Best Free Payroll Software for Taxes, Direct Deposit, & More

Payroll software calculates business payroll by multiplying employees’ pay rates by the hours worked per pay period and keeping track of employee deductions like workers compensation insurance and taxes. Some of the free programs even offer direct deposit. This article will cover the best free payroll software options.

Calculate & File Payroll Taxes Automatically with Gusto

Did you know that one-third of small businesses calculate payroll taxes incorrectly, costing them time, money, and legal problems? Gusto is an all-in-one payroll and HR solution for small businesses that helps you avoid payroll headaches by calculating, filing, and paying your payroll taxes automatically. Try it free for 30 days.

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Free Payroll Software Options

Option #1: Payroll4Free.com

Payroll4Free.com Features 

Features
# of Employees	Free for up to 25 employees
Direct Deposit	+$12.50 per month
1099s	✔
W2s	✔
Taxes	+$12.50 per month
Supported In	All 50 US states

With Payroll4Free.com, you get full payroll functionality for free. It’s available in all 50 states. You have the ability to pay employees with direct deposit or with paper checks, and you can print pay stubs. Payroll4Free.com will calculate all of your tax liabilities and give you pre-populated forms to submit to the government, including W2s and 1099s. And for $12.50 month, you can even have Payroll4Free.com submit taxes on your behalf.

If you need worker’s comp insurance in addition to payroll, Payroll4Free.com can help you find a policy at no charge. Plus, you’ll be able to pay for it automatically through the program. You can even manage paid time off (PTO) with accrued vacation balances in Payroll4Free.com. In addition, Payroll4Free.com offers a 20% discount if you pay annually for optional services shown above.

What’s Missing from Payroll4Free.com’s Free Package?

While Payroll4Free.com offers free payroll processing, they charge $12.50 per month to deposit and file payroll taxes — a feature that’s included for free with Xero. And when compared to the free trial sign-ups offered by others, Payroll4Free.com also doesn’t have an easy way to try out their service. You have to answer a lot of questions before your software becomes effective.

For example, on most free trials, users enter their name, business name and email address to access the software and begin configuring it for their business. Payroll4Free.com requires users to answer questions about pay cycles and deductions, employee data and pay rates before accessing the software. That makes the sign-up process take longer, especially if you’re not sure how you want to set payroll up and don’t have ready answers to those questions.

Payroll4Free.com lets you pay employees and contractors, prep tax forms, and offer direct deposit

How Payroll4Free.com Makes Money

Payroll4Free.com places small banner ads in the web-based software to cover their costs. They also offer add-ons like direct deposit and tax services to file your payroll taxes.

Visit Payroll4Free.com

Option #2: Xero Payroll

Xero Payroll Features 

Features
# of Employees	Free for up to 5 employees with Xero Standard package Free for up to 10 employees with Xero Premium package
Direct Deposit	✔
1099s	✔
W2s	✔
Taxes	Calculates and pays payroll taxes in CA, FL, TX, NJ, NY UT and VA Only calculates tax liability (does not pay payroll taxes) in AK, AZ, CO, GA, HI, IL, IN, MA, NC, NH, NV, OH, PA, SD, TN and WA
Supported in	24 states only, see list above

Xero is the best option for businesses already using Xero Accounting Software because it’s already included for 5-10 employees depending on the accounting package you have. In addition to basic payroll, you’ll also be able to manage attendance and calculate tax payments. Xero can even send automatic tax payments if you’re in one of the seven states where that service is available.

Xero is an online small business accounting program, similar to QuickBooks. In fact, it’s one of QuickBooks’ closest competitors and we rated it the best QuickBooks alternative. If you buy a subscription to use Xero for accounting, one of the perks you get is free payroll.

What’s Missing from Xero’s Free Payroll Software?

At the time of writing this article, Xero is only able to file taxes in 24 states (see table above). If you need need to buy and track benefits, worker’s compensation insurance, or have more than 10 employees, you’ll need to upgrade to a Xero Premium account starting at $70 per month. Gusto calculates and files payroll taxes in all 50 states, and combines payroll, benefits, and HR in one package, without any upgrade or add-on costs.

Xero Payroll calculates and files state and local taxes

How Xero Makes Money

Xero makes its money by selling its Xero accounting software. Having two programs combined means you’ll have seamless integration between payroll and accounting, and can easily log payroll as an expense and manage taxes.

Visit Xero

Option #3: Paycheck Manager

Paycheck Manager Free Calculator Features 

Feature
# of Employees	Unlimited
Direct Deposit	✕
1099s	✕
W2s	Requires an upgrade to to Paycheck Manager Basic edition
Taxes	Calculates deductions only
Supported in	All 50 US states

Paycheck Manager is not full-fledged payroll software. It is an online calculator which is best suited for one-off paycheck calculations, or for an office with perhaps only one employee. It’s great for those times when you don’t have access to full-fledged payroll software (like at night in your restaurant, or on the weekend at your retail kiosk). It comes in handy when you must either estimate, or calculate a paycheck immediately, such as when you terminate an employee and want to give them their final check that day, or realize that you missed them in the last payroll cycle and they’re standing in front of you, waiting.

It’s also great if you’re just looking for a tool to calculate withholding and payroll taxes. Paycheck Manager helps you determine each employee’s paycheck after taxes and deductions. In addition to adding up hours and overtime pay, Paycheck Manager will calculate social security, Medicare, and state/federal income taxes you need to deduct. They have 2 calculator options – simple and advanced. With the advanced calculator, you can enter in pre-tax deductions, like 401k, travel benefits, and healthcare. Once you’re finished, you can print a pay stub and check.

What’s Missing from Paycheck Manager Free Payroll Calculator?

Paycheck Manager is just an online calculator, so you’ll need to reset it each time you enter a new check. If you want software that stores employee information like pay rate and business information like your routing number, you’ll need a full-blown payroll software program that helps you manage payroll taxes and integrates with your accounting system.

Although Paycheck Manager offers a paid upgrade that lets you calculate, pay and file payroll and year-end taxes, it doesn’t support time clock integration, direct deposit, new hire reporting, or benefits management. All of these features are standard in Gusto’s payroll and HR software for an affordable monthly fee.

Paycheck Manager free payroll calculator

How Paycheck Manager Makes Money

Paycheck Manager makes money by upselling services in addition to their free calculator. For instance, you have to upgrade to calculate year-end totals (including FUTA and SUTA) so you don’t have to track them manually. These features cost $1.50 – $5 per month per employee and give you an online account to run payroll with more ease, as well as calculate your year-end taxes.

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4 Low-Cost Payroll Software Alternatives

While the free payroll we reviewed above can help with simple payroll, if you need other time-consuming payroll functions such as direct deposits, timecards integration, and automatic tax filing, it’s worth investing in a paid platform that can handle those tasks.

Many of the low-cost payroll programs below offer free trials so you can see which solution is right for your business before you take the plunge. For a more indepth review, check out our best small business payroll software guide.

Option #1: Gusto Payroll

Gusto Payroll Features

Feature
Cost	$39 per month + $12 month per employee
Free 30 Day Trial	✔
# of Employees	Unlimited
Direct Deposit	✔
1099s	✔
W2s	✔
Taxes	Calculates & submits payroll taxes
Supported In	All 50 States

Gusto is a payroll processing software that helps small businesses streamline their payroll, track worked hours, manage employee benefits, and automatically calculate and pay payroll taxes. Gusto also offers employee self-onboarding, payments via direct deposit, and generating year-end W-2s and 1099s.

What’s Missing from Gusto Payroll?

While Gusto’s Core package is one of the most affordable payroll solutions available ($39 per month + $6 month/employee), you really need to sign up for the Complete package ($39 per month + $12 month/employee) to get some of the best features, including employee self-onboarding, PTO management, and an employee directory. Gusto also offers a Concierge package with dedicated HR support, including unlimited access to certified HR professionals ($149 per month + $12 month/employee).

Check out our full review of Gusto payroll.

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Option #2: Square Payroll

Square Payroll Features 

Feature
Cost	$29 per month + $5 month per employee
Free 30 Day Trial	✔
# of Employees	Unlimited
Direct Deposit	✔
1099s	✔
W2s	✔
Taxes	Calculates & submits payroll taxes
Supported In	32 US States

Square, the company that has revolutionized payment processing for small merchants, also offers payroll. You can use Square to track employee hours and pay them with direct deposit. So if you already use Square for your POS, then adding payroll makes sense. In addition, Square manages all state and federal taxes and new hire reporting — including year-end W2s and state tax forms. Whereas with Patriot and Intuit you would have to prepare tax forms on your own.

What’s Missing from Square Payroll?

The only real downside to Square Payroll is that their price is a bit higher than the other low-cost payroll providers and they’re currently only available in 32 states.

Check out our full review of Square Payroll.

Visit Square Payroll

Option #3: Intuit Basic Payroll

Intuit Basic Payroll Features 

Feature
Cost	$20 per month + $2 month per employee
Free 30 Day Trial	✔
# of Employees	Unlimited
Direct Deposit	✔
1099s	$15.99 per contractor
W2s	✕
Taxes	Calculates tax liabilities Does not provide tax filing
Supported In	All 50 States

The company behind QuickBooks and TurboTax, Intuit is also a big name in small business payroll. Their basic package costs only $20 month + $2 for each employee, and includes free live support from payroll experts. The price is even less if you pay annually. This makes it perfect for QuickBooks users who want a simple, low-cost payroll program.

What’s Missing from Intuit Payroll Services?

Intuit’s basic payroll package is fairly limited. When it comes to tax features, they offer no year-end W2s or tax forms. Although Intuit can calculate your payroll tax liabilities, it’s up to you to submit payments when they’re due.

Visit Intuit Payroll

Option #4: ADP Payroll

ADP Payroll Features 

Feature
Cost	Pricing varies ($25 setup fee)
Free 30 Day Trial	2 months free
# of Employees	Unlimited
Direct Deposit	✔
1099s	$102.50/year
W2s	$102.50/year
Taxes	Calculates & submits payroll taxes
Supported In	All 50 States

A leading name in the payroll provider space, ADP offers a variety of payroll and tax services for small businesses, including online payroll processing, healthcare benefits management, and tax compliance. ADP lets you run payroll online by phone or via a mobile app, calculates and pays payroll taxes automatically, and offers 24/7 access to experienced payroll professionals.

What’s Missing from ADP Payroll?

One drawback is that ADP charges per pay period, compared to Gusto which charges per month regardless of your pay schedule. Pricing is also confusing, and you will have to request a quote directly from ADP. However, once you speak to a representative, you can easily negotiate for competitive pricing and waiving of the setup fee.

Check out our full review of ADP Payroll.

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Bottom Line on Free Payroll Software

Most of the free payroll software options in this article have some limitations which can be problematic for small businesses who don’t have a full-time HR employee or department. Don’t forget to read our best payroll software guide if you’re shopping for a paid payroll software solution.

If you haven’t guessed by now, we really like Gusto as an all-in-one payroll and HR solution for small businesses. Gusto allows you to run payroll in minutes, automatically calculates and files payroll taxes, and lets employees self-onboard and manage direct deposits, benefits, and more. Click here to try Gusto free for 30 days.

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