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Hiring your first W-2 employee? Compliant full-service payroll for one worker starts around $42/month (Patriot Full Service). OnPay and Gusto run ~$55/month with stronger UX. QuickBooks only wins on price if you already pay for QuickBooks Online.
- First-hire compliance triggers explained
- Four picks compared at one W-2 headcount
- Links to S-corp guide without duplicating reasonable comp
One W-2 employee cost floor
Do you need payroll for one employee?
You need payroll software (or an accountant running payroll) when you have a W-2 employee subject to income tax withholding and FICA. Triggers include:
- First hire on payroll with Form W-4 on file
- Quarterly Form 941 deposits and filings
- State withholding and unemployment (SUTA) accounts
- Workers' compensation in most states
- New-hire reporting to state agencies
Sole proprietors with no employees generally do not run W-2 payroll for themselves—owner draws are not wages. LLCs and corporations with a hired W-2 worker need compliant payroll even at one headcount. This guide covers general first-hire scenarios; S-corp owner-officers have additional rules covered in our dedicated S-corp guide.
What 1-employee payroll must do
- Calculate federal and state withholding, FICA, and employer taxes each pay period
- Deposit taxes on IRS/state schedules (software handles timing on full-service plans)
- Issue W-2 and file with SSA/IRS at year-end
- File new-hire reports
- Offer direct deposit or printable checks with pay stub records
- Track optional benefits, garnishments, or workers' comp deductions if applicable
Top picks for one employee
Patriot Full Service — ~$42/mo
$37 base + $5 for one W-2. Full federal/state/local filing, tax filing guarantee, free 1099 e-file. No minimum employee count; base-only billing in months with zero workers paid. Full Patriot review →
Try PatriotOnPay — ~$55/mo
$49 + $6 for one W-2. All 50 states, local tax filing, core HR and onboarding included—strong pick if your one employee might be remote in another state. OnPay review →
Try OnPayGusto Simple — ~$55/mo
$49 + $6 (Simple base raised to $49 in March 2026). Best UX and benefits marketplace; account free until first payroll run. Multi-state requires Plus ($80 + $12/ee). Gusto pricing →
Try GustoQuickBooks Payroll Core — ~$56.50/mo add-on / ~$94.50 all-in
If you already pay for QBO, Core add-on is $50 + $6.50 = $56.50 for one W-2. New stack with Simple Start: $38 + $50 + $6.50 = $94.50/mo. Native ledger sync is the reason to choose it. QB Payroll review →
View QuickBooksComparison table (1 W-2 employee)
| Provider | Monthly cost | Full-service filing | Multi-state | HR in base | Free trial | EA pick |
|---|---|---|---|---|---|---|
| Patriot Full Service | $42 | Yes | $12/mo per extra state | HR Center only | 30 days + 50% off 6 mo | Budget |
| OnPay | $55 | Yes | All states included | Yes | 1 month free | Remote worker |
| Gusto Simple | $55 | Yes (single-state) | Plus tier required | Add-ons | Free until first run | UX |
| QB Core (payroll only) | $56.50* | Yes | Included | Premium+ | 50% off 3 mo promos | QBO users |
| QB Core + Simple Start | $94.50 | Yes | Included | Premium+ | Bundle promos | New QBO stacks |
*Requires existing QBO subscription; all-in row includes Simple Start ($38/mo).
S-corp vs regular employer
Paying yourself as an S-corp officer?
This guide covers general first W-2 hires (LLC with one employee, micro-SMB, etc.). If you are the employee—especially as an S-corp shareholder-officer—you must run reasonable W-2 salary when you perform services for the corporation. That scenario has distinct compliance and pricing angles covered in our best payroll software for single-employee S-corps (2026 guide). Do not substitute distributions for payroll tax on officer wages.
When you'll outgrow 1-employee plans
Plan to upgrade or switch when:
- Second hire — per-employee math stays linear, but HR/onboarding needs grow
- Remote worker in new state — OnPay/Gusto Plus/ADP may beat Patriot's per-state fees
- Benefits enrollment — Gusto or ADP benefits modules vs Patriot partner integrations
- 15+ employees — evaluate ADP RUN or Gusto Plus/Premium
See also: cheapest payroll for small business (2026).
FAQ
Can I run payroll myself for one employee?
Technically yes with manual calculations and IRS EFTPS deposits, but one missed deposit schedule triggers penalties fast. Full-service software at ~$42–$55/mo is usually cheaper than fixing compliance mistakes.
What's the cheapest compliant option?
Patriot Full Service at ~$42/mo for one W-2 in a single state with full tax filing and guarantee. Avoid Patriot Basic unless you have professional tax help for deposits and filings.
Payroll software vs PEO for one employee?
PEOs co-employ staff and bundle benefits—usually overkill and more expensive for a single hire. Standard payroll software is the default for one W-2 employee.
Do I pay per employee if nobody gets paid this month?
Patriot charges base only ($37 Full Service) when no workers are paid. OnPay and Gusto still bill the monthly base.
Related: Single-employee S-corp guide · Cheapest payroll · Patriot review · OnPay review · Gusto pricing · All payroll software guides
Affiliate disclosure: Some links on this page are affiliate links; we may earn a commission at no extra cost to you. I only recommend tools I would use for my own clients.
Thomas Camp Jr., EA
Thomas is an Enrolled Agent and tax accountant with over 14 years of experience helping small businesses choose the right payroll, accounting, and operational tools. His recommendations come from hands-on implementation—not just feature lists. Verify EA credentials →
