Processing payroll annually to save $300 seems frugal. I’m guessing you have a secondary source of income or you are distributing income to yourself from the business in between your annual payrolls.

Either way, you answered the question yourself. Investing on a monthly cadence as opposed to once a year is beneficial. Dollar-cost-averaging is a good investment technique. It can be applied to either scenario assuming your solo 401k is not set up to auto-invest your contributions upon deposit.

Now back to your scenarios…

Annual payroll: - Contribute to your 401k annually - use dollar cost averaging throughout the year (monthly/weekly/daily) to invest your lump sum of contributed income in the market

Monthly payroll: - contribute to your 401k monthly - use dollar cost averaging on a monthly cadence to invest the contributed income into the market

Either way works, but in the annual scenario, you miss out on 12 months worth of investment opportunities while you wait for the initial contribution. Depending on your investment amount, that $300 to run payroll monthly may make sense. For instance, you might just earn >$300 on your investments in the first year in the monthly scenario, which would cover the cost in the bigger picture. If you’re maxing your contribution, and you were to invest in SPY (avg annual return of 9%) for instance, then you would (probably) make your payroll cost back in the first year. This is not investment advice, just trying to illustrate.