Managing finances is a necessary component of running a successful business. Ensuring employees are paid on time and accurately, managing taxes and maintaining compliance are just a few of the payroll processes that business owners need to stay on top of to keep their organizations flourishing.
Payroll software can help users automate and manage these critical operations, saving them time and reducing the risk of errors. However, payroll software can be pricey, and not all small businesses have the budget for these helpful systems; fortunately, there are free options that provide effective payroll processing features.
When it comes to managing payroll for your small business, choosing the right software can make a big difference. In this guide, we look at some of the best free payroll software for small businesses in 2023 and examine their features, pros and cons to help you find the right solution.
Feature comparison of payroll software for small businesses
|Direct deposit payments||No||Yes||Yes||Yes||No||Yes|
|Available in the U.S.||Yes||Yes||Yes||Yes||Yes||No|
Best free payroll software
HR.my is a forever-free payroll service that provides unlimited employee management. This no-strings-attached payroll solution lets employer accounts add as many employees as needed for no additional costs and even offers features for expense claim management, document sharing, approval workflow, attendance management and collaboration.
This payroll processing solution is ideal for small business teams with a greater number of members or growing teams looking for a system to expand with them. With an employee self-service platform and workforce planning, the system makes it easy for administrators and team members to manage payment processes.
- Numerous employee management features, including unlimited employee support, employee self-service portal, attendance management system and time clock, leave management, expense claim management, employee web portal, and self service e-claim and e-leave.
- Payroll processing.
- Connections are encrypted with SSL (TLS) protocol, and data is secured with the AES-256 encryption algorithm.
- Approval workflow.
- Workforce availability planning.
- Document workflow.
- Team collaboration and knowledge management.
- Documents and forms sharing.
- Announcement and notice board.
- Employee credential tracking.
- Complete historical records.
- Print and export.
- The Announcement and Notice Board is a helpful workforce management aspect of this technology, as it allows administrators to generate announcements and deliver notifications about announcements to their staff.
- Staff can easily refer to the board to view current or previous announcements.
- The solution is regularly updated with new features, and users can request that features be added for free.
- The system’s Document Workflow allows the migration of any paper-based document approval. This can help manage onboarding paperwork, and users can view the status of payroll documents.
- No downloading or installation is necessary to use the software.
- Users can access all the online human resource management functions through an iPad, Android tablets, Mac or Windows anytime for easy on-the-go use.
- The solution does not provide e-filing capabilities for state or federal taxes.
- Users cannot perform processing for variable pay, deductions or bonus or commission payments.
Payroll4Free.com is free payroll software for teams of 25 or fewer users, making it optimal for smaller businesses. After a fast and straightforward enrollment process with the system’s guided step-by-step account setup tool, organizations can begin paying their staff through paper checks or direct deposit payments. In addition, organizations can use Payroll4Free.com to pay 1099 contractors.
The software offers capabilities to help administrators and staff. For example, the detailed reporting features help users keep track of pay information like earnings, benefits, taxes, accrued time and payroll journal reports. Meanwhile, staff members will surely enjoy that employee pay information is easily accessible online from any device through the employee portal.
- Pay employees and contractors.
- Tax calculations and forms.
- Vacation time tracking.
- Detailed reporting.
- Direct deposits or paper checks.
- Employee portal.
- Knowledgeable customer service.
- Quick and easy enrollment.
- Organizations can choose to pay workers through paper checks, direct deposits or a combination of both options.
- In addition to calculating state, federal and local taxes for users, Payroll4Free.com generates filled-out tax forms.
- Users receive unlimited live customer service and support from Payroll4Free.com’s team of experienced payroll and tax professionals to help them with questions or advice.
- If organizations choose to transfer direct deposit funds to pay employees through the Payroll4Free.com bank rather than their own bank, they must pay an additional fee.
- While Payroll4Free.com can make all necessary tax filings on the organization’s behalf, this costs an additional monthly fee.
Payroll4Free.com lives up to its name by providing basic payroll services — but only for organizations paying 25 individuals or less. Payroll4Free.com offers additional paid services, including payroll tax deposit and filing, as well as direct deposit fund transfers to employees through the Payroll4Free.com bank’s direct deposit service.
Sumopayroll’s payroll processing and HR software offers automated time management tools and expense management capabilities and takes a digital approach to salary payments through the use of online salary credits. It also has capabilities for tracking leave management so scheduling conflicts are a thing of the past.
Sumopayroll’s cloud-based payroll processing services are aimed at small and midsize companies. This solution is free to organizations with fewer than 10 employees — no credit or debit card necessary.
- Payroll and payslips.
- Employee management.
- Self service.
- Employee and attendance import.
- Mobile HR app.
- Reports and support.
- The automated time management tool is easy for employees to use for free through the web time clock.
- With the attendance import tool, users can use the system with the GPS-based mobile app or to submit weekly time sheets.
- Bank direct deposit is provided as a free feature, though bank charges and GST are applied.
- The free plan is limited to the payroll module only, and organizations can subscribe to any other module for more features at a cost per-employee per month fee.
- The employee mobile app lets employees clock in and out with the time clock, submit time-off requests, download payslips and perform other employee self-service actions. This requires an additional fee.
Sumopayroll provides its payroll, employee and attendance module for free to organizations with up to 10 employees. This includes payroll processing, employee management features, self-service capabilities, employee attendance importing, mobile HR app, reporting and customer support. An organization with more than 10 employees will have to pay an additional monthly per-employee fee.
TimeTrex is a time and attendance software program that uses workforce automation to help users manage their employees with ease. Businesses can gain free instant access to the solution by using the TimeTrex Community Edition, either on-site or through cloud-hosting.
The cloud-hosted free solution provides employee scheduling with flexible pattern scheduling, time and attendance tracking for monitoring employee attendance, overtime and vacation time. Users gain fully integrated payroll processing with tax calculations as well as reporting and direct deposit functionality. The on-site solution provides all of the aforementioned perks too and has no employee limits or time limits so users can freely apply the software as they wish.
- Employee scheduling.
- Time and attendance.
- Payroll processing.
- Tax and benefit calculations.
- Tax reports.
- Check printing.
- Direct deposit functionality.
- No employee limits and no time limits with the on-site solution.
- The free solution offers federal, state and local tax calculations, and it can generate reports for W2, W3, 1099, 940, 941 and international tax.
- Employee leave management is simplified thanks to the time and attendance tracking features, and vacation and sick leave are easily performed within the solution.
- This solution provides helpful automated calculation capabilities for processes like overtime, accruals and premiums.
- Users can create and deploy automation rules for calculating benefits, garnishments, insurance, leave, overtime, premiums, accruals and other important figures.
- The on-site version of this solution requires a download, installation and setup. Users also need a PHP, a web server and a database to run the on-site software.
- Neither versions provide payroll tax filing.
- The free plans do not include any phone, chat or email customer support.
ExcelPayroll can be a cost-effective way to process payroll for small businesses, ideally with no more than 50 active employees. This manual approach to payroll involves the use of templates where administrators can input employee information and hours worked. The template will then perform the calculations and populate with the appropriate payroll data.
Since the entire process runs on Excel, users do not need to worry about installing additional software; instead, they can simply download ExcelPayroll for free to get started. Additionally, the Offline Payroll Excel Program makes conducting payroll possible even if you don’t have an internet connection.
- Free Excel base VBA payroll program.
- Prints W2 forms, W3, 940, 941, DE9 and tax liabilities.
- Prints on any type of computer checks.
- Accrual vacation and workers’ compensation reports.
- 401K, 125P, HSA, garnishment or other deductions.
- Generates accounting entries.
- Mid-year conversion and detailed instructions.
- Customized withholding and timecard option.
- Redo payrolls for previous years.
- The software provides a complete set of payroll tools.
- The system is intuitive and produces accurate calculations thanks to its pre-formulated Excel functions.
- The solution is customizable, so businesses can design their check layouts that are ideal for their preferences.
- This solution is only recommended for organizations in states with simple taxes and laws.
- Since the work is done manually by the user, this can take time and effort.
- The ExcelPayroll program only runs on PC Excel 2007, Excel 2010 or Excel 2013; users who have updated with Microsoft Windows 10 or that use Excel 2016, Office 365 or later versions may need to set their computer to trust the ExcelPayroll program. Otherwise, they may need to downgrade to Excel 2007 or 2010 to use the software.
Zoho Payroll provides a free version of its payroll management software for small businesses located in India with fewer than 10 employees working from a single location. This cloud-based payroll system is regularly updated with current tax changes to ensure organizations using it are in compliance.
Zoho Payroll has features for calculating payroll and taxes and managing loans and repayments. Employees can also access individual self-service portals through a web browser or the mobile app to view their payslips and tax information.
- Automatic payroll calculation.
- Direct deposit payments.
- Income tax calculation.
- Employee self-service portal through a web browser or the mobile app.
- Efficient loan management.
- Taxes are projected based on the CTC at the beginning of the financial year and deducted from employees’ payrolls every month. Since the software is cloud-based and automatically updates according to new tax structure changes, users should always be able to stay compliant.
- Businesses that administer loans to employees can easily keep track of these actions through the loan management features, as well as be able to deduct loan repayments from employee monthly payrolls and track them to completion. Users can temporarily pause loans to employees as needed.
- Zoho Payroll has its own mobile app for employees through which they can view payslips, tax information and investment details. Users can also submit reimbursement claims and proofs for investments.
- The Zoho Payroll Free Plan is only available in India.
How to choose the right payroll software for your small business
Choosing the right payroll software for your business requires careful consideration of your needs and growth potential. By taking the time to research different options and evaluate features, you can find software that meets your needs and helps your business run smoothly.
When you’re selecting payroll software for your small business, keep the following key factors in mind.
Compliance is a crucial aspect of payroll, so you need to make sure the software you choose can handle processing calculations for state and federal payroll tax requirements, such as filing and paying taxes on time. Using a solution with these features will help you avoid penalties and fines from the IRS. Make sure to check that the software is up to date too and can handle all the latest laws and regulations.
Determine what employee information needs to be tracked (e.g., salaries, benefits and deductions), and find software that can manage these details to ensure that your employees can be paid correctly and on time.
Consider how often your business needs to process payroll and find a product that can handle this based on your specific needs. Some payroll software can process payroll on a weekly or bi-weekly basis, while others can process monthly payroll.
Try to choose a solution that can integrate with other systems you use, such as accounting software or third-party scheduling systems. This will help streamline your processes and save you time.
Ease of use
Choose software that is user-friendly and easy to navigate, especially if you have limited experience with applying payroll software to your small business.
Ensure the software you choose has robust security features to protect the sensitive employee and financial data your organization will need to use in its payroll processes.
Growth potential and scalability
Small businesses that are growing should choose a solution that can scale, so a free solution limited to a certain number of users may not be an ideal choice in the long run.
If you need more functionality from payroll software than what these options can offer, but you only have a small budget, here are options to consider: Rippling, QuickBooks Payroll, Patriot, Gusto or Paychex.