Payroll add-on
QuickBooks Payroll: what it costs, and when it is worth it
Payroll is the add-on that decides your real monthly bill. Here is the pricing, the per-employee maths for teams of one to ten, and the point at which a standalone service wins.
QuickBooks Payroll starts at about $50 per month plus roughly $7 per employee, with two higher tiers around $88 and $134 plus larger per-employee fees. At 1–2 employees it is rarely the cheapest option; from about three employees the automatic tax filing starts paying for itself.
| Tier | Base price | Per employee | What you get | Suits |
|---|---|---|---|---|
| Payroll | $50/mo | ~$7/mo | Unlimited payroll runs, direct deposit, federal and state tax filing and payments, W-2s and 1099s | Small teams that just need payroll done correctly |
| Premium | $88/mo | ~$13/mo | Everything above plus same-day direct deposit, HR workflows, and an expert review of your setup | Teams hiring regularly or with staff in several states |
| Elite | $134/mo | ~$17/mo | Full-service setup, tax penalty protection up to an annual cap, dedicated HR support | 10+ employees, or owners who want the filing risk covered |
List prices in USD; roughly 50% off the first three months is common. Multi-state filing can carry an extra per-state charge. Per-employee fees are the number to model — they scale with headcount, not with how much work payroll takes.
The real maths
Monthly cost by team size
Base fee plus per-employee fee at list price. Include yourself if you pay yourself a W-2 salary — a lot of owners forget that they count as an employee.
| Team size | Payroll | Premium | Elite | Annual (Payroll) |
|---|---|---|---|---|
| 1 employee | $57 | $101 | $151 | $684 |
| 3 employees | $71 | $127 | $185 | $852 |
| 5 employees | $85 | $153 | $219 | $1,020 |
| 10 employees | $120 | $218 | $304 | $1,440 |
| 20 employees | $190 | $348 | $474 | $2,280 |
Rounded monthly totals at list price. Add your accounting plan ($38–$340) to get the full monthly software cost.
The break-even is not about features. At three to five employees, the hours you would spend filing quarterly 941s and registering with state agencies are worth more than the monthly fee. Below two employees, a simple payroll service or your accountant usually costs less per year.
Contractors first
If everyone you pay is a 1099 contractor, skip payroll
You do not need a payroll subscription to pay contractors. You need clean records, a W-9 on file before the first payment, and a 1099-NEC issued by the end of January.
- Collect a W-9 up front. Chasing addresses in January is the most common cause of a late 1099.
- Pay through the bank, not cash. A traceable payment trail is your defence if the classification is ever questioned.
- Watch the $600 threshold. Payments of $600 or more in a year to an unincorporated contractor generally require a 1099-NEC.
- Keep the classification honest. A worker you control like an employee is an employee, whatever the invoice says.
What payroll actually files for you
- Federal income tax withholding and deposits
- Social Security and Medicare (FICA), both halves
- Federal unemployment (FUTA) and most state unemployment
- Quarterly 941 and annual W-2 / W-3
- State withholding where you are registered
You are still the responsible party: state registrations, new-hire reporting and correct employee details remain your job.
Hiring your first employee? Read the setup checklist first — it covers payroll settings in week one, which is much cheaper than fixing them after the first pay run.
Run it properly
Four things to set before the first payday
Payroll errors are expensive because they compound: a wrong withholding rate repeats every pay run until someone notices. Spend an hour on setup.
Register with the state, not just the IRS
Most states require a withholding account and a unemployment insurance account before your first payroll. Software can file; it cannot register you.
Set pay schedules and cut-offs
Decide the frequency, the deposit speed, and the deadline for approving hours. Same-day deposit costs more — and is rarely needed if the schedule is stable.
Confirm worker classification
W-2 or 1099 is a legal test, not a preference. Getting this wrong is the single most expensive payroll mistake a small business can make.
Reconcile payroll to the bank every month
Payroll journals should hit the same ledger as everything else. If they do not, your profit number is wrong and you will not know until year end.
Payroll, filed for you
If the maths above works for your headcount, the trial is the cheapest way to check that the state registrations and pay schedules fit before your first real run.
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Payroll questions
What owners ask before adding payroll
How much does QuickBooks Payroll cost?
List prices start at roughly $50/month plus a per-employee fee, with two higher tiers around $88 and $134 per month plus a larger per-employee fee. Promotions of about 50% off the first three months are common. The per-employee charge is the number to model carefully: it scales with headcount, not with how much work payroll actually takes.
Is QuickBooks Payroll good for a team of one or two?
It works, but it is rarely the cheapest option at that size. If you are the only employee, a simple payroll service or your accountant often costs less per year. Payroll bundled into the tool you already use becomes compelling around 3–10 employees, where the time saved on tax filings outweighs the fee.
Does QuickBooks handle 1099 contractors?
You can track contractor payments and prepare 1099-NEC forms in QuickBooks Online without buying a payroll subscription. If everyone you pay is a contractor, you usually do not need payroll at all — see our freelancer guide.
Who files the payroll taxes?
On the standard payroll tiers, QuickBooks calculates, files and pays federal and state payroll taxes for you, and the top tier adds penalty protection up to a stated annual cap. You are still the responsible party — the software files what you tell it, so new hire details and state registrations still have to be right.