Best payroll software for small businesses

Extensive research into the payroll software market, carried out by Startups experts, reveals the best payroll software for small businesses is 12Pay by IRIS. This user-centric software demonstrates smart, tailored features that make it an easy-to-use service that doesn’t compromise on functionality.

We judged the top providers against five key payroll categories identified by our small business users during our more than twenty years working with them: pricing, security, employee management, accounting features, and usability. Here are the five we like most for UK SMEs:

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FEATURED PROVIDER	BEST ALL ROUND
Provider QuickBooks	Provider IRIS	Provider Sage Payroll	Provider Xero	Provider Moorepay
Best for Small businesses wanting to seamlessly integrate payroll with its accounting software	Best for Small businesses needing digital resources to answer employee queries	Best for Small businesses wanting a comprehensive suite of accounting tools	Best for Small businesses wanting to save time by automating payroll processes	Best for SMEs needing extra customer support, and a thorough onboarding process
Cost £1-7/mo plans + 0.40/mo for payroll features	Cost Free for 9 employees £73/y for 30 employees £144/y for unlimited employees	Cost £8/m for 1-5 employees £13/m for 6-10 employees £19 – £106/m for additional employees	Cost £5/m for 5 people £49/m for 10 people + £1/m for additional employees	Cost Provides personalised quotes after assessing business needs
HMRC compliant	HMRC compliant	HMRC compliant	HMRC compliant	HMRC compliant

Optimise your business with Quickbooks' all-in-one payroll solution Try Quickbooks

Effective payroll solutions simplify the paying process by automating payroll duties to ensure they are fully HMRC compliant. The best products also boast transparent, self-service apps where staff can access and manage their personal information – keeping your talent satisfied in the midst of today’s hiring crisis.

But the important question is, regardless of 12Pay’s title as the best payroll software, is it the right choice for your business? It isn’t the only game in town – Moorepay and Xero also have fantastic payroll software solutions.

Below, we’ll guide you through all of the options available on the market to make sure you find the best one for your unique needs. We’ll provide insights into the differences between them all to help you find the best match for your business needs.

Or, to save time, you can simply fill in our simple 🔍cost comparison tool to find quotes that have been tailored to your firm’s unique specifications. Don’t worry: this service is free, takes just one minute, and involves zero obligations on your part.

1. 12Pay by IRIS: Best for small businesses enrolling lots of sub-contractors, such as construction workers

12Pay by IRIS

4.2

Easy-to-use, well-established payroll system.

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• Free trial Free plan
• Price from Free for 9 employees

• Easy to use once set up
• Impressively functional free version

Summary 12Pay is a powerful software tool designed to simplify every payroll function, within budget. The app is accessible by virtually any device and also has tons of features, including specialist payslip templates and a Simple Report Writer AI tool for monthly reporting. Test it out by downloading the free six-month trial for up to nine employees.

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IRIS is one of the UK’s longest-running private software companies. It’s been supplying administration solutions to the country’s businesses, charities, and public sector for over 40 years – and has used that time wisely to implement lots of user-centric features that simplify the payroll process.

For example, the ability to print self-sealing payslips so you don’t have to waste time securing envelopes on a Friday afternoon.

What is 12Pay’s USP?

12Pay offers payroll business software that’s user-friendly, affordable, and in our expert opinion, a great all-in-one payroll solution for SMEs. It keeps all of your company payroll data securely in a centralised location for ease of access.

One particularly ingenious feature is the specialist payroll bureau – a digital resource containing key documents and guides to assist you in answering client queries. This is endlessly helpful for those firms with more complex payroll demands such as if you need to regularly enroll and manage new suppliers or subcontractors.

Used in conjunction with 12Pay’s specialist CIS (Construction Industry Scheme) Extensions for Subcontractors – which only QuickBooks also offers – 12Pay is the ultimate option for construction businesses that need to outsource large portions of work.

In terms of more practical considerations, the software integrates with HMRC, so online submissions are accurate all year round. RTI reporting and auto-enrolment are included in the service, so compliance is no issue either.

Verdict

12Pay by IRIS is a great all-round payroll software that encompasses compliance, security, and accessibility. It’s ideal for small businesses wanting a professional, reliable service that offers flexible payroll options.

There is a free plan available with IRIS, but it is only suitable for up to three employees.

2. Sage: Best for small teams with fewer than 5 employees wanting a dedicated accounting resource

Sage

4

An elegant payroll solution that can act as entire accounting department for small firms.

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Read our review of Sage Accounting

• Free trial 30-day
• Price from £8/m for 1-5 employees

• SImple, 4-step DIY payroll
• Expert support 24/7
• Good automations for saving time

Summary SMEs are often working with tight budgets when purchasing new technology, and Sage Payroll is an excellent low-cost solution for such employers. At just £7 a month for 5 employees, the platform is fully HMRC compliant and takes users through an easy four-step method for payroll processing, reporting and tracking. Plus, it’s cloud-based, so it can be accessed anywhere.

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3. Xero: Best for Xero accounting users with a large employee turnover, such as hospitality firms

Xero

4.6

Manage payroll in your sleep thanks to Xero's powerful automation tools.

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• Free trial? No
• Price from £5 for 5 employees (+ a subscription to Xero Accounting software)

• Mobile app gives employees more payroll transparency
• Automations keep you HMRC compliant all year round

Summary Xero lets you manage your payroll and accounting seamlessly in one system, saving you time and resources. Its automation features are unrivalled, and the Xero Me mobile app is an excellent, easily accessible feature. The whole process of payroll is made easy with Xero software, and it really shows.

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Moorepay

3.9

Medium-sized businesses will find Moorepay a great payroll software to use for going above and beyond in employee management.

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• Free trial? No
• Price from Provides personalised quotes after assessing business needs

• Switching from your old provider or in-house payroll is easy
• Managers are instantly notified about payroll submissions so you can make speedy decisions

Summary Moorepay is a powerful payroll provider that has been designed with medium sized businesses in mind. Its feature list is impressive, as are its data storage capabilities. You can trawl through hundreds of employee records quickly to perform HR duties as well as just manage payslips. But that won't be necessary for businesses with fewer than 10 employees.

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Moorepay is a goliath in the payroll services industry, used to pay one in six of the UK’s working population – but that doesn’t make it any less of a bespoke provider for SMEs.

What is Moorepay’s USP?

Moorepay’s payroll software is better-suited to medium-sized businesses as its costs simply outweighs the benefits for businesses with fewer than 20 employees.

Part of the reason for its higher price tag is that, alongside payroll features, Moorepay is a good example of a payroll-cum-employee management tool – it handles a wide range of HR duties like real-time, insightful dashboards and data-driven graphs.

These are undeniably handy, but won’t be necessary for a lot of SMEs. Still, important pull-factors that we know customers want from their payroll are all there with Moorepay and more. Security is dialled up to 10 with single sign-on, biometric login capability and privacy features.

As Moorepay is entirely cloud-based, anywhere access means greater flexibility for you and your employees. Plus, like with Xero, the Moorepay mobile app is gives employees will easily access their payslips, P60s, and book leave – so you’ll get less queries, and have more time.

Moorepay is HMRC compliant and BACS approved (permitted to send faster payment transactions on behalf of third party organisations). Plus, we like how easy it is for you to switch payroll providers as Moorepay’s customer support team makes this a painless process to complete.

Verdict

We really like Moorepay as a secure payment option for teams that are working remotely or in a hybrid model. Its security features are second to none and, with plenty of employee management tools at your disposal, your workforce will be kept happy, updated, and importantly, paid on time.

Still, we’re not impressed by the app’s opaque pricing plans. Lack of transparency is unfortunately an issue with a lot of business software tools. That’s why we designed our 🔍online comparison tool. It’s 100% free to use and gives you direct quotes from the top providers on the market – a much quicker way to compare costs.

5. QuickBooks: Best for micro businesses with just one employee

Quickbooks

4.7

Simple to use, high-performing accounting software.

Try Quickbooks

Read our QuickBooks review for more.

• Free trial 30-day
• Price from £1-7/mo plans + 0.40/mo for payroll features

• All-in-one accounting solution
• Gentle learning curve for new users

Summary QuickBooks is an HMRC-recognised software that helps you manage your taxes, cash flow, invoicing and payroll, all in one place. There’s no contract, and its award-winning UK-based phone support is free for users. Prices start at only £5 per month for the first four months, with a maximum of three users.

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QuickBooks is a big player in the world of small business payroll software, with some great features that are relied upon by small firms across the UK. Its self-employed accounting software is highly regarded as the best out there, and its payroll software isn’t too shabby either…

What is QuickBooks’ USP?

If you’re looking for easy-to-use, functional, and aesthetically pleasing payroll software, look no further than QuickBooks. Its HMRC-compliant software does all your calculations for you and updates tax codes automatically, so you can simply submit your figures in a couple of clicks.

Unlike IRIS, Moorepay, Xero, or Sage, Quickbooks pays dues to sole traders with a set of specialist self-employed features. Feel assured you’re paying yourself correctly with Directors National Insurance contributions (NICs) calculations and Automatic Real Time Information (RTI) submissions to HMRC.

That doesn’t mean you can’t hire any other staff. The self-service employee portal has similar functionality to other software providers like 12Pay and Xero, enabling your employee to enter their address, access payslips, enter timesheets, request leave and even submit expenses.

Still, we’d recommend this basic, stripped back system for teams with no more than one employee. It’s low maintenance – but that does sacrifice some key payroll elements like slimmer employee portals and less features on its mobile version than desktop.

Verdict

The fact we could have listed off another paragraph or two worth of features is evidence that QuickBooks is a great payroll software choice for micro businesses or side hustles that want a cheap option they can use to manage both their payroll duties and their cash flow.

As with Xero, integration with QuickBooks’ accounting software is required in order to access the payroll offering.

Payroll software: key features comparison table

Next steps: roundup and comparison of the best payroll software in the UK

• Our top-rated provider, 12Pay by IRIS is a superb, all-round payroll product that comes with a lot of extra support and specialist industry products that are particularly beneficial for contractors.
• Sage’s payroll software can play the role of an accountant for your business, helping you to keep an eye on your overall financial performance as well as payslips.
• Xero’s automation will streamline your admin duties, particularly if your business deals with a lot of employee turnover.
• Moorepay is an excellent choice for larger businesses with employees based in more than one office.
• Quickbooks is a great option for basic payroll and accounting management if you’re a sole trader.

Regardless of our opinion, you should always compare the best payroll software available before signing on the dotted line. The last thing you want is to be stuck in a contract with a service that doesn’t fulfil the needs of your business, even if it is, generally speaking, a great product.

This is where our custom-built comparison tool comes in. We’ve partnered with some of the best payroll software providers to help you get the best service for your business, including the likes of IRIS and Moorepay.

Simply fill in a few basic details, and providers will be in touch with bespoke 🔍personalised quotes for you to compare, along with further details about why the service they offer would best suit the needs of your business.