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May 14, 2026
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cheapest-payroll-one-employee-llc
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Gusto's Contractor Only plan offers the cheapest payroll for a one-employee LLC, starting at $6/month. Find out why it's best and compare other top budget options.
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cheapest payroll service
one employee LLC
solo LLC payroll
Gusto review
small business payroll cost
payroll software comparison
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The cheapest payroll service for a one-person LLC typically starts around $6 per month plus a base fee, often found in basic plans from providers like Gusto or QuickBooks Payroll, but the real cost depends on how you pay yourself and your state's specific tax rules.
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Person reviewing tech reviews options on laptop

Quick Answer

For a solo LLC owner needing payroll, the goal is simplicity and affordability. You're likely looking for a service that handles federal, state, and local tax filings without a massive monthly fee or complex setup. Most providers cater to this by offering entry-level plans designed for just one employee (you). The key is to find a balance between cost and necessary features, like direct deposit, tax form generation, and year-end reporting. Don't overpay for features you won't use.

TL;DR

  • Cheapest plans often start around $6-$40/month plus a per-employee fee.
  • Focus on services handling tax filings and direct deposit.
  • Consider how you'll be paid (salary vs. owner's draw) as it affects tax forms.
  • Factor in state-specific tax requirements.
  • Look for free trials and clear cancellation policies.

What We'll Cover

  1. Understanding Payroll for a One-Person LLC
  1. What Makes Payroll Services Cheap?
  1. Cheapest Payroll Service for One-Employee LLC Compared
  1. Calculating the Real Cost: An Oddly Specific Example
  1. Beyond Price: Essential Features for Your Solo Payroll
  1. How to Choose the Right Service for Your One-Person LLC
  1. What to do First
  1. Common Mistakes to Avoid
  1. When This Does Not Apply
  1. Official Sources I Checked
  1. FAQ

Understanding Payroll for a One-Person LLC

Even if you're your only employee, you still need to run payroll. This isn't just about paying yourself; it's about managing your tax obligations correctly. The IRS requires businesses to report wages paid, even to the owner, and to withhold and remit taxes. For an LLC, this often means treating yourself as an employee if you've elected S-corp status or if you're paying yourself a salary through your partnership agreement. If you're simply taking owner's draws from a disregarded entity, the rules are different, but many find using a payroll service simplifies things immensely. It helps keep your business and personal finances cleaner, which is a win for tax time and for anyone looking to secure future financing. For a deeper get into LLC structures, check out resources on Small Business Administration (SBA) pages.

The Employee vs. Owner's Draw Distinction

This is the big one. If you've elected to be taxed as an S-corp, you must pay yourself a reasonable salary and file payroll taxes. This makes you an employee of your own company. If your LLC is taxed as a sole proprietorship (a "disregarded entity"), you typically take distributions or "owner's draws." Technically, these aren't "payroll" in the traditional sense and don't require a formal payroll service for tax withholding on your end, though you'll still owe self-employment taxes. However, many solo LLC owners still opt for a payroll service even with draws because it automates tax payments and record-keeping. It's often easier than trying to track it all yourself. Investopedia has a good rundown on S-corp vs. LLC basics.
Chart comparing Cheapest Payroll Service for One-Person data
Chart comparing Cheapest Payroll Service for One-Person data

What Makes Payroll Services Cheap?

The sticker price of a payroll service can vary wildly, but for solo operators, the cheap options usually share a few characteristics:
  • Limited Features: Basic plans often skip advanced features like HR support, time tracking integrations, benefits administration, or detailed employee handbooks. You get the core functions: running payroll, direct deposit, and tax filings.
  • Per-Employee Pricing: Most services have a base monthly fee (covering the software and platform) plus a per-employee fee. For a one-person LLC, this per-employee fee is minimal, making the base fee the dominant cost.
  • Bundled Software: Sometimes, the cheapest payroll comes bundled with accounting software (like QuickBooks Payroll or Xero Payroll). If you're already using or need accounting software, this can be cost-effective.
  • Focus on Compliance: The cheapest services prioritize getting your federal and state taxes filed on time. They might offer less hand-holding or advanced reporting than premium options.

Cheapest Payroll Service for One-Employee LLC Compared

When you're the only one on the payroll, the comparison is simple: who offers the most basic, reliable service for the lowest monthly cost? It's not about bells and whistles; it's about accurate tax calculations and timely filings.
Provider
Base Monthly Fee
Per-Employee Fee
Estimated Annual Cost (1 person)
Key Features
Best For
Gusto
$40
$6
$112
Direct deposit, tax filings, basic HR tools
Simple salary payments, growth potential
QuickBooks Payroll
$45 (Core)
$4 (Core)
$93 (Core)
Integrated with QuickBooks, direct deposit, tax filings
Existing QuickBooks users
ADP Run
Starts at $40
$4
$88
Solid tax support, mobile app
Businesses needing reliable tax compliance
Paychex Flex
Starts at $39
$4
$87
Strong payroll processing, reporting
Businesses needing solid reporting
OnPay
$40
$6
$112
All-in-one payroll and HR
Growing businesses needing more HR support
Note: Prices are estimates and can change. Always check the provider's website for the most current pricing and plan details. Some plans may have minimum charges.

Calculating the Real Cost: An Oddly Specific Example

Let's say you've elected S-corp status and need to pay yourself a salary of $60,000 per year, which breaks down to $5,000 per month. You're using a service with a $40 base fee and a $6 per-employee fee.
  • Monthly Service Fee: $40 (base) + $6 (you) = $46
  • Annual Service Fee: $46/month * 12 months = $552
But wait, that's just the service fee. You also have to consider the actual taxes. For an S-corp owner, you'll have federal income tax withholding, Social Security, and Medicare taxes (both employee and employer portions). Let's assume a simplified annual tax burden of $15,000 for federal income tax withholding and $8,000 for Social Security and Medicare (this is a rough estimate; your actual taxes will vary based on deductions, credits, and state taxes).
  • Total Annual Payroll Taxes: $15,000 (income tax) + $8,000 (FICA) = $23,000
  • Total Annual Cost (Service + Taxes): $552 (service) + $23,000 (taxes) = $23,552
This $23,552 is the real cost of running payroll for yourself as an employee of your S-corp. The service fee is just a small fraction of the total obligation. This is why accuracy in calculations is key.

The Hidden Costs of "Free" Payroll

Some services advertise "free payroll." Often, this means they'll run payroll for free if you also use their accounting software, or it's a limited-time trial. Or, it might not include tax filings, which is the most important part for compliance. Be wary of "free" that doesn't cover the essentials. You can read more about IRS payroll tax responsibilities on IRS.gov.

Beyond Price: Essential Features for Your Solo Payroll

While we're talking about the cheapest options, don't completely ignore features. For a one-person LLC, here are the must-haves:

Essential Features for Your Solo Payroll

  1. Direct Deposit: Gets your pay directly into your bank account.
  1. Automated Tax Filings: The service handles federal, state, and local tax forms and payments. This is non-negotiable for avoiding penalties.
  1. Year-End Forms (W-2/1099): Generates and files W-2s (if you're an employee) or 1099s (if you pay contractors) for the IRS and yourself.
  1. Basic Reporting: Access to payroll summaries, tax liability reports, and historical data.
  1. Mobile App: Useful for checking pay stubs or initiating payroll on the go.

How to Choose the Right Service for Your One-Person LLC

Picking the right payroll service isn't just about finding the lowest number. It's about finding the best fit for your specific situation.

Key Questions to Ask Potential Providers

When you're on the phone with a sales rep or browsing their website, have these questions ready:
  • "What is the total monthly cost for a single employee LLC owner, including all base fees and per-employee fees?" (This confirms their advertised price and avoids hidden charges.)
  • "Does your service automatically handle all federal and state tax filings and payments for an S-corp owner in [Your State]?" (Be specific about your business structure and state.)
  • "What is your cancellation policy, and are there any fees associated with it?" (You don't want to be locked in.)

Written Record Tip

Always ask for your initial service agreement, pricing structure, and any setup instructions in writing (email is fine). If you're setting up tax direct deposit, get confirmation of the dates and amounts being submitted to the IRS and your state's tax authority. A screenshot of your account dashboard showing your next scheduled payroll and tax payment date can also be a lifesaver if disputes arise later.

What to do First

Before you even look at payroll providers, you need to get your ducks in a row:
  1. Determine Your Business Structure & Tax Election: Are you a sole proprietorship LLC, or have you elected S-corp status? This is critical. If you're unsure, consult a CPA or tax professional. The IRS has resources on business structures.
  1. Get Your EIN: If you don't already have one, apply for an Employer Identification Number (EIN) from the IRS. This is your business's Social Security number and is required for most payroll services. You can get one for free at IRS.gov.
  1. Understand Your State's Requirements: Each state has different payroll tax laws and filing procedures. Check your state's Department of Revenue or Labor website.
  1. Decide How You'll Pay Yourself: Salary (if S-corp) or owner's draw? This impacts the type of payroll setup you need.

Common Mistakes to Avoid

When hunting for the cheapest payroll, it's easy to fall into a few traps.

Pitfalls of Cheap Payroll

  1. Ignoring Tax Filings: Some services might offer free payroll processing but charge extra for tax filings. This is the most important part; don't skimp here.
  1. Not Checking State Specifics: What's cheap and easy in California might be more expensive or complex in Texas due to different tax regulations.
  1. Assuming "One Employee" Means You: If you also pay contractors, ensure the service handles 1099s properly, as this can sometimes be an add-on cost. You might find QuickBooks Payroll vs Gusto: Pay Contractors 2026 helpful here.
  1. Overlooking Cancellation Fees: Some "cheap" plans lock you into a year-long contract.

When This Does Not Apply

This guide is focused on the absolute cheapest payroll solutions for a one-person LLC primarily concerned with basic payroll and tax compliance. It probably doesn't apply if:
  • You have actual employees (W-2 earners) beyond yourself.
  • You have a very complex payroll situation (e.g., multiple states with significant payroll in each, union dues, garnishments).
  • You need extensive HR support, benefits administration, or advanced time-tracking integrated directly into payroll.

Official Sources I Checked

  • IRS.gov: For EIN application and general payroll tax information.
  • Small Business Administration (SBA): For understanding business structures and initial setup.
  • Your State's Department of Revenue/Labor: For state-specific tax laws and filing requirements.
  • Consumer Financial Protection Bureau (CFPB): For general consumer advice on financial services.
Extra checklist visual for Cheapest Payroll Service for One-Person
Extra checklist visual for Cheapest Payroll Service for One-Person

Best Next Resource

The safest next move is to solve the rule first, then compare providers only if they reduce the work. Compare pricing, trial terms, cancellation policy, and whether the free tier is enough. Compare: Compare Gusto payroll (payroll-first option for small teams), Compare QuickBooks (accounting plus payroll fit for many small businesses), Check Wave (lighter bookkeeping option before paying for a suite).
If you are at this step
Best next move
Why
You still need the rule
Check the official source first
It prevents a bad paid decision
You know the rule and need a provider
Compare at least three reputable options
Price gaps are common in this category
You are about to pay or submit personal info
Save the terms, fees, cancellation policy, and confirmation email
Written records protect you later

FAQ

Q: Do I really need payroll if I'm the only employee of my LLC?

Yes, if you've elected S-corp status, you're legally required to pay yourself a salary and run payroll. Even if you're a disregarded entity taking owner's draws, using a payroll service simplifies tax tracking and record-keeping, preventing potential headaches later.

Q: What's the difference between an owner's draw and a salary for an LLC?

A salary is a fixed amount you pay yourself as an employee of your own company, subject to standard payroll taxes. An owner's draw is a distribution of profits from the business to your personal account; it's not treated as income or wages for tax purposes in the same way as a salary.

Q: How much does payroll software usually cost for a one-person business?

The cheapest options typically range from $6 to $40 per month, plus a small per-employee fee ($4-$6). The total annual cost for a single person will likely be between $100 and $200 for the service itself, not including the actual taxes you owe.

Q: Can I just use a spreadsheet to do my own payroll?

You can, but it's generally not recommended, especially if you're treating yourself as an employee (S-corp). Tax laws are complex and change frequently. A small error in withholding or filing can lead to significant penalties from the IRS or your state. Payroll services automate these calculations and filings, reducing your risk.

Q: What if I pay contractors instead of myself as an employee?

If you're primarily paying independent contractors (1099 workers), you'll need a service that handles 1099 filings correctly. Some basic payroll services might not include this, or it could be an additional cost. Providers like Gusto and QuickBooks Payroll offer contractor payments. You'll still need to issue Form 1099-NEC to contractors who earned $600 or more from you in a year.
Key Takeaways:
  • For a one-person LLC, the cheapest payroll services focus on core functions like direct deposit and automated tax filings.
  • Expect monthly fees to start around $6-$40 plus a small per-employee charge.
  • Ensure the service handles all federal and state tax filings and payments accurately for your specific business structure (especially if S-corp).
  • Always ask providers about cancellation policies and get pricing in writing.
  • Before choosing a service, secure your EIN and understand your state's payroll tax obligations.
Affiliate disclosure and financial disclaimer: I'm not a financial advisor - just a guy who made a lot of money mistakes and learned from them. Some links here may earn me a small commission, but I only recommend stuff I'd tell my friends about.

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