Best Free Payroll Software for 2023

Even at its free level, TimeTrex grants you access to several integrated solutions designed to help you manage your workforce. You get online tools to create schedules, capture clock-ins/outs, track attendance, monitor PTO, pay employees, conduct performance reviews, and record staff information in a centralized database. This is more than what Payroll4Free.com offers (doesn’t have free HR tools) and what HR.my provides as part of its forever-free solution (doesn’t have performance reviews).

TimeTrex has robust time tracking capabilities—making it one of our leading time and attendance software for a small business to use. Its web browser-based time clock allows you to turn computers into employee time tracking devices. However, geofencing capabilities, facial recognition time clocks, and mobile time tracking apps aren’t included in its free Community Edition. If you require geolocation and face verification tools to prevent buddy punching, we recommend HR.my as it offers those functionalities for free.

With TimeTrex’s efficient pay processing tools, you don’t have to worry about doing payroll yourself. Its features cover all day-to-day payroll basics, like automatic tax calculations and custom deductions, such as garnishments, PTO accruals, and benefits. It also offers electronic pay stubs, free direct deposit for small business, and paychecks that you can print in several formats. However, TimeTrex doesn’t handle payroll tax payments and filings for you. If you don’t want do-it-yourself (DIY) taxes and are willing to pay extra, then consider Payroll4Free, as it offers automated tax filing services for $25 monthly.

TimeTrex seamlessly integrates with other programs for payroll like QuickBooks, ADP, Paychex, Ceridian, and Sage. Note that HR.my doesn’t have this functionality, while Payroll4Free.com has limited options and connects with other software through payroll data exports and time data imports.

Aside from standard payroll, HR, and employee reports, TimeTrex has built-in templates that you can customize.

In addition to paying employees and calculating taxes (federal, state, and local) for free, it allows you to set up any deduction, contribution, and earning. Payroll4Free.com will automatically compute it—provided you have specified how these items should be calculated. Note that it doesn’t have the integrated time tracking tools that both TimeTrex and HR.my provide for free. You have to manually import time data into its system before you can run payroll.

If you prefer to pay employees via checks, Payroll4Free.com can help set up its software to add any data you want to appear on the check. You won’t get the said free service with both HR.my and TimeTrex.

Aside from unlimited customer support, Payroll4Free.com has a team of experienced payroll and tax specialists that you can contact if you have queries or need payroll advice. However, it doesn’t have the community forum that TimeTrex and HR.my offer, which allows you to get input from other business owners and HR professionals.

You get custom and detailed reports, enabling you to stay up-to-date with payroll information, tax details, PTO accruals, and employee deductions. It has several reporting options, but the choices aren’t as robust as HR.my and TimeTrex—simply because these two providers’ free packages include other HR solutions, so you may run non-payroll reports.

If you’re always on the go, HR.my has a cloud-based system that you can access 24/7 and from any device (such as Windows and Mac computers, Android tablets, and the iPad). No software installation is needed—unlike TimeTrex’s free Community Edition, which you need to download.

Of the three free payroll software that we reviewed, only HR.my has a platform that’s multilingual. While its default language is English, you can change it directly from the system and choose from 66 options, which include Chinese, Korean, French, Spanish, Japanese, and Vietnamese.

HR.my doesn’t only provide free payroll tools—you also get time tracking, PTO management, expense claim management, and self-service solutions for employees. However, it doesn’t have the scheduling and performance review tools that TimeTrex offers for free.

HR.my’s time clock solution offers geolocation tracking, facial verifications of clocking in employees, and mobile time-ins/outs for field staff. However, TimeTrex’s time tracking feature is more robust as it has a facial recognition time clock option—employees only have to stand in front of the device’s camera to clock in/out.

HR.my’s payroll tools are designed to simplify and automate employee pay processing. It has automatic pay runs and payslips, and you can remit employee salaries through direct deposits or print paychecks. It doesn’t support, however, payroll tax filings and year-end reporting—you have to fill out W-2 forms yourself.

Running payroll can be a complicated process, as it requires several documents and tools to ensure that you pay employees accurately and on time. The most common requirements that a small business will need include an employer identification number (EIN) and a bank account with sufficient funds to pay employees (either through direct deposits or check payments).

You also need to understand payroll compliance regulations, such as the required tax payments at all levels (federal, state, and local) and the payroll tax forms you need to submit. In addition, knowing common payroll terminologies (such as garnishments, gross and net pay, fringe benefits, and pay periods) will help you avoid potential pay errors.

If you’re new to processing employee payments, you can attend payroll training to familiarize yourself with how to run payroll, including labor laws and state guidelines. You can also hire a payroll accountant to handle your pay runs or invest in a payroll system like TimeTrex, Gusto, and the other providers we mentioned in this guide.

First, check federal and state laws, as some states may have payday schedules for specific types of employees. Next, take a look at the payroll frequencies that best fit your business and workers—the most common options are biweekly, weekly, semimonthly, and monthly.

It is also important to set up a payroll calendar and identify the different pay periods so you know when to start calculating payroll and when employees should expect to receive their pay. For example, hourly workers paid on a biweekly basis will receive their pay every two weeks, whereas employees on a semimonthly payroll will get their salaries every 15th and end of the month.

Paying independent contractors is simpler compared to paying employees because you’re not required to withhold taxes and pay taxes for contract workers. Given that contractors are not your employees, you also don’t have to include them in your company’s benefits plan (such as retirement and health insurance).

In terms of W-2 vs 1099 reporting, you don’t have to file year-end tax forms for independent contractors—they are responsible for paying and filing their own payroll taxes. However, as an employer, you should prepare 1099-NEC forms for your contractors to show how much each worker earned for the calendar year.

Employee payroll, on the other hand, requires you to deduct income taxes, garnishments, Medicare, Social Security, and benefits premiums (if you offer employee benefits), among others. You also have to remit tax payments and submit quarterly and annual tax forms to government agencies.

Getting the cheapest payroll software for small business owners may be one of the criteria that budget-friendly users are looking for, but it’s also important to determine whether it can handle all of your pay processing and basic HR needs.

For small businesses, consider online payroll tools that can calculate overtime, wages, taxes, and deductions (like benefits and insurance premiums). Plus, it should have the capability to generate required reports (such as tax forms) and can help you comply with federal regulations. Providers that can remit payroll taxes and file tax reports for you are preferred, especially if you don’t want to handle tax filings yourself.

For companies that employ hourly staff, look for payroll systems that have time tracking tools to capture employee clock-ins/outs. If it doesn’t have this feature built-in, check if it can connect with a time and attendance solution (like Homebase and Clockify), as this integration allows you to easily import time data into payroll for pay processing. It also removes the need to manually track employee attendance using time sheet templates and then having to input the summarized work hours directly into payroll.

While taking stock of the payroll features you need is essential, it is equally important to consider the size of your company, your budget, and the type of employees you have. Businesses in certain industries may even need specific functionalities, such as tip reporting and commission payments for restaurants and retail shops. Also, choose payroll software that is flexible enough to scale with your business and handle your additional HR needs (like recruiting and performance review tools), especially if you have plans to grow.

Processing employee payments yourself may save you money since you don’t have to pay a software provider or a payroll accountant to handle it—but we only recommended it to business owners who only have a handful of employees. It’s also important that you’re well-versed in how to run payroll and have no problems managing payroll taxes yourself. This includes remitting tax payments and filing the required tax forms to the applicable government agencies.

While the free payroll software on our list are great options, you can manually calculate payroll with a calculator or use Excel to compute all earnings and deductions. There are also online payroll calculators you can use, but you have to input the salary information one employee at a time in order to get each worker’s net pay. Plus, these online calculators can’t store salary data, which means you have to separately track and save all computations and payments for payroll tax processing.