Best Payroll Software for Small Business: Top Solutions in 2025

Managing payroll can be a daunting task, especially for small businesses that rely on independent contractors (1099 employees).

The right 1099 payroll software can simplify the process, save time, and ensure compliance with tax regulations. In this article, we’ll explore the top payroll software solutions designed to handle 1099 employees, making payroll management a breeze for small businesses.

Why 1099 Payroll Software Matters

Why 1099 Payroll Software Matters

Small businesses often hire independent contractors for flexibility and cost-effectiveness. However, paying 1099 employees comes with its own set of challenges, such as tracking hours, calculating taxes, and ensuring timely payments. Dedicated 1099 payroll software can automate these tasks, reduce errors, and help you stay compliant with IRS requirements.

Top 8 Payroll Software Solutions for 1099 Employees

Here are the best payroll software options for small businesses that need to manage 1099 employees effectively:

Gusto

Gusto is a top choice for small businesses looking for simplicity and affordability. It offers a dedicated “Contractor Only” plan, making it ideal for businesses that primarily work with 1099 employees.

Key Features:

  • Unlimited payroll runs for contractors.
  • Automated tax calculations and filings.
  • Easy-to-use employee self-service portal.
  • Affordable pricing for small businesses.

Pros:

  • Simple onboarding for contractors.
  • Clear tax information and compliance support.
  • Unlimited customer support via chat, email, and phone.

Cons:

  • No dedicated mobile app for contractors.

Gusto integrates seamlessly with other tools like Jobber, making it a great choice for businesses that need to sync time tracking and payroll data.

Patriot Software

Patriot Software is another excellent option for small businesses managing 1099 employees. It’s known for its user-friendly setup process and flexibility.

Key Features:

  • Process payments for contractors and employees in the same pay run.
  • Flexible pay options for different types of work (e.g., hourly, salaried, or project-based).
  • Comprehensive setup process with helpful resources.

Pros:

  • Easy contractor payments.
  • Affordable pricing for small teams.
  • Great customer support.

Cons:

  • No mobile app for contractors.
  • Limited reporting export options.

OnPay

OnPay combines payroll processing with HR management, making it a versatile choice for small businesses. It’s particularly helpful for those new to managing 1099 employees.

Key Features:

  • Automated payroll tax calculations.
  • Regular updates on payroll tax laws.
  • Free setup and first month of service.

Pros:

  • Transparent pricing.
  • Excellent customer support.
  • Easy-to-use platform.

Cons:

  • No fully automated payroll approval.
  • Limited features for managing bonuses or commissions.

RUN Powered by ADP

RUN by ADP is a robust payroll solution for businesses that want to bundle payroll with accounting tools. It’s a great fit for growing teams with complex needs.

Key Features:

  • Direct deposit for contractors.
  • Customizable payroll reports.
  • Integration with QuickBooks and other software.

Pros:

  • Free for the first three months.
  • Real-time reminders for pay periods.
  • Workers’ compensation insurance options.

Cons:

  • Requires a separate plan for 1099 contractors.
  • Lack of pricing transparency.

QuickBooks Payroll

QuickBooks Payroll is perfect for businesses already using QuickBooks for accounting. It offers advanced payroll features, including support for 1099 employees.

Key Features:

  • Automated tax calculations and filings.
  • Job costing feature for project-based work.
  • Unlimited payroll runs.

Pros:

  • Seamless integration with QuickBooks.
  • Advanced payroll tax tools.
  • Great for businesses with employees in multiple states.

Cons:

  • Additional fees for out-of-state employees.
  • No self-serve onboarding for contractors.

Paychex

Paychex is a beginner-friendly payroll solution with strong customer support. It’s ideal for businesses that need detailed employee profiles and HR tools.

Key Features:

  • Detailed contractor profiles with custom fields.
  • 24/7 live phone support.
  • Manages paid time off and bonuses.

Pros:

  • Excellent customer service.
  • Flexible payroll options.
  • Access to expert tax services.

Cons:

  • Higher pricing compared to competitors.
  • Cluttered interface.

Payroll4Free

Payroll4Free is a completely free payroll software for small teams with fewer than 10 employees. It’s a great option for businesses on a tight budget.

Key Features:

  • Free payroll processing for contractors.
  • Optional full-service tax filing support.
  • Direct deposit payments.

Pros:

  • No cost for basic payroll functions.
  • Helpful customer support.
  • Easy to use.

Cons:

  • Limited customization options.
  • Only compatible with Windows.

Justworks

Justworks is a comprehensive HR and payroll platform that handles 1099 employees alongside other HR functions. It’s ideal for growing teams with complex needs.

Key Features:

  • Pay contractors in different currencies.
  • Time tracking and expense management.
  • Employee handbooks and policy templates.

Pros:

  • All-in-one HR and payroll solution.
  • Great for international contractors.
  • Multiple salary structures.

Cons:

  • Higher pricing.
  • Limited third-party integrations.

How to Choose the Best 1099 Payroll Software

How to Choose the Best 1099 Payroll Software

When selecting payroll software for your small business, consider the following factors:

  • Features: Do you need basic payroll functions, or do you require advanced tools like HR management and tax compliance?
  • Team Size: How many contractors do you need to pay? Some software is better suited for smaller teams.
  • Cost: What’s your budget? Free or low-cost options like Payroll4Free may work for small teams, while larger businesses may benefit from Gusto or Justworks.
  • Ease of Use: Look for software with a user-friendly interface and good customer support.
  • Integration: Does the software integrate with your existing tools, such as accounting or time-tracking apps?

Final Thoughts

Choosing the right 1099 payroll software can save you time, reduce stress, and ensure compliance with tax regulations. Whether you’re a small business with a handful of contractors or a growing team with complex needs, there’s a payroll solution out there for you. Consider your business’s unique requirements and explore the options listed above to find the perfect fit.

By investing in the right 1099 payroll software, you can focus on growing your business while leaving the payroll headaches to the experts.