Best Free Payroll Software for Small Businesses

Look for tax calculation capabilities, direct deposit and automatic deductions.
Oct 27, 2021

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While more robust payroll software products like Gusto and QuickBooks Payroll boast modern user interfaces and a plethora of features, free payroll software is much more minimalist. For small-business owners who don’t mind a bit of manual data entry and who manage just a handful of employees, though, it can be a valid alternative to racking up another monthly expense.

A free payroll software product is exceptional if it’s equipped to calculate federal, state and local taxes, can handle benefits deductions, includes direct deposit, has an employee portal and offers some form of customer service. Other features to look out for include time tracking, a cloud-based platform, HR management and payroll tax filing. However, a free payroll software product will rarely offer all of these features and will generally look a tad outdated.

Payroll4Free: All-around best free payroll software

Pricing

Free for 25 or fewer employees. For $15 per month, Payroll4Free will file and deposit payroll taxes, as well as process year-end tax forms. Business owners can pay another $15 per month, if they’d like, to use Payroll4Free’s bank for direct deposit.

Pros

Cons

  • Calculates federal, state and local taxes.

  • Will file payroll taxes and process year-end tax forms for a monthly fee.

  • Direct deposit.

  • Can set up benefits deductions.

  • Track sick time, vacation time and PTO.

  • Employee portal provides access to paystubs, W-2s, vacation time and personal info.

  • Customer service available via phone and email.

  • Better Business Bureau accredited company with an A+ rating.

  • 25-employee cap.

  • Ads.

  • Only works with Windows; not cloud-based.

Feature overview

Compared to other free payroll software products, Payroll4Free’s tax filing options really set it apart. For one, it protects a business from making mistakes that can prove costly. It also saves the business owner a great deal of time. According to the company, the majority of its free payroll software clients pay to enroll in the service. Though Payroll4Free doesn’t let employees clock in and out or record their hours within the system, the software can import employee hours from outside files. Despite its features, the product isn’t a good fit for business owners who are averse to Windows or have more than 25 employees.

TimeTrex: Best time tracking and scheduling features

Pricing

Open-source Community Edition is free. Quote-based plans that include a mobile app, facial recognition capabilities, job costing, applicant tracking and more are also available.

Pros

Cons

  • Calculates federal, state and local taxes.

  • Calculates direct deposit.

  • Can set up benefits deductions.

  • Track employees’ hours, attendance, overtime and vacation time.

  • Employee portal provides access to sick day and vacation time accruals, as well as pay stubs.

  • Automatic scheduling capability.

  • HR management.

  • No cap on the number of employees.

  • Cloud-based.

  • Does not file payroll taxes.

  • Does not file direct deposit.

  • Customer service limited to support forum.

Feature overview

Compared to Payroll4Free, TimeTrex’s community edition payroll software offers more time-tracking, scheduling and HR features, and it's cloud-based. On the downside, it falls short on tax filing. While it will generate tax reports, business owners should be comfortable filing their own payroll taxes. Likewise, TimeTrex will calculate and prepare your direct deposit, but it's up to the business to remit the file to the bank. The software also works alongside other popular payroll software products in case you’d only like to use it for, say, time-tracking.

HR.my: Best multilingual capabilities

Pricing

Free.

Pros

Cons

  • Time tracking features let employees clock in, clock out and record their locations.

  • Employee portal provides access to time-off requests, PTO balances, personal info and discussion forums.

  • Expense claim management.

  • Multi-user HR management system.

  • Cloud-based.

  • No cap on the number of employees.

  • Supports 65 languages in addition to English.

  • No direct deposit.

  • No dedicated customer support aside from the forum.

  • Ads.

  • Does not calculate or file payroll taxes.

Feature overview

HR.my earns a spot on this list for its multilingual capabilities and HR features. In addition to letting employers track their mobile workforce by collecting geolocation data, the platform lets them assign employees different levels of access to the employer account. This is especially useful for businesses that have an HR staff or administrators. Employers can also set up claim approval workflows to ensure documents get sent to the right person the first time around. The product's biggest drawback is its lack of tax calculation and filing services. If the business owner doesn’t have prior experience calculating and filing payroll taxes on their own, this is not the right product for them.

eSmart Paycheck: Best payroll calculator

Pricing

Free.

Pros

Cons

  • Calculate federal and state payroll taxes.

  • Generate payroll tax forms.

  • Option to e-file taxes for a fee.

  • Print paychecks.

  • Limited functionality.

  • May require more manual data entry than the alternatives.

Feature overview

The online payroll calculator eSmart Paycheck lets you create paychecks, print them and calculate federal and state payroll taxes. Generating tax forms, like W-2s, is free and users can pay a fee to file them through a service called eSmart Payroll. The site says private information is not saved, which may require more manual data entry from one payroll period to the next. This tool can be used on its own or paired with another free payroll software. It’s especially useful if your current payroll software doesn’t automatically calculate taxes.

Best free payroll software trials

Before paying for a subscription, you can try the following payroll software products for free:

  • Gusto: This exceptional payroll and HR platform doesn't require you to pay anything until you're ready to run payroll. For more information, read NerdWallet's review of Gusto.

  • Patriot Payroll: The company, which also sells accounting software, gives clients unrestricted access to its payroll platform for 30 days. For more information, read NerdWallet's review of Patriot Payroll.

  • OnPay: With one base fee instead of multiple plans, this option skips confusing pricing structures. You can try it free of charge for 30 days. For more information, read NerdWallet's review of OnPay.

  • Wave Payroll: Known for its free accounting software, this platform also has base fees instead of multiple plans. Clients can try its payroll software for free for 30 days. For more information, read NerdWallet's review of Wave Payroll.

  • QuickBooks Payroll: Business owners interested in this product have to choose between a free 30-day trial or saving 50% for three months. For more information, read NerdWallet's review of QuickBooks Payroll.

How to choose payroll software

Before deciding whether to pay for payroll software, business owners should consider the complexity of their state’s tax laws, whether or not they plan on scaling up their company, their number of employees and how much time they’re willing to dedicate to administrative tasks. Just as importantly, it's best to avoid labeling free payroll software as a temporary solution; switching from one software to another is a pain and often time-consuming. If free payroll software won’t cut it as the business grows, the business will likely be better off picking a product that can accommodate growth and has automation options.

Business owners can typically make up for a lack of time tracking or expense claim management features by working with an outside app that might do the job even better. The same can’t be said for payroll taxes. Overall, there are features that are certainly nice to have and features that are vital for most business owners.

Most important features

  • Tax calculation and preferably tax filing options.

  • Ability to calculate benefits deductions.

  • Direct deposit.

Extra features

  • Time tracking.

  • HR management features.

  • Expense claim features.

  • Cloud-based system.

  • Employee portal.

  • Customer support via phone.