For a small trade or service business with a handful of employees, the easiest path is a cloud payroll service that calculates taxes, files returns, and handles direct deposits automatically. Gusto, QuickBooks Payroll, and ADP Run are the most common options for businesses this size.

QuickBooks Payroll is usually the best fit if you’re already using QuickBooks Online for your books. Everything stays in one system and payroll transactions flow directly into your general ledger without manual entries. Gusto is another solid choice with a clean interface that’s easy to learn. Either one works fine. Pick whichever feels simpler to you.

These services handle the hard part. They calculate gross-to-net pay, withhold federal and California state income taxes, Social Security, Medicare, and CA SDI. They also file your quarterly and annual payroll returns and generate W-2s at year end. Doing all of this manually is technically possible with a few employees, but it’s not worth the risk of making a mistake on California payroll tax filings.

California adds complexity that other states don’t. You need to register with the Employment Development Department before running your first payroll and get a state employer account number. Workers’ comp insurance is required from day one, even with just one employee. California also has specific rules around pay frequency, overtime calculations, and final pay timing that trip up a lot of small business owners in the trades.

Before you set up payroll, make sure your workers are actually employees and not independent contractors. This matters a lot in construction and the trades. California’s ABC test makes it much harder to classify workers as 1099 contractors than most other states. Getting this wrong leads to back taxes, penalties, and interest that add up fast. If you’re already working with contractor bookkeeping services that understand your industry, they can help you think through classification before it becomes a problem.

The setup is the part that matters most. Getting your pay items, tax accounts, and employee details configured correctly from the start saves you from cleaning up messy data later. TradeBuilt offers payroll system setup and training so you can get it right the first time and then confidently run payroll yourself going forward. Once the system is configured properly, actually running payroll each period takes about fifteen minutes.

One last thing. Don’t skip payroll because it feels easier to pay people cash or write checks without withholding. The IRS and California EDD eventually catch up, and the penalties for not running proper payroll are much worse than the monthly cost of doing it right. A basic payroll subscription for a few employees runs $40 to $80 per month. That’s a small price compared to the headache of back payroll taxes, penalties, and an EDD audit.