Top 5 Free Payroll Apps for Small Businesses

As a small business owner, you know your business is growing when you’re investing in a free payroll app. Adding employees to your business as an entrepreneur is great for scaling, but it can also mean added work to ensure you’re accurately and efficiently paying those employees. Even for seasoned small business owners, payroll can be a pain.

But payroll doesn’t need to be a time-consuming, pull-your-hair-out exercise. With the right automated payroll software, like a free payroll app, you’ll be able to streamline your payment process, comply with taxes, and ensure your employees are paid right—and on time.

Ahead, we’re going to dig into what exactly payroll for your small business is, why you’d use a free payroll app as an option, and the top 5 free payroll apps to consider for your small business. Let’s go!

What is payroll for a small business?

Payroll is the process by which a small business compensates—or in another word, pays—its employees for a set period or given date of time worked. Small business owners and managers must accurately calculate the amount of money for each employee at the establishment. Employees have historically received physical checks or direct deposits into their banking account from payroll.

Payroll must have the following elements to be completed:

• Employee hours worked over the designated pay period, including any PTO or sick days that may impact pay
• Banking information (or a check if you’re still into sending those out)

In a small business, payroll is often handled by one person, like the owner or a manager (or let’s face it: whoever’s reading this article). Typically in larger companies, payroll is the responsibility of an accounting manager or the human resources department. But for a small business, many of these roles are merged into a couple of people to handle, which can be a bit hectic and time-consuming—especially if owners are leaning toward using paper records for payroll.

Payroll is a business’s most important—and often priciest—expense in order to run operations smoothly. Some good news? Payroll is also a deductible, which can contribute to the overall gross income, also known as adjusted gross income, which may lower tax costs or contribute to a refund.

Why use a free payroll app for small businesses

It may seem obvious in the digital age that using a free payroll app is a smart business decision, but not everyone has jumped onto the technology train to streamline operations.

What if you’ve got a good payroll system that works for you? It’s like the saying goes: if it’s not broke, don’t fix it.

There are a myriad of reasons why a free payroll app will be good for your small business. Below are a few common, important considerations and benefits to switching to a free payroll app.  

Keep costs low

At the absolute top of the list for a free payroll app is to help keep your overall business expenses lowered. We want to save money where we can, right? Automate your entire payroll process to reduce any costly errors that will save money and time.

Many other businesses, typically those bigger than the average small biz, source out payroll to other businesses. But that comes at a steeper cost. A free payroll app won’t cost nearly as much as contracting out the work to another business supporting its own employees.

Save time

Paper payroll records are time-consuming: Manually tracking hours worked, who called in sick, which employee was on vacation, and don’t even get us started on shift switching. A free payroll app can automate all of this for your small business and your staff.

Error reduction

Switching from paper to digital records not only saves manual time, it also reduces any manual errors that can occur from doing calculations and tracking employee hours worked. Payroll apps can house all kinds of data as well so that calendars are synced and you and your employees know exactly how many hours have been worked that need to be paid out.

Transparency

Some free payroll apps can hold all of your employees information, like hours and shifts worked. Because you and your employee now have all the same info, this makes things more transparent (and less error prone) than referring back to a stained schedule on a bulletin board. It also means that employees see info sooner. The benefit there is that they may be able to remember anything that might constitute an error more easily.

Security

A smart payroll app also includes sensitive info, like banking accounts, social security numbers, and confirms to your employees you’re paying them correctly and on-time. Not only that, it keeps that payroll information protected. Manual pay info in ledgers or even just on a company laptop are a lot easier for other people to see, change, and abuse. Keeping your employees’ info safe shows that you value their privacy, and that they can trust you.

Reliability

With automation, a small business owner, or whoever manages payroll, can be assured that employees will be paid on-time, and the amount they should be owed for time work. It takes the worry out of trying to complete complicated tasks on-time, especially when you don’t have to wait for any information: it’s all there at your fingertips, when you need it most.

Data syncing

A free payroll app doesn’t just need to keep your employees’ payroll information: it can do so much more. Sync and house your employee data with this software, like employee birthdays, emergency contacts, and any completed employee certifications, while being able to send messages or alerts to your team to remain connected.

Employee friendly

Free payroll apps can be extremely employee-friendly and easy to use. Employees are able to see their own schedule, pay stubs, deposits, and W-2s. These apps can let your employees know when they are paid. It, too, can empower employees to keep track of their PTO or sick days, and help keep track of any shift trades.

Manages compliance complexities

A payroll app is ready-made to manage any tax or compliance complexities when paying employees from deducting mandatory state and federal taxes to any additional local taxes, and keeping up with percentages or increases. A payroll app will also ensure any time card or timesheet and payroll records are FLSA-compliant.

Best free payroll apps for small business in 2024

There are a lot of free payroll apps out there, but we did the research to help you find the best of the best.

Read on for our favourite five picks including a bonus option that—in our humble opinion—has everything a small business needs for payroll and beyond.

1. eSmart Paycheck

eSmart Paycheck is useful for employers who need to do payroll calculations, generating paychecks to print, with federal and state tax considerations included.

Key benefits:

• Paycheck prep
• Calculated federal, state, and local taxes
• Includes 401K deductions
• Prints pay stubs and checks

Key considerations:

• All features free for only three months, then only pay calculator features are free
• No tax deposits
• No state tax e-filing
• No direct deposit option
• Requires some manual data entry

2. TimeTrex

TimeTrex is a great tool to use for both payroll and scheduling. It’s also cloud-based, like other free payroll software options, and has integration capabilities with programs like QuickBooks and Sage.

Key benefits:

• Tracks employee hours worked, along with overall attendance including overtime and vacation days
• Automated scheduling
• Calculates federal, state, and local taxes
• Automatically calculates overtime and accruals
• Calculates deductions like benefits, contributions, vacation, and sick days
• Direct deposit and check printing
• No employee cap
• Employee-friendly self-serve portal
  

Key considerations:

• Doesn’t file payroll taxes
• Direct deposit takes time
• Custom quotes for more features required

3. ExcelPayroll

ExcelPayroll is an app that is primarily used with Microsoft Excel with pre-formulated Excel functions. The free payroll app can handle up to 50 employees.

Key benefits:

• Deduction and contributions management
• Tracks overtime
• Tracks vacation time accruals
• Ability to do tax computations on a weekly, biweekly, monthly, quarterly, or yearly basis
• Tracks expenses

Key considerations:

• No tax filing services available
• No direct deposit
• Doesn’t have any employee self-serve capabilities or portals

4. HR.my

Like the name of the app suggests, HR.my is focused primarily on human resources solutions. It’s limited, but it does offer free unlimited payroll processing.

Key benefits:

• Good for employees who need to clock in and out at different locations
• Employee-friendly HR system that empowers workers to manage and track time-off, schedules, requests, and a discussion forum
• Cloud-based
• Available in over 60 languages

Key considerations:

• Because it’s a crowdsourced, there are paid ads on the platform
• No direct deposit
• Won’t calculate or file payroll taxes

5. Payroll4Free

Payroll4Free is an option for businesses with fewer than 25 employees. For a free app it has a lot of great features, and is ideal for businesses on a budget that aren’t intending to grow past 24 team members.

Key benefits:

• Federal, state, and local tax calculations
• Can do both direct deposits or print checks
• Has an employee self-service portal
• Generates necessary tax forms like W-2 or 1099
• Easy set-up for deductions like contributions or benefits
• Human resources tools

Key considerations:

• Windows-only system
• Employee cap

Choose Homebase as your new fave payroll app

Homebase’s payroll app is designed for small businesses—user-friendly, and built for business owners & managers, not just accountants.

Payroll automation

Instead of shuffling papers to find accurate information on how many hours your employees need to be paid for you, you can do it all in a few clicks on your screen. Homebase can easily change timesheets into pay for your employees with accurate calculations.

Homebase even stays up-to-date on any tax considerations needed for payroll. The app calculates federal and state taxes so employees know exactly how much they are getting after taxes. No calculators required.

The app will file any taxes, too, including W-2s and 1099s.

Data you can trust

Homebase is synced with all the employee data you’ll need to ensure they’re paid accurately and on time. Every time an employee clocks in for their shift, and the second they clock out, Homebase tracks it for your business. Instead of using paper to keep up-to-speed on shifts, like swapping or overtime hours, Homebase gets an accurate read on where your employees are and for how long.

The data you get for Homebase is directly from your employees. Homebase ensures your workers have self-service capabilities like onboarding and signing digital payroll forms so you don’t have to manually enter their data.

Homebase helps you avoid mistakes like forgetting to put in breaks, PTO, or vacation days. It tracks all of this employee data for you so that when you run payroll biweekly or monthly, you’re getting the best, complete portrait of how your employees spent their time, and how much they need to get paid.

Compliance assistance

It can be all too easy to get lost in the compliance sauce if you’re trying to handle everything involved with payroll by paper records. With Homebase, the app stays up-to-date on what the overtime and break policies are for each state so you can ensure your employees are getting the time off they need, or recording any additional time worked past their scheduled shift for pay.

Homebase will also keep all of your employee records and time cards are FLSA compliant, and remain there for the minimum three-year period.

Streamlined operations

Homebase makes it easier for you to handle all the administrative parts of your business. Payroll is one of the biggest expenses for any business. Any errors can cost your money, and erode trust with your employees.

With Homebase, processes are automated, employees have more control and insight into their pay stubs, scheduling, and timesheets, and how those all intersect with the other, resulting in their paychecks. Get started with Homebase for free today (Payroll available on Essentials plan and up!).

Free payroll apps FAQS

What is a payroll app?

A payroll app is software that small businesses can use to compensate its employees for hours worked in a given pay period. A payroll app can also contain other types of data including overtime, vacation requests, shift switches, and other important employee information like banking details.

Why does my small business need a payroll app?

A payroll app helps to streamline business operations, cut costs, and ensure payroll is completed accurately and paid to employees on time. Small businesses benefit from using a payroll in an effort to reduce time spent on manual tasks, which frees owners and employees to focus on other important aspects of the business. Payroll apps also have better security than keeping paper records, which means employees can trust that their banking or personal information is kept safe.

Why is a payroll app better than a paper timesheet?

A payroll app provides more accurate and up-to-date information than a paper timesheet. Paper timesheets can get lost, destroyed, or too cluttered to contain all of the necessary information for an employee’s schedule. With a payroll app (like Homebase), employees and small business owners and managers have all transparency into pay and hours worked to ensure accuracy.

What is the best payroll software for my business?

Homebase is the best solution for all of your payroll needs that also handles scheduling, timesheets, compliance, and more. Homebase streamlines payroll operations by being employee-friendly, so employees can manage and keep track of their own schedules, keeps accurate digital records that are FLSA compliant, and ensures all tax considerations are up-to-date and correct on pay stubs, and yearly taxes filed on your business’s behalf.