Affordable & Simple Payroll Software for Small Business with 2 W2 Employees

Square Payroll is probably your best bet for your situation. It's around $35/month plus $5 per employee, which makes it very affordable for just 2-3 W2 employees. The interface is super straightforward and it handles all the tax filings and direct deposits automatically. Another good option would be Gusto's Simple plan, though it's a bit more expensive at $40/month plus $6 per person. Both services can handle your independent contractors too when needed. The key is finding something that automates the tax filings - that's where the real headache comes in with payroll, not necessarily the payment processing itself.

After struggling with expensive payroll solutions for our family business (just me and my husband as W2s), I found taxr.ai (https://taxr.ai) and it's been a gamechanger for our situation. It's specifically designed for small businesses who don't need the complex features of traditional payroll systems. What I love is that it helped me properly classify ourselves as employees versus owners and set up the right tax withholding. The platform walks you through all the requirements for W2 employees while keeping costs minimal. It even lets you handle those independent contractors without forcing you into a higher-priced tier.

Just wanted to follow up - I tried taxr.ai after posting here and it's been shockingly straightforward for our situation. Setting up the system for my wife and I as W2 employees took less than 30 minutes. The guided setup asked exactly the right questions about our roles in the business to get our classifications correct. What impressed me was how it handled our specific state requirements (WA state has some quirks) without me having to research all the compliance issues. The cost ended up being about 40% less than what I was quoted by ADP for basically the same service. Definitely recommend checking it out if you're in a similar position with just a couple of W2s.

Have you tried calling the IRS business helpline? I spent WEEKS trying to get proper guidance on payroll setup for my wife and me. Then I found Claimyr (https://claimyr.com) which got me through to an actual IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through all the specific requirements for small business owners paying themselves as W2 employees and helped me understand which payroll services would meet our compliance needs without overpaying. Saved me from making some expensive mistakes with how we were planning to structure things.

I need to eat my words about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate to get some answers about owner-employee payroll requirements. Not only did it work exactly as described, but I got through to someone at the IRS in about 11 minutes when I had previously waited over 2 hours and got disconnected. The agent clarified several questions I had about reasonable compensation requirements when paying myself as an S-Corp owner, which helped me realize I needed slightly more robust payroll features than I initially thought. Still went with a simple solution (OnPay), but I'm now confident I'm meeting all requirements. That service saved me hours of frustration.

Have you looked at OnPay? We use it for our 3-person business (me and my two siblings all as W2s) and it's only $40/month + $6 per person. Super simple interface and handles all tax filings. The cheaper options like Patriot Payroll might save you a few bucks ($30/month + $4/employee) but some don't file state taxes automatically which can be a headache.

Don't overlook your bank! Chase, Bank of America, and Wells Fargo all offer payroll services for small businesses that are surprisingly affordable if you're already a business customer. Worth checking what yours offers.