9 Best Payroll Services For Small Business (March 2024) – Forbes Advisor

Toronto-based Wave is a relatively new player in small business financial services, and it’s making its name by building a user-friendly and affordable platform that addresses the unique needs of freelancers, contractors and small business owners.

Payroll is Wave’s latest feature. It comes to the platform along with accounting, invoicing and payment processing for small businesses—replacing a laundry list of tools for many entrepreneurs.

Through Wave Payroll, you can pay employees and contractors via direct deposit and automatically generate W-2 and 1099 forms for tax season. It takes care of payroll tax payment and filing in 14 states (and growing), and offers a self-service employee portal for easy access to tax documents and banking and contact updates.

In addition, if you own a seasonal business and only need payroll software during parts of the year, you can deactivate your subscription for off-seasons and avoid paying Wave during that time. Then, when your business season kicks back in, simply reactivate your subscription and account. This capability, coupled with its contract payment options, makes Wave an ideal option for seasonal businesses such as garden centers and landscaping companies.

Wave doesn’t offer benefits administration, a major drawback, but its recent purchases of companies across the financial sector and its 2019 acquisition by H&R Block promise more capabilities and features to come.

Features

Wave Payroll’s standout features include employee and contractor payroll tools, tax services, an employee self-service portal and invoicing tools. Here is a closer look at each of them.

  • Employee and Contractor Payroll. Using Wave Payroll, you can pay both employees and independent contractors with one click come payday. Once you’ve paid your employees, you can access a report of all payroll expenses broken down by employee. The platform also generates W-2 and 1099 forms, so they’re always at your fingertips. And if you own a seasonal business where you only have to pay contractors or employees during certain times of the year, you can pause your payroll subscription during off-seasons to avoid paying the base monthly rate.
  • Tax Services. Wave Payroll offers tax payment and filing services in 14 states and is continually adding more states. Using this service, you can automate your payment and filing of state and federal payroll taxes. Its current tax service states include: Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, Wisconsin. In states where Wave Payroll does not offer tax filing and payment services, the software indicates what paperwork you must file on the state and federal level and how much you need to pay from each payroll run.
  • Self-Service Portal. Wave Payroll offers employees a self-service portal that allows them to access their pay stubs and W-2 forms without HR involvement. They can also use the platform to update their contact and banking information.
  • Invoicing. To send an invoice, you must only send an invoicing email using the Wave “pay now” button. Wave offers a mobile app that makes paying invoices easy from anywhere. Clients can pay using a credit card or Apple Pay from the email and funds will arrive in your account in two business days. Once you’ve sent an invoice or received a payment, the data is automatically recorded in your accounting records for effortless reporting and tax filing.The Wave invoicing Starter plan is free, offers unlimited invoices and can be used in conjunction with Wave Payroll without an extra expense. However, to accept credit card or ACH/EFT payments, you must pay:
    • 2.9% plus $0.60 per Visa, Mastercard or Discover transaction
    • 3.4% plus $0.60 per Amex transaction
    • 1% of your invoice amount per ACH/EFT transaction

Pricing

Wave offers two plans based on the state in which you operate your business. If you operate in one of the 14 states in which Wave offers tax services, you will pay a higher base monthly rate to take advantage of these services. All other states must remit payment and file their taxes themselves and so will pay a lower monthly base rate for Wave’s payroll solution. Both plans come with a 30-day free trial.

Tax Service States

Most businesses using Wave Payroll will need to pay a $20 monthly base fee, plus $6 per active employee or contractor paid per month to use Wave’s payroll solution. This is because Wave does not offer tax payment and filing services in 37 U.S. states (see next plan for states that are excluded from this plan.). Payroll tools offered in this plan include:

  • Employee and independent contractor payments
  • An employee self-service portal
  • Direct deposit payments
  • Workers’ compensation
  • Accounting records
  • Tax filing documents for employees and contractors
  • Payroll expense reporting
  • Leave time tracking and accruals
  • Integrations with Wave Accounting, Invoicing and Payments
  • Live chat customer support Monday through Friday
  • Email support
  • The ability to pause your subscription during off-seasons

Self-Serve States

In addition to all the features in the Tax Service plan, Wave offers automated payroll tax services in 14 U.S. states. If your business operates in any of these states, you must choose this plan. The Self-Serve States plan costs $40 per month plus $6 per contractor paid and active employee. It offers automatic calculations, remittance and filing of payroll taxes. The states in which this plan applies are: Arizona, California, Florida, Georgia, Illinois, Indiana, Minnesota, New York, North Carolina, Tennessee, Texas, Virginia, Washington, Wisconsin.

Reputation

Wave Payroll earns four out of five stars on Capterra with 61 reviews and 4.1 out of five stars on G2 with 31 user ratings. Users like that the software is extremely easy to use and set up, is affordable and has free features such as invoicing.

However, they say that the software does not offer enough customization options, nor does it offer detailed reporting to meet their needs. They also say its customer support is unhelpful; the chat bot does not offer relevant solutions and when they email customer support, it often doesn’t, either. They say the limited features the platform offers makes it a good option for companies with five to 10 employees but no more.

Our Experience

I tested Wave Payroll on a Mac computer and a Safari browser. Signing up for the free trial was simple, taking only a couple of minutes. I simply had to input my name, email address and phone number. I was sent a code to my phone to verify my identity. After inputting the code, I was asked simple questions about how I wanted to use the account, such as if I wanted to invoice clients or run payroll.

Once set up, the account brought me to an initial reporting dashboard. The dashboard had a handful of reports and optional action items but didn’t feel cluttered or overwhelming. Reports I could access right away included a cash flow analysis for my business, a list of outstanding invoices, bills my company owes, an income and expense statement by fiscal year and an expense breakdown pie chart with percentages for each expense category.

Adding an employee could not have been simpler in my case, though there was more manual data entry than I preferred. I clicked “add an employee” from the initial dashboard and was taken to a form to fill in information on my employee. Information I had to enter included the employee’s full name and Social Security number, their home address, a work location, the type of wage they would receive (salary or hourly, for example), their email address and how I wanted to pay them (direct deposit, for example).

Since I was given the option to send them an invite to input their own information, I would have preferred to only input about half of this data before sending the invite. However, I only had to click a box and click “submit” to send an invite to my employee. Still, the process did not require any technical knowledge and each step was intuitive to complete.

Some features I wish were better include its automation options, customization options and chat support. There are almost no automation options and you cannot customize the dashboard at all. Reporting also did not offer customization options. In addition, when I contacted the chat support to ask if I had missed any customization options, I was given irrelevant responses and prompted to contact customer support via email. All in all, the chat support feature was unhelpful.

In addition, when trying to access tax services, I was simply upsold by a partner company that wanted $500 plus $150 to do my taxes. In other screens, I was prompted to buy more products from Wave Payroll. I would have preferred to be contacted some other way to be asked to buy more products from Wave or its partners.

Who Should Use It?

Wave is a unique fit for microbusinesses and solopreneurs who pay a small team heavy in contractors and part-timers, and frequently invoice clients or customers for online payment. And, with the ability to pause the subscription, it is great for service companies such as landscapers who hire contractors often and endure off-seasons.

Learn more: Read the full Wave Payroll review.

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