Short answer: for most independent restaurants, Gusto is the best all around payroll company, ADP and Paychex are the safe traditional picks if you still hand out physical checks, and Toast Payroll only makes sense if you run a single location already on Toast POS. The monthly fee is not the real cost. The real cost shows up the first time you have to fix a mistake.
Old school payroll companies charge you every time you process payroll. If you run payroll every two weeks, they bill you every two weeks. Every time you want to do an off-cycle payroll – like if you fire somebody or make a mistake – they charge you extra.
Newer payroll companies charge you a flat rate per month, per employee. You can run as many payrolls as you want during that month. If you run someone’s payroll and forget to pay them their tips, just run another payroll the next day. No problem. That flexibility is very helpful because this industry has so many moving pieces and it’s easy to make a mistake.
Here’s a rundown of my favorite payroll companies, from favorite to least favorite. I’ll also touch on Toast Payroll, Square Payroll, 7shifts and Paylocity, four additional options.
| Payroll company | Best for | How they bill | Physical checks | The catch |
|---|---|---|---|---|
| Gusto | Most independent restaurants and small groups | Flat monthly, per employee, unlimited runs | No, direct deposit only unless you add an integration | If part of your staff has no bank account, you are printing checks yourself |
| ADP | Operators who want a known brand and delivered checks | Per payroll run | Yes, delivered | Off-cycle payrolls are painful and add-ons raise the price fast |
| Paychex | Operators who want a real person on the phone | Per payroll run | Yes, delivered | Same inflexibility as ADP, older dashboards |
| Toast Payroll | Single locations already on Toast POS | Flat monthly, per employee | Limited | Built on StratX, an older platform. Breaks down with multi-location staff and support is rough |
| Square Payroll | First-time operators on Square POS | Flat monthly, per employee | Limited | Basic. You will outgrow it |
| 7shifts | Operators already using 7shifts to schedule | Flat monthly, per employee | Limited | Payroll is the newest part of the product and support is still catching up |
| Paylocity | Groups that want strong HR onboarding and a named rep | Per payroll run | Yes | Integrations are clunkier than the newer platforms |
Gusto is very tech forward with a great user interface. They’re not the cheapest payroll service, but they’re very reasonably priced and very flexible.
Pros, Gusto is absolutely the best at:
Cons:
ADP and Paychex are both a little old school.
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Square is a very basic payroll service that’s limited, but easy to use.
7shifts is a scheduling platform. They just built a payroll function, and it has room to grow.
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Pick based on how your restaurant actually runs, not on the sticker price.
This trips people up, because it’s three different jobs and most operators assume it’s one.
At FIXE we process payroll for restaurants and we do the bookkeeping behind it, but you still choose your own processor. We’re not trying to sell you a payroll product. We’re trying to make sure the numbers that come out of it are right.
If nobody owns step three, you end up with a P&L that looks wrong and nobody can tell you why. That’s the most common cleanup we get called into.
Record every tip on the paycheck. Pay them out through payroll. Keep the collection and payout on your balance sheet, not your P&L, so your labor line isn’t distorted. We wrote the full version of this in restaurant tipping best practices and accounting, including the difference between a tip and a service fee, which is the one that gets restaurants audited.
Flat rate processors like Gusto typically bill a base fee plus a per employee fee each month, with unlimited runs inside that month. Traditional processors like ADP and Paychex bill per payroll run, so a restaurant on a weekly cycle pays more often than one on a biweekly cycle. Get quotes on your actual headcount and your actual pay frequency, and ask specifically what an off-cycle run costs.
Yes, report them. Employees used to ask us to leave tips off so they wouldn’t get taxed. We’ve seen too many restaurants get audited or penalized for not reporting tips. It costs you employer taxes on those tips, and it’s still cheaper than the penalty.
You can, and the cleanest time to do it is at the start of a quarter so your quarterly filings don’t straddle two systems. You’ll need your year-to-date wage and tax detail out of the old processor before you lose access to it. Pull that first, before you cancel anything.
We process payroll for restaurants and we keep the books behind it, working inside whichever processor you choose. Our pricing is published on our pricing page, starting at $690 a month per location with the software stack included.
Usually it’s one of three things: tips recorded as income instead of a liability, an off-cycle run that never made it into the ledger, or employer taxes posted to the wrong period. All three are findable. All three are why a restaurant-literate bookkeeper is worth more than a generalist here.