S-Corp Owner Payroll Solutions

As an S-corp owner, you are legally required by the IRS to pay yourself a "reasonable salary" and withhold appropriate federal and state taxes. This can be a complex process, but using a dedicated payroll service is the most reliable, efficient, and secure way to ensure compliance and avoid costly errors. Below is a detailed comparison of several top-rated payroll providers, with direct links to their websites for your convenience.

Payroll Provider Comparison for a Single-Employee S-Corp (Highly Rated Options)

Gusto

Full-service payroll (W-2s, 1099s), automated tax filings & payments, direct deposit, and basic HR tools. Known for a modern, user-friendly interface.

Learn more at Gusto

OnPay

A single, all-inclusive plan with no hidden fees. Includes unlimited pay runs, all tax filings, direct deposit, and seamless integration with accounting software like QuickBooks and Xero. 

Learn more at OnPay

Patriot Software

A budget-friendly option that handles all federal and state tax filings and deposits for you. Also offers free direct deposit and an employee portal.  

Learn more at Patriot Software

Roll by ADP

A chat-based app that lets you run payroll from your phone. It provides automated tax filings and payments and is backed by the reliability of ADP. Good for those who prefer mobile management.  

Learn more at Roll by ADP

Note: All prices are estimates for a single employee and can change. Pricing is often structured as a base fee plus a per-employee fee. The annual cost is the monthly estimate multiplied by 12. For the most accurate and up-to-date pricing, it's best to check each provider's website. These services often offer free trials and no long-term contracts. 💰

Risks and Complexities of Manual Payroll

While it's possible to file payroll taxes without a dedicated software, it's a complex and high-risk undertaking. The potential for costly errors makes it a false economy.

Federal Tax Filings

To manage federal payroll manually, you would have to:

• Make Tax Deposits: Use the free Electronic Federal Tax Payment System (EFTPS) to deposit federal income, Social Security, and Medicare taxes. You must enroll and receive a PIN, which can take time.

• File Quarterly Forms: File Form 941 (or Form 944 for very small businesses) quarterly using IRS-approved software. The IRS does not provide a simple web form for this.

• File Annual Forms: At the end of the year, you must file W-2 forms with the Social Security Administration (SSA) through their Business Services Online (BSO) portal.

State Tax Filings

This is where the process becomes even more difficult. Each state has its own system for filing and paying payroll taxes. You would be responsible for:

• Understanding State-Specific Laws: Each state has unique rules for unemployment insurance, withholding taxes, and deadlines.

• Using State Portals: You would need to register and use your state's online portal (e.g., Department of Revenue, Department of Labor) to file and pay taxes, often with little to no calculation assistance.

The Dangers of Manual Payroll

The main risks associated with a manual approach include:

• Penalties and Fines: The IRS and state tax agencies levy steep penalties and interest for late or inaccurate filings. A small calculation error can become a significant financial issue.

• Wasted Time: The time spent on manual calculations, keeping up with changing tax laws, and navigating multiple government websites takes time away from running your business.

• Audit Risk: Inconsistent or incorrect filings can flag your business for an audit, which is a stressful, time-consuming, and potentially expensive process.

For these reasons, the small monthly fee for a full-service payroll provider is a minimal cost compared to the potential financial and administrative headaches of doing it yourself.