Payroll software is the simplest, least costly way for most therapy practices to pay their employees.

‍

Once you have employees working for you, your day-to-day bookkeeping not only becomes more complex, but you have new state and IRS tax requirements—like income tax remittance and FICA—to deal with.

‍

That’s partly why so many therapy practices use software or software-as-a-service (SaaS) to tackle payroll. Here’s everything you need to know to choose the best payroll software for your therapy practice.

‍

{{consult}}

Who should use payroll software?

The cost of most payroll software relative to the amount of time it would take you, as a business owner, to manage your own payroll by hand makes it a smart choice for any therapy practice with employees.

‍

That applies even if your practice has just one employee, and the employee is you. For instance, if your practice is an LLC filing as a single-member S corporation, you must pay yourself a salary. 

‍

Doing so is more complicated than just cutting yourself a check—complicated enough that, even if you are the sole employee, paying a monthly subscription fee for software makes more sense than doing it yourself.

‍

If you have no employees but you need to pay contractors on a regular basis, you may also benefit from payroll software. Paying contractors requires less paperwork—there’s no need to withhold income tax or FICA from their pay, for one thing—so whether you benefit from using payroll software in that case depends on how much time you spend each week paying out contractors. If the effort and time involved is negligible, you probably don’t need software to do it.

Why therapy practices use payroll software

Before getting hands-on with how payroll software works, here’s a quick review of some reasons therapy practices use it.

‍

• Saving time. Whether it’s calculating withholdings for income tax, FICA, and state taxes, tracking hours worked, and any vacation time used, or responding to questions from employees, all these tasks take up time and energy many therapists would rather devote to their clients.
• Avoiding penalties. There may be steep penalties at both the federal and the state levels if you make an error withholding taxes or filing reports. You’re far less likely to make these errors when you handle your payroll work with software.
• Sticking to core competencies. The majority of therapists don’t have a background in accounting, taxes, or local labor laws. Using payroll software lets you focus on your core competencies—treating clients, running your practice—while paying a relatively small fee to outsource the work.
• Integrating with your bookkeeping. If you already use software to do your bookkeeping or pay a bookkeeper to do it for you, most payroll software is able to integrate with them so your books are always synced to your payroll. Heard, which handles bookkeeping and taxes for therapists, offers payroll integrated via Gusto.

Alternatives to payroll software

Not every business with employees uses payroll software. In fact, before payroll SaaS became available, there were only two options for outsourcing payroll: Create a payroll department or hire a payroll service.

‍

Large companies still have payroll departments that handle pay and benefits for their employees and work with an accounting team to keep the books balanced. But for small businesses with a handful of employees, internal payroll departments have never been affordable.

‍

The alternative is a payroll service. Much as a bookkeeping firm or an accounting firm may handle a small business’s bookkeeping or accounting, a payroll service handles payroll. Some accounting firms still offer payroll along with their regular bookkeeping and accounting services.

‍

Using payroll software or SaaS is typically less expensive than hiring a service, and can accommodate businesses with even just one or two employees. 

‍

{{consult}}

What does payroll software do?

Each payroll software package or SaaS offers slightly different services. You’ll find a comparison of the three most popular options below. But, in general, all of them:

‍

• Store employees’ personal employment information
• Calculate the pay of each employee or contractor based on their salary, wage, or fees, amount of hours worked, and services rendered
• Calculate and withhold taxes from employees’ pay based on the requirements of the state and federal governments
• Track employees’ work hours and attendance
• Pay employees on a set schedule by direct deposit 
• Generate pay stubs and tax forms for employees
• Generate reporting forms for your business
• Provide you, the employer, with an online dashboard or app for managing employees, pay, benefits, scheduling, and tax forms
• Create reports on employee pay and benefits over particular time periods
• Help you track and manage employees’ benefit plans, including retirements savings, health insurance, and health spending accounts
• Provide employees with a dashboard where they can update their information, view reports, and manage their benefits

‍

Payroll software costs a monthly or annual subscription fee. Typically the fee consists of a base rate, plus a certain amount for each employee registered in the software.

What should your therapy practice look for in payroll software?

While each therapy practice’s needs are unique, here’s what to take into account while considering payroll software:

‍

• Number of employees. Is the software able to handle just one or two employees? How easy or difficult is it to add an employee as your practice grows?
• Bookkeeping integration. Does the software integrate with your current bookkeeping solution? Is it easy to import and export data?
• Customer support. Is there an easily accessible support team available if you need help? Is communication via app, email, or phone?
• Flexible schedules and hours. Is the software set up to easily accommodate session-based work, or is it more suited to fixed schedules? How are employee work hours reported or tracked?
• Learning curve. Based on demos of the software, how long do you think it would take to get up and running? Does it seem like you will need to invest a substantial amount of time using the software?

‍

Finally, the best indication of whether a particular payroll platform is a good choice for your practice won’t come from product demos or lists of features. 

‍

Talk to other therapists who handle payroll for their practices, and find out what they use. Another therapy practice with ways of organizing and scheduling employees similar to your own is the best model for whether a certain software platform is a good fit.

‍

{{consult}}

Gusto vs. OnPay vs. ADP RUN vs. QBO Payroll

There are many payroll platforms on the market, but three in particular are most popular with small therapy practices: Gusto, OnPay, ADP RUN, and Quickbooks Online (QBO) Payroll.

‍

Use this quick breakdown to help you choose the right platform for your practice.

‍

‍

Gusto

Overview

Gusto is a popular, comprehensive payroll solution for small businesses. With its most basic package, Gusto Simple, you have all the tools needed to onboard new employees and pay them via direct deposit. New employees can enroll in benefit plans like health insurance and 401(k)s, and the Gusto dashboard gives you all the tools you need as an admin.

‍

Gusto Simple only allows you to pay employees in one state; if you have multiple employees in different states, it may not be the best choice for your practice.

‍

If you plan to offer employees paid time off (PTO) or create your own custom hiring documents for employees to sign, you’ll need to upgrade to Gusto Plus ($80 + $12 per employee per month).

‍

However, Gusto does allow next-day deposits—meaning, you can pay employees the day after running payroll. Not all payroll platforms let you do this with their basic package. For instance, using OnPay’s basic package, there’s typically a wait of at least four days between running payroll and money being deposited in employees’ accounts.

‍

Gusto’s integrations extend well beyond typical bookkeeping and accounting tools to include project management software, Google Workspace, online storage tools, and a wide range of SaaS. If you’re already using apps and software to automate some of your practice’s back office, Gusto may be a better choice than other platforms.

‍

Finally, with Gusto’s Contractor Only pricing package, if you exclusively pay contractors (and not employees), there’s no base rate. Meaning, the total amount you pay per contractor is $6 per month. 

‍

Key features

• Basic onboarding tools
• Huge range of integrations
• Next-day deposits
• Contractor-only pricing

‍

Best for…

Gusto is a good overall pick for small-scale payroll. It may be a smart choice if you’re already using other SaaS tools to automate your back office and you want to be able to integrate your payroll platform with them. It’s a particularly good choice if you currently only employ contractors, and want an inexpensive way to make and track payments to them.

OnPay

Overview

OnPay offers many features similar to Gusto, and the pricing for their basic package is identical. But a few differences set it apart.

‍

OnPay allows you to pay employees in multiple states. This might be helpful if you run a fully remote practice, with therapists working in different parts of the USA, and want a one-stop, no-add-ons-necessary tool for paying them.

‍

You’re also able to manage PTO for employees using OnPay’s basic package. This feature isn’t available in either Gusto or ADP’s basic packages.

‍

However, compared to Gusto, OnPay offers fewer integrations. If you’re particularly adept at automating your practice’s back office, and you want a payroll platform that will integrate with your various SaaS tools, OnPay might not be right for you.

‍

Key features

• Basic onboarding and payroll
• Handles employees in multiple states
• PTO included in basic package

‍

Best for…

OnPay is a solid alternative to Gusto, particularly if you have employees in different states or if PTO management is important to your practice.

ADP Run

Overview

ADP provides a wide range of payroll, HR, and compliance-related services to businesses large and small, and RUN is their payroll offering for businesses with 49 or fewer employees.

‍

It’s harder to say how much ADP RUN might cost your therapy practice to use, since they provide pricing details on a quote-per-customer basis. Reports from customers put basic packages at anywhere from $59 to $79 per month, with the price increasing depending on how many employees you have and how many add-ons you’d like to include.

‍

Add-ons are the name of the game. For instance, while any basic ADP RUN package includes payroll tools, you’ll need to pay extra in order to manage employees’ health insurance, retirement plans, and other benefits. Coverage for these features is included in basic versions of Gusto and OnPay.

‍

For more advanced options like onboarding (including background checks), you’ll need to upgrade RUN’s Essential plan to their Advanced plan.

Some reviews also point out that in-person phone support is hard to come by when you’re signed up for an Essential Package, and that you’ll need an Enhanced package or higher to speak to a human.

‍

Key features

• Basic payroll and onboarding
• Integrations with accounting/bookkeeping and HR software
• Customizable functionality with add-ons

‍

Best for…

If you’re looking for a quick and easy out-of-the-box payroll solution that you can set up and begin using immediately, ADP RUN is not the right choice. Signing up requires going through sales calls to get up and running.

‍

On the other hand, if high customizability is important to you, ADP’s add-ons based features and pricing may be right for you. For instance, if your practice is just hiring its first employees, but you expect to expand significantly in the future, you could start out with a basic ADP package and add on features like benefits management as they become necessary.

QBO Payroll

Overview

QBO Payroll is the payroll offering from QuickBooks Online, a popular DIY accounting platform for businesses. If you already use QBO to do your bookkeeping and accounting, you can activate QBO Payroll from within the app. Payroll will automatically sync up with your books.

‍

If you don’t use Quickbooks, QBO payroll comes with basic bookkeeping software built in. You can track revenue and expenses, store receipts, generate reports, and do most of the day-to-day bookkeeping tasks a small business typically demands. 

‍

The Core version covers the basics, while pricier versions include certain key features (an app that lets employees punch in for their shifts) and advanced support (specialists will help you get your payroll set up and review it to make sure it’s running smoothly).

‍

Unlike the other payroll solutions covered here, QBO Payroll offers a 30-day free trial when you sign up for a monthly plan. If you pay for a year of service in advance, you’ll get a discount on your first three months.

‍

Key features

• QBO integration
• Free trial
• Bundled bookkeeping tools

‍

Best for…

If you already use QBO for your bookkeeping and you’re satisfied with it, QBO Payroll is the logical next step. Otherwise, if you’ve already got a different bookkeeping solution in place, Payroll comes with a lot of extra features you won’t use at a price higher than competitors. 

How Heard does payroll

Heard includes payroll as an add-on to monthly bookkeeping, quarterly tax estimates, and annual tax filing. Payroll integration starts at $39 per month, plus $6 per employee.

‍

On the front end, there’s no need for you to sign up for a separate payroll service. On the back end, Heard integrates with Gusto to give you full payroll support.

‍

All of your payroll transactions are synced with your bookkeeping and taxes, so you don’t need to switch between different apps and SaaS platforms to manage your practice’s finances.

‍

—

‍

First time as an employer? Learn how to set up payroll for your therapy practice.

‍

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

‍

Bryce Warnes is a West Coast writer specializing in small business finances.

‍

{{cta}}