Cheapest payroll for 1-person LLC: What to pick?

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May 6, 2026

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Looking for affordable payroll for your 1-person LLC? We compare top services like Gusto & OnPay, showing how to save money on essential employee payments.

TL;DR

You need payroll for yourself if your single-member LLC is taxed as an S-corp. It's not optional.

Gusto is often the top pick for single-employee LLCs due to its user-friendly interface and comprehensive features, despite not being the absolute cheapest on paper.

DIY payroll is possible but risky. You can manage it yourself, but you’re on the hook for all the filings and calculations.

Cost isn't the only factor. Consider ease of use, compliance help, and integration with other tools you use.

Don't skip it to save a buck. Penalties for missed payroll taxes are no joke and will absolutely tank your budget faster than a monthly payroll fee.

What We'll Cover

Why Does a 1-Person LLC Even Need Payroll? (Hint: S-Corp Magic)

My First Payroll Panic (And How I Dug Out of It)

What's the *Actual* Cheapest Payroll Service for 1-Person LLCs?

Quick Comparison: Top Payroll Services for Solo Founders

Gusto: Why So Many Solo Founders Love It

QuickBooks Payroll for Single-Member LLCs: Is it Worth It?

Patriot Payroll & SurePayroll: Are They Good Budget Options?

Can I Just Do Payroll Myself for My 1-Person LLC?

Understanding "Reasonable Salary" for S-Corps (And Why It Matters)

Hidden Costs and Things to Watch Out For

Choosing the Right Payroll for *Your* Business (And Your Brain)

FAQ: Payroll for Your Solo Empire

Why Does a 1-Person LLC Even Need Payroll? (Hint: S-Corp Magic)

Okay, so this is where it gets a little wonky, but bear with me. Most single-member LLCs are "disregarded entities" by the IRS. That just means the IRS pretends you and your business are the same thing, and your business income and expenses just go on your personal tax return (Schedule C). No biggie, right? You just take owner's draws, and that's that.

But here’s the kicker: many smart folks, myself included (eventually!), choose to have their single-member LLC taxed as an S-corporation. Why? To save on self-employment taxes. When you're a Schedule C sole proprietor, you pay 15.3% self-employment tax on all your net earnings. It’s brutal.

With an S-corp election, you become an employee of your own company. You pay yourself a "reasonable salary," and on that salary, you pay your share of Social Security and Medicare taxes (FICA) — 7.65%. The company also pays 7.65%, which effectively means you're still paying the full 15.3% on your salary, just like before. So, what’s the point?

The point is, any additional money you take out of the business beyond your salary is treated as a distribution, and those distributions are generally not subject to self-employment taxes. So, if your business makes $100,000, and you pay yourself a reasonable salary of $60,000, you only pay FICA taxes on that $60,000. The remaining $40,000 comes to you tax-free from a FICA perspective. That's a huge chunk of change saved, but it comes with a catch: you have to run payroll for that salary. It's the cost of doing business and saving some serious tax dollars.

The IRS Really Doesn't Mess Around with Payroll

Let me tell you, the IRS is not playing games when it comes to payroll taxes. Unlike income tax, which is calculated annually, payroll taxes are due throughout the year. If you don't withhold and pay your FICA taxes (and federal income tax, if you choose to withhold that from your salary) and deposit them on time, they will hit you with penalties. And those penalties compound. I know from personal, deeply painful experience that they will send you nasty letters and eventually start assessing interest and penalties. It’s not just a polite reminder; it’s a threat to your financial well-being. And you do not want that headache. It’s why having a proper payroll service, even for just you, is non-negotiable for an S-corp.

My First Payroll Panic (And How I Dug Out of It)

Alright, confession time. When I first started my little content business back in 2022, after clawing my way out of that $23K credit card debt, I was obsessed with keeping costs down. Every dollar out felt like a dollar back towards my old habits. So, when my accountant (the first real professional I hired, bless his patient soul) told me I needed to elect S-corp status and run payroll for myself, I internally recoiled. Another monthly fee? For me? It felt absurd.

I remember sitting at my kitchen table, hunched over my laptop, staring at these payroll service websites. The prices felt steep for just one person. I tried to convince myself I could just "figure it out." I mean, how hard could it be to pay myself? I had a checking account! It was the kind of thinking that, honestly, got me into trouble with my debt in the first place – thinking I knew better or could cut corners where I really shouldn't.

So, for about six months, I did nothing. I just kept taking owner's draws from my business account. I was busy writing, building clients, celebrating small wins. Then came the letter. A CP136 notice from the IRS, telling me I owed money because I hadn't made quarterly estimated tax payments for my payroll. My own payroll! It wasn't the exact $347.23 I was calculating in my head, but it felt like $3,472.30. It was the general "Failure to Deposit Penalty," which, if you want to geek out, you can read about on the IRS website. It was for a few hundred dollars, but the implication of what I was doing wrong, and what it could turn into, really scared me straight.

The Wake-Up Call That Cost Me

I had to pay the penalty, plus interest. More than that, I had to spend hours on the phone with the IRS, trying to understand what I'd messed up and how to fix it. It was easily a full day of my time, which as a freelancer, is money lost. That’s when I finally swallowed my pride and signed up for a payroll service. The monthly fee suddenly seemed like a tiny, insignificant cost compared to the stress, the time, and the actual penalties I incurred because I was trying to be "cheap" in the wrong area. It was a classic "penny wise, pound foolish" situation, and I definitely learned the hard way.

Cheapest payroll for 1-person LLC: What to pick? comparison

What's the Actual Cheapest Payroll Service for 1-Person LLCs?

Okay, let's get down to brass tacks. "Cheapest" is a tricky word when it comes to payroll because it's not just about the sticker price. It's about what you get for that price and what it saves you in time and potential penalties. For a single-employee LLC, you're usually looking at a base fee plus a per-employee fee. Since you only have one employee (yourself!), the per-employee fee is minimal, so the base fee is the main thing to focus on.

Generally, your options break down into these categories for the "cheapest" route:

Budget-Friendly Online Payroll Services: These are dedicated payroll companies that offer basic plans designed for small businesses. Think Patriot Payroll, SurePayroll, or even Gusto's most basic plan. They handle tax filings and payments automatically.

Payroll as Part of Accounting Software: Services like QuickBooks Payroll integrate directly with your accounting software, which can be convenient if you're already using QuickBooks. Sometimes they offer bundles.

DIY with a Tax Service: This means you do all the calculations, withholding, and depositing yourself, often with guidance from your accountant or an online tax service. It's the cheapest in terms of monthly fees, but the most expensive in terms of your time and risk.

After looking at the options and weighing the risks of doing it myself, I've come to believe that the actual cheapest option isn't always the one with the lowest monthly price tag. It's the one that reliably handles everything so you don't get hit with penalties or spend hours trying to figure out tax forms. For that, Gusto's "Core" plan often wins out, especially when you factor in its ease of use. But let's get into some specifics.

Considerations Beyond Just the Monthly Fee

When you're trying to figure out what's "cheapest," remember these points:

Tax Filing and Payments: Does the service handle all federal and state tax filings and payments automatically? This is non-negotiable. Missing deadlines or messing up calculations will cost you.

Compliance Support: What kind of help do they offer if you have questions about payroll tax laws? Tax laws change, and having support is huge.

Integration: Does it play nicely with your existing accounting software (like QuickBooks Online or Xero)? smooth integration saves you data entry time.

User Interface: Is it easy to use? You're going to be logging in regularly. A clunky interface will frustrate you and waste your time.

Customer Support: Can you actually talk to a human if something goes wrong? This is really useful when you're dealing with money and taxes.

Quick Comparison: Top Payroll Services for Solo Founders

Here’s a snapshot of some popular options and how they stack up for a one-person LLC, focusing on their basic plans:

Feature/Service

When you're running your own gig, especially if it's an S-Corp, the lines blur between "owner" and "employee." But the IRS? They don't blur. You, as the owner-employee, become a bonafide employee of your own corporation. This means you need a Federal Employer Identification Number (EIN), just like any other business with employees. You can get one from the IRS website. You'll also need a state tax ID number if your state has its own income tax or unemployment insurance.

Setting up payroll for yourself doesn't take forever, thankfully. With a good online service like Gusto, it's often a surprisingly quick process, probably around 30 minutes to an hour of actual input time once you have all your company info, your personal info (as the employee), and bank details ready. I remember panicking it would take all day, but when I finally bit the bullet, it was mostly just plugging in numbers. The initial setup requires:

Your company's legal name and address.

Your EIN.

Your state tax IDs (if applicable).

Your company's bank account information for direct deposit and tax payments.

Your personal information (as the employee), including your full name, address, Social Security Number, and bank account for direct deposit.

Your W-4 elections. You'll fill out a W-4 for yourself, just like any other employee.

Your predetermined "reasonable salary." More on this later, but you need an annual figure.

Once that's done, running payroll usually takes literally minutes each pay period. You just log in, confirm the hours (for yourself, usually 80 for a bi-weekly period), and hit "run payroll." The service handles the rest: calculating taxes, deducting them, paying them to the right authorities, and filing the necessary forms like Form 941 (Employer's Quarterly Federal Tax Return) and Form 940 (Employer's Annual Federal Unemployment (FUTA) Tax Return).

And it's not just the IRS. You'll also be dealing with your state's Department of Revenue (or equivalent) for state income tax withholding and your state's unemployment agency. Each state has its own rules and forms, which is another reason why a payroll service is such a lifesaver. Trying to figure out, say, Texas Workforce Commission forms versus California Employment Development Department forms? No, thank you.

Gusto: Why So Many Solo Founders Love It

When it comes to payroll services, Gusto is almost universally recommended for small businesses, and for good reason. For a 1-person LLC, it's definitely a top contender for the "cheapest smart option." Their "Core" plan starts at $40/month plus $6 per employee. So, for just yourself, you're looking at $46 a month. Yes, there are cheaper options, but let's talk about value.

What Gusto Does Well for a Solo Founder

Insanely User-Friendly Interface: This is Gusto's biggest selling point. The dashboard is clean, intuitive, and easy to navigate. You don't need a finance degree to figure out how to run payroll, onboard yourself (as the employee), or access reports. It makes a complicated process feel simple.

Full-Service Payroll: This isn't just a fancy phrase. Gusto handles all your federal, state, and local payroll tax filings and payments automatically. This means less stress for you, fewer opportunities for mistakes, and no more worrying about those dreaded IRS penalty notices. They truly take the compliance burden off your shoulders. Check out their explanation of payroll taxes and compliance at Gusto.com/product/payroll/taxes.

Integrations: Gusto integrates smoothly with popular accounting software like QuickBooks Online, Xero, and FreshBooks. This means your payroll data automatically flows into your books, saving you hours of manual data entry and reconciliation. My accountant loves this because it keeps my books tidy.

Onboarding and HR Features: Even for just one person, Gusto helps with onboarding. You input your info, sign documents digitally. Plus, as you grow (which is the goal, right?), Gusto's other plans offer more solid HR features like benefits administration, time tracking, and compliance resources. It's built to scale with you.

Helpful Support: Their customer service is generally highly rated. If you ever have a question about running payroll or understanding a tax form, they're there to help. And that's a comfort when you're dealing with something as important as your money.

Gusto Anecdote: The Time I Almost Forgot About State Unemployment

I vividly remember running my first payroll through Gusto. It was late afternoon, and I was wrapping up work at my co-working space downtown. I was nervous, double-checking every field. I set up my direct deposit, entered my salary, and clicked "run payroll." It was so… easy. But then, a few weeks later, I got a notification from Gusto about a state unemployment tax filing coming up. I had completely forgotten about it. My brain was still stuck in the "federal taxes only" mindset.

Gusto just… handled it. They calculated the amount, withdrew it from my business account, and filed the necessary forms with the Texas Workforce Commission. I didn't have to lift a finger beyond seeing the notification. That’s when it really clicked for me: the "cost" of Gusto wasn't just for processing my salary. It was for having an automated, intelligent system that understood all the various tax obligations I had as an employer (even if that employer was just me). It was cheap insurance against my own ignorance, and for a solopreneur who's juggling a million things, that peace of mind is priceless.

QuickBooks Payroll for Single-Member LLCs: Is it Worth It?

If you're already using QuickBooks Online for your bookkeeping, then QuickBooks Payroll is a natural consideration. It offers really tight integration, which can simplify your accounting workflow. Their plans start at around $45/month plus $6 per employee for the "Core" plan, putting it right in line with Gusto's pricing.

Pros and Cons of QuickBooks Payroll

Pros:

smooth Integration with QBO: This is the big one. Your payroll expenses and tax liabilities automatically post to your QuickBooks Online ledger, making reconciliation a breeze. If you like having everything under one roof, this is a strong argument.

Familiar Interface: If you're already comfortable with QuickBooks Online, the payroll interface will feel familiar.

Full-Service Tax Filing: Like Gusto, QuickBooks Payroll handles all federal and state tax filings and payments. They guarantee accuracy, which is a huge plus. You can read more about their offerings at QuickBooks Payroll.

Cons:

Can Be Clunkier: Some users find the QuickBooks Payroll interface a bit less intuitive and modern than Gusto's, especially if you're not already deep into the QuickBooks ecosystem.

Customer Support Can Be Hit-or-Miss: Intuit (the company behind QuickBooks) is a giant, and sometimes their customer support can feel a bit impersonal or harder to reach than smaller, dedicated payroll providers.

Bundling Can Be Pricey: While the base payroll plans are competitive, if you start looking at higher-tier QuickBooks bundles that include advanced accounting and payroll, the costs can escalate quickly.

Should You Pick QuickBooks Payroll?

It really boils down to your existing setup. If you're a die-hard QuickBooks Online user, and the idea of separate systems makes you twitch, then QuickBooks Payroll might be the "cheapest" in terms of saving you time and headaches with integration. However, if you're not already committed to QBO, or you use a different accounting software (like Xero), then Gusto often offers a more user-friendly, specialized payroll experience.

Patriot Payroll & SurePayroll: Are They Good Budget Options?

Okay, so we've talked about Gusto and QuickBooks Payroll, which are excellent but maybe not the absolute cheapest if you're really pinching pennies. Let's look at a couple of services that often come up when budget is the primary driver: Patriot Payroll and SurePayroll.

Patriot Payroll: The Lean, Mean Payroll Machine

Patriot Payroll is often lauded for its affordability, making it a serious contender for the "cheapest payroll service for LLC with one employee" title. Their "Basic Payroll" plan starts at $17/month plus $4 per employee. So, for a single person, that's $21/month. Significantly cheaper than Gusto or QuickBooks.

Patriot Payroll Rundown:

Pricing: Very competitive. The $21/month for one employee is hard to beat for a full-service option.

Features: Their "Basic Payroll" plan includes unlimited payroll runs, direct deposit, employee portals (for you, the employee), and payroll reports. However, it's NOT full-service tax filing. For that, you need their "Full Service Payroll" plan, which starts at $37/month plus $4 per employee ($41/month for one person). This is an important distinction — always double-check if the basic plan includes tax filing. For an S-corp, you need tax filing.

Ease of Use: It's generally considered straightforward, but some users find the interface a bit dated compared to Gusto. It's functional, not flashy.

Support: They offer phone and chat support, and their team is U.S.-based.

Patriot Payroll Verdict: If you go with their "Full Service Payroll" plan at $41/month for one employee, it's a very solid, slightly cheaper alternative to Gusto or QuickBooks. You get automated tax filing and payments for a bit less. Just make sure you pick the full service option. For more info, check out Patriot Software's payroll page.

SurePayroll: Solid, If a Little Older

SurePayroll, a Paychex company, has been around for a while. They also offer competitive pricing for small businesses, starting around $29.99/month plus $4 per employee for their basic "Self-Service" plan. Again, for a 1-person LLC, that would be about $34/month. But, like Patriot, you need to watch out for the tax filing feature. Their "Full Service" plan, which includes tax filing and payments, typically starts higher, often closer to $50/month for one employee.

SurePayroll Rundown:

Pricing: Competitive, but again, ensure you select the plan that includes tax filing.

Features: Offers direct deposit, automatic tax calculations, and generally good support. They have a 100% tax filing guarantee, which is reassuring.

User Experience: Often described as functional but not as modern or intuitive as Gusto. It gets the job done without a lot of bells and whistles.

Customer Service: As a Paychex company, they have a solid support system.

SurePayroll Verdict: If you can find a good deal on their full-service plan, SurePayroll is a dependable choice. Just make sure the price point works for you, as it can sometimes be on par with or even slightly more expensive than Gusto for full-service. You can learn more about their features at SurePayroll.com.

The Key Takeaway for Budget Options

When you're comparing Patriot or SurePayroll to Gusto or QuickBooks, the biggest difference often comes down to the user experience and additional bells and whistles (like advanced HR features or more solid integrations). For pure, no-frills, full-service payroll for one employee, Patriot's full-service plan might edge out Gusto on price. But if a super slick, easy-to-use interface and solid integrations are important to your workflow, then Gusto's slightly higher price might be worth it. It’s all about finding your balance between cost and convenience.

Can I Just Do Payroll Myself for My 1-Person LLC?

This is the question I asked myself initially, and the answer is a resounding technically, yes, but please don't. Or at least, please don't unless you really know what you're doing, love tax forms, and have an unusually high tolerance for administrative risk.

The True Cost of DIY Payroll

When I was contemplating DIY payroll, I thought, "I'm smart, I can follow instructions." And to a certain extent, I could. But the sheer volume of things you need to remember is insane:

Calculate withholdings: Federal income tax, Social Security, Medicare. And then state income tax (if applicable) and state unemployment insurance (SUI). Each of these has different rates and thresholds. The IRS Tax Withholding Estimator can help, but it's still your responsibility to get it right.

Deposit taxes: You have to make these deposits on time, usually electronically through the Electronic Federal Tax Payment System (EFTPS). This often means understanding if you're a monthly or semi-weekly depositor. Get this wrong, and you're looking at penalties.

File forms:

Form 941: Employer's Quarterly Federal Tax Return. Due every quarter.

Form 940: Employer's Annual Federal Unemployment (FUTA) Tax Return. Due annually.

State-specific forms: Each state has its own forms for income tax withholding, unemployment insurance, and sometimes other local taxes.

Form W-2: You have to issue a W-2 to yourself (as the employee) at the end of the year and also file it with the Social Security Administration (SSA) — you can find info on that at SSA.gov.

Form W-3: Transmittal of Wage and Tax Statements.

Stay compliant: Tax laws change. Rates change. Deadlines change. It's a full-time job for some people, let alone a solo founder trying to run their business.

My brief, ill-fated attempt at DIY payroll wasn't even full DIY; it was just me neglecting to set up proper payroll. But even that partial step outside compliance cost me. The mental energy alone of trying to keep up with all those deadlines and calculations, on top of running a business, would have been crushing. What is your time worth? If an hour of your time is worth, say, $75 (a conservative estimate for many solo founders), then spending 5-10 hours a month on payroll admin quickly makes that $40-$50 payroll service look like a bargain.

When DIY Might Make Sense (Barely)

Honestly, for an S-Corp, it almost never makes financial sense to DIY. The risk of penalties far outweighs the monthly fee of a service. The only scenario where I could even remotely see someone attempting DIY is if they are an accountant or a tax professional themselves, intimately familiar with all federal and state payroll laws, and enjoy filling out forms. Even then, the time cost is likely higher.

Or, if you just absolutely cannot afford even the cheapest full-service option (like Patriot's $41/month plan), and you’re literally choosing between keeping your business afloat and having a payroll service. But even in that extreme case, I'd say the money you save on an S-corp election is so significant that finding $40-$50 a month for compliance should be a priority. Maybe cut out a streaming service or two instead.

Understanding "Reasonable Salary" for S-Corps (And Why It Matters)

This isn't directly about the cheapest payroll service, but it's absolutely vital to understand when you're running payroll for yourself as an S-corp owner-employee. The IRS requires you to pay yourself a "reasonable salary."

What Even Is a Reasonable Salary?

It's not some arbitrary number you pull out of a hat to minimize your FICA taxes. The IRS defines a "reasonable salary" as what you would have to pay someone else to do your job (or a similar job) in your industry and geographic area, considering your experience, responsibilities, and the number of hours you put in.

Why does the IRS care? Because people used to try and pay themselves a tiny salary (say, $10,000) and take huge distributions (say, $100,000) to avoid self-employment taxes. The IRS caught on. If your salary is too low, they can reclassify your distributions as salary, and then you'll owe all those back payroll taxes, plus penalties and interest. And trust me, you don’t want to mess with the IRS on this one.

The IRS provides guidance on reasonable compensation. They look at factors like:

Your duties and responsibilities.

The time and effort devoted to the business.

Your training and experience.

What comparable businesses pay for similar services.

The character and amount of the company’s regular distributions to shareholders.

My Own Reasonable Salary Conundrum

When I first started, I agonized over this. My accountant helped me land on a figure, and we made sure it was well-documented. We looked at average salaries for content strategists or marketing managers in Austin. It wasn't the lowest number I could've picked, but it was defensible. And that's the key word: defensible. You need to be able to justify your salary if the IRS ever comes knocking.

Choosing a payroll service won't set your reasonable salary for you, but it will ensure that once you do determine that salary, all the proper taxes are withheld and paid on it, and all the necessary forms are filed. It’s part of the S-corp dance, and a payroll service is your dance partner.

Hidden Costs and Things to Watch Out For

Okay, so we're talking "cheapest payroll for 1-person LLC." But sometimes, what looks cheap on the surface has hidden gotchas. Here's what I've learned to keep an eye out for:

1. Quarterly or Annual Fees (Beyond Monthly)

Some payroll services might advertise a low monthly fee but then hit you with a separate charge for year-end tax forms like W-2s and W-3s, or for filing annual FUTA taxes. This usually isn't the case with full-service plans from Gusto, Patriot, or SurePayroll, but it's worth checking the fine print. Make sure "full-service" truly means all federal and state filings, including year-end.

2. Setup Fees

A few services, especially older, more traditional ones, might charge a one-time setup fee. Most modern online services have done away with this, but it’s something to verify when you're comparing.

3. State-Specific Fees

While most online payroll services include all state filings in their base fee, there can be exceptions for states with particularly complex payroll tax structures. Make sure the advertised price covers your specific state. For example, some states require very specific local filings, and sometimes a service might charge extra for those. Always check their state support details.

4. Integration Add-Ons

If you need your payroll service to integrate with a specific accounting software or time-tracking tool, double-check that the integration is included in your chosen plan. Sometimes, the cheapest plans have limited integration options, and you have to upgrade to a pricier tier.

5. Lack of Full-Service Tax Filing

This is the biggest "hidden cost" trap. As I mentioned with Patriot and SurePayroll, their cheapest plans might not include automated tax filing and payments. They'll calculate everything for you, but you're still responsible for actually making the deposits and filing the forms. This is a huge time sink and risk. Always opt for the "full-service" plan for an S-corp. It's not truly cheaper if you have to spend hours doing it yourself, or worse, pay penalties for mistakes.

6. Poor Customer Support

This isn't a direct monetary cost, but it will cost you in time and frustration. If a service is super cheap but you can never get a hold of anyone when you have a question, or their support is unhelpful, that's a cost. You're dealing with your money and taxes; reliable support is critical. You can read up on consumer financial protection at consumerfinance.gov.

7. Escalating Pricing Tiers

Be aware of how pricing scales. For a 1-person LLC, it’s usually straightforward, but if you anticipate hiring even one more person in the next year or two, look at the next pricing tier. Sometimes a cheaper entry-level service gets more expensive than its competitors as you add just a few employees.

I remember once signing up for some online tool (not payroll, but same principle) because its basic plan was super cheap. But then I needed one tiny feature, and it turned out to be locked behind a plan that was triple the price, making it far more expensive than a competitor who offered that feature in their slightly-more-expensive-but-still-reasonable base plan. Always read the feature list for each tier carefully.

Choosing the Right Payroll for Your Business (And Your Brain)

Alright, Alex, pull it together. So many options, so many numbers. How do you actually pick the right one for your one-person LLC? It really boils down to balancing three things: cost, convenience, and compliance.

If Cost is Your Absolute Top Priority (and you don't mind a slightly less polished experience):

Patriot Payroll (Full Service Plan): At around $41/month for one employee, this is often the sweet spot for maximum savings while still getting full tax filing and compliance. It might not be as "pretty" as Gusto, but it gets the job done reliably.

If You Want the Best Balance of Value, Ease of Use, and Peace of Mind:

Gusto (Core Plan): At $46/month for one employee, it's a few bucks more than Patriot, but its user-friendliness, modern interface, and strong integration capabilities often make it worth the slight premium. This is my pick, personally. It saves me mental energy, which is really useful.

If You're Already Deep in the QuickBooks Ecosystem:

QuickBooks Payroll (Core Plan): If you live and breathe QuickBooks Online for your accounting, then the smooth integration here could save you a ton of time and reconciliation headaches. Pricing is comparable to Gusto.

What I Do (And Why)

Sitting here at my coffee shop, thinking about all this, I'm glad I went with Gusto. When I first signed up, I was still trying to recover from that IRS letter, and I just needed something that worked, that wouldn't mess up, and that I wouldn't have to think about constantly. Gusto delivered. I login, click "run payroll," confirm, and I'm done. My tax filings are handled, my payments are made, and my accountant can pull whatever he needs for year-end.

For me, the few extra dollars a month for Gusto's superior user experience and solid reputation for compliance is absolutely worth it. It frees up my brain space to actually focus on writing and growing my business, instead of stressing about tax deadlines and obscure state forms. And that, truly, is the "cheapest" way to run your business in the long run. It's about protecting your time and your sanity as much as your wallet.

Cheapest payroll for 1-person LLC: What to pick? summary

FAQ: Payroll for Your Solo Empire

### Q: Does a single-member LLC need payroll if it's not an S-Corp?

No, generally not. If your single-member LLC is taxed as a sole proprietorship (the default), you do not run payroll for yourself. You take owner's draws, and you pay estimated self-employment taxes quarterly. Payroll is only necessary if you elect for your LLC to be taxed as an S-corporation, which requires you to be an employee of your own company and pay yourself a reasonable salary.

### Q: What's the biggest risk of not running payroll for an S-Corp?

The biggest risk is IRS penalties. If you fail to pay yourself a reasonable salary and take only distributions, or if you don't withhold and deposit your payroll taxes on time, the IRS can hit you with significant "Failure to Deposit" penalties, interest, and potentially reclassify your distributions as salary, making you liable for back taxes and more penalties. This can get very expensive, very quickly. You can read more about penalties on the IRS website.

### Q: How often do I have to run payroll for myself?

Most S-corp owners run payroll either bi-weekly (every two weeks) or semi-monthly (twice a month). Some might do it monthly. The frequency affects your tax deposit schedule with the IRS (monthly or semi-weekly), but your payroll service will handle that based on your company's tax liability. Consistent payments are key for maintaining your "reasonable salary" status.

### Q: Can I change payroll services if I'm unhappy?

Yes, absolutely. Switching payroll services is generally straightforward, especially if you have all your past payroll records (like quarterly Form 941s and annual W-2s). Most new payroll providers will help you transfer your historical data to ensure a smooth transition and accurate year-to-date figures.

### Q: What if my business doesn't make enough money to pay myself a "reasonable salary"?

This is a tricky spot. If your S-corp genuinely isn't generating enough income to pay a reasonable salary, it might indicate that the S-corp election isn't currently benefiting you. You still need to pay yourself something that's considered reasonable for the work you're doing, even if it means taking less in distributions or, in extreme cases, dipping into business savings. It’s a discussion to have with your accountant, as consistently paying an unreasonably low salary or no salary at all can flag you for an IRS audit.

### Q: Do I need a separate bank account for payroll taxes?

No, a separate bank account isn't required. Your payroll service will typically initiate withdrawals directly from your main business bank account for tax deposits and your net pay. However, it's always smart to keep enough funds in your business account to cover these regular payroll expenses to avoid any failed payments or overdraft fees. Maintaining good cash flow is essential, as emphasized by the FDIC.

I'm not a financial advisor — just a guy who made a lot of money mistakes and learned from them. Some links here earn me a small commission, but I only recommend stuff I'd tell my friends about.

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