target small teams looking to fully outsource their human resources needs while gaining access to large companies' health insurance plans and benefits.
The prices are determined by level of service. The basic software-only version costs $50/month + $8/month for each employee, while the basic tier of the PEO service is $79/month for each employee and the premium tier is $109/month for each employee.
The primary benefit is that it offers access to top-tier health insurance, workers compensation insurance, and fully outsourced compliance. Justworks tackles all the complex legalities for you.
The only downside is price point, which is significantly higher than most typical software products. The other downside is that the co-employment structure limits your options if you would like to experiment with alternative equity plan structures or customize your employment contracts. When most important to you is to outsource your legal exposure, and gain access to premium benefits, then Justworks is the best choice for you.
10. Warp
Warp is a brand new platform with AI features designed specifically for startup founders. It specifically targets lean finance teams that have employees located in multiple different states across the U.S. and do not want to deal with the complex filing procedures for each state.
The system's price point is quite high. The Pro plan costs $89/month + $35/month per employee, while the premium tier costs $129/month + $50/month per employee. For example, if a ten-person team was on the Pro plan, its total monthly cost would equal approximately $439/month.
Warp justifies its high pricing with its ability to automate the setup of state tax accounts, handle quarterly payroll tax filings, and address notice tax issues automatically. Additionally, it claims to be able to migrate clients from other platforms to Warp in less than 10 minutes. The price is a major drawback, significantly higher than Gusto or OnPay for basic functionality.
Warp also has a smaller history of success than other providers and its primary focus is the US compliance landscape versus receiving clients from around the globe. Warp is the best option for well-capitalized startup companies that want to pay a premium to completely eliminate the need for hands-on work on state compliance issues.
The Difference Between Platform Software and Employer Services
A common mistake that buyers make is to assume that a platform is a homogenous product type. It is important to comprehend the distinct legal distinctions between a software solution and an Employer of Record, as well as a Professional Employer Organization.
Standard software typically serves two main purposes: to compute payroll based upon employee time and hours worked, and to disburse salaries to employees. As the employer of the employee, you are still responsible for the entire legal liability of the employee. If the employee files a lawsuit against you or if a tax calculation is erroneous because of incorrect entries on your part, you will assume full responsibility. This is the case whether you use Gusto or Rippling.
An Employer of Record (EOR) creates an additional layer of protection between the employer and an employee hired in a foreign jurisdiction. For example, if your company wishes to hire an employee located in Germany but is unable to establish a German legal entity, it will likely cost approximately $30,000 and take six months.
An EOR platform will use its own legal entity located in Germany to create a contract with the employee, and the employee will work for that entity. The EOR is responsible for all local legal and compliance liability associated with hiring the employee.
A Professional Employer Organization (PEO) provides domestic staffing and employment services. You would work as a co-employer with a PEO like Justworks under a co-employment agreement. You would still be responsible for the employee's daily activities, but the PEO will be the legal employer for the purpose of payroll taxes and insurance for the employee. Small businesses can pool their resources to purchase quality health insurance at bulk rates through a corporate group health insurance program.
Final Thoughts: Align Your Technology Platform with Your Future Plans
Large companies are moving towards consolidation as many companies don't want to manage 10 separate software platforms to support their human resource, financial, and IT departments. AI-based anomaly detection is becoming commonplace, allowing finance departments to identify and rectify payment issues before any funds leave the company.
You must identify what is broken in your current process when evaluating your potential technology platform(s). If your company is a small, domestic operation with less than 50 employees, then a basic, cost-effective structure is sufficient to meet your needs.
However, if your HR department spends 10 hours on a new employee's setup (laptops, software credentials, etc.), then you need to adopt a more integrated approach. If you are paying individuals in five different countries and on three continents, then you need to engage an international expert.
When comparing technology solutions, do not focus only on the number of features offered. Identify the technology platform that will address your greatest operational or legal constraint most urgently.
Common Questions About Implementing SaaS Payroll Software
How long will it take to migrate historical pay data to the new system?
Migrating to a new technology platform poses significant risk if this transition is rushed. Most SaaS solutions require two to four weeks to migrate employee records and tax accounts and upload a company's historical payroll. Migration of an enterprise system can take as long as eight weeks.
All year-to-date tax amounts need to be transferred correctly when migrating mid-year for accurate year-end W-2s. It is recommended to perform parallel testing, processing one payroll cycle with both the old and new systems to accurately match the calculations before the system becomes live.
What happens to the general ledger if the data-sync fails?
Most current technology connects to financial/accounting software using Application Programming Interfaces (APIs). When that connection fails, data will not reach the general ledger. Low-cost software can silently fail, causing the finance department to identify the error at month-end close.
Quality software helps mitigate this risk by providing real-time notifications and detailed error logs to show which department code or employee record caused the data-sync issue. It is important to identify (via the vendor) who is responsible for the issue caused by the failure of a third-party integration.
How do international contractor payments create currency conversion risk?
When paying a contractor in another country, currency needs to be converted from the paying entity's local currency to the contractor's currency. Most global platforms will convert the payment for you; however, they typically charge a small percentage of the conversion spread.
If there is a substantial exchange rate movement between the date the contractor invoice is approved and when the money is transferred to the contractor, the contractor may receive significantly less than they expected. Quality global platforms allow contractors to maintain balances in multiple currencies or utilize various methods to receive payments to minimize the currency conversion bank fees.
Who is responsible for a late state tax filing?
This is where the industry draws a clear line in the sand. Basic accounting/financial software provides tax numbers and reminds the user to send the payment, but when the user fails to send the payment by the state deadline, the state imposes penalties on the company.
Managed compliance platforms collect the tax money from the client's bank account prior to the filing date, hold it, and remit it to the state directly. When a managed compliance platform files a state tax return late, they generally reimburse the client for any financial penalties resulting from that filing error. Before engaging with any vendor, always read through the Service Agreement to see if it includes a liability clause for the vendor's tax-filing mistakes.
