Payroll management is essential for every business. It involves tracking the number of hours or days an employee has worked, the number of leaves they’ve taken, corporate taxes, and other factors. 

Traditionally, payroll management was a manual process requiring businesses to track employee hours and pay rates on spreadsheets. This was not only time-consuming but also prone to errors.

Researchers from the University of Hawaii reported that almost 88% of payroll spreadsheets contain errors in large to medium-sized corporations. Due to this, organizations face many challenges regarding salary calculation, tax filings, tax reports, and other statutory compliant requirements. Thanks to technological advancement, you can now streamline and automate most of these tasks via free payroll software. 

A study by Research and Markets shows how widespread payroll software is, that its market is expected to grow at 9% CAGR in 2019-2025. 

If you are not using the best free payroll software in 2023, it’s high time you adopt one. And before you get into why, let’s first understand what free payroll software is and how it helps manage everything, including payroll taxes.

What Is Free Payroll Software?

Free payroll software is a business tool that allows large and small business owners to manage and process payroll at no cost. You can automate payroll-related tasks, such as calculating wages, deducting taxes, and generating payslips. Most open source payroll software also helps you with tax filing services.

While free payroll software can be a cost-effective solution for small businesses with a limited budget, it’s important to note that some free software may have limitations or offer fewer features than paid options. Therefore, researching and comparing different payroll software options is important to find the best fit for your business needs.

Benefits of Payroll Software

Payroll management usually involves a team of professionals, including administration, accounting, and HR. Given the number of experts working to manage the organization’s payroll, ensuring accurate and timely salary disbursements is essential.

This is where free, open source payroll software can prove invaluable, facilitating more efficient and accurate pay runs.

While each payroll solution offer unique benefits, the most common advantages include:

• Streamlined payroll processing, reducing the time and effort required for calculations and paperwork.
• Automated tax calculations that help mitigate the risk of errors and ensuring compliance
• Increased accuracy of complex tax calculations and reports filling
• Direct deposit and other payment options make it easier to pay employees on time and how much they prefer.
• Detailed reporting capabilities to give you a clear overview of payroll expenses and supporting decision-making processes
• Integration with other HR and accounting systems, enabling seamless data exchange and reducing duplication of effort

How Manual Payroll Processing is Different From Using Payroll Software

Manual payroll processing is perfect for small businesses with fewer employees. However, as your organization grows, you should invest in a payroll tool to automate basic tasks and reduce the chances of errors. Also, manual processing requires hiring people with specialized skills, whereas anyone with little knowledge of payroll can manage the software. 

Here’s a complete list of comparison between manual and tool-based payroll processing. 

What To Look for in the Best Free Payroll Software?

While the best free payroll software for your organization depends on your unique needs, here ae some essential features that you must look for. 

• Accurately calculate the wages based on the predefined salary schedule
• Allow employees to apply for leaves and view their leave balance. Also, managers should be able to approve/reject the same
• Biometric integration for attendance management and wage calculation on that basis
• Supports direct deposits to avoid manual payment every month
• Generate payslips automatically and send them to respective employees through email
• Create reports on leave summary, wages paid to workers, worker’s compensation, etc.
• Perform statutory compliances such as tax deductions, due date reminders, etc.
• Automatic deduction of advances or loans from salary

Also, HR and payroll software integration is a must to avoid duplication or other errors.

Top 10 Free and Open Source Payroll Software

Now that you know how full-service payroll software has the edge over manual payroll systems, it’s time to automate your payroll process. Let’s look at the ten free, open source payroll software for your business.

1. Collabrill

Collabrill is a cloud-based payroll solution for small and medium businesses. It helps simplify and automate tedious payroll tasks, saving time and eliminating errors. You can track employee’s attendance and leave directly from the system, making calculating payroll more accurate. It also includes features for compliance, such as tax calculations and reporting. Although it is not completely free, it comes with a 30-day free trial.

 Key Features 

• Cloud-based interface and collaborative platform to manage HR functions
• 360-degree collaboration for handling various functions such as HR, Project management, portfolio management, project budgeting, etc.
• Flexible and easy-to-use
• An astringent security protocol for data protection
• Simplifies and automates payroll processing
• Report generation for both employees and employers
• Encourages employee engagement by maintaining communication between various departments

Pros

• Great customer support
• Low learning curve
• Helps organize documents, preventing loss
• Various modules to support different aspects of business

Cons

• The user interface could be improved
• Limited features that might not handle complex calculations of large enterprises
• Does not integrate with as many applications as other free payroll software
• Does not have a mobile app

2. Kredily

Kredily is a cloud-based HR and payroll software that helps small and medium-sized businesses manage their payroll, attendance, leave, and other HR functions. It offers customization options to fit the needs of different business. Plus, it provides real-time reports and analytics to help businesses make more informed decisions faster. 

Key Features

• Supports’ Web Clock-In’, tracks in-time, out-time, and employee breaks
• Provides location-based attendance of employees
• Biometric integration is available
• Customize workweek cycles, weekly offs, shifts, and employee salary structures
• Eases statutory compliances
• Centralized data to manage HR functions effectively
• Manage employee finances and investments
• Enables employees to view leave balance
• Allows employees to send leave requests and upload documents

Pros

• A comprehensive set of features
• Intuitive and user-friendly interface
• It has a mobile app that allows you to track employee salaries on the go
• Proactive customer support

Cons

• Limited integration options
• Reporting capabilities are quite limited
• Only supports bank transfer, which can be a limitation for some businesses
• It may not be the best option for companies that plan to scale up rapidly

3. Timetrex

Timetrex is a complete workforce management software that provides the benefits of automation to even small organizations. It helps businesses optimize their workforce and reduce administrative tasks associated with workforce management. TimeTrex offers customization options to fit the needs of different businesses and can be accessed through a web browser and mobile devices.

Key Features

• Easy scheduling and time tracking can be accessed by employees from web browsers linked to their mobile
• Integrated attendance and payroll
• Generates tax reports 
• Issues electronic pay stubs for each employee
• Advances payroll tax calculator for computing taxes
• Direct electronic transfer of funds to employees
• Absence management and calendar tracking
• Overtime tracking for each employee

Pros

• As it is an open-source solution it allows you to modify the source code to suit your requirements
• Has advanced absent management and overtime tracking that leads to accurate payroll calculation
• Has an active user community that shares tips and best practices
• Supports compliance management

Cons

• Customer support could be improved
• Its mobile app isn’t as comprehensive as its web app
• Limited integration options
• The search option needs improvement

4. OpenPro

OpenPro is an open-source ERP software designed for businesses of all sizes. It offers various aspects of business, including sales, marketing, HR, payroll, production, and manufacturing. It helps managers streamline operations, automate administrative tasks, and make data-backed decisions. 

Key Features

• Simplified payroll processing
• User-friendly interface due to which even non-technical employees can check their leave balance, salary, tax deducted, etc. 
• Scalable and can be expanded with the growth of the organization
• Compliance calendar compatible with government regulations
• Pay periods can be defined for employees, i.e., daily, monthly, weekly, etc.
• Employee classification, i.e., full-time, part-time, salary with overtime 
• Built-in time card system makes payroll processing easier

Pros

• Allows you to transfer from Quickbooks payroll easily
• High level of control and analysis
• In-depth reports and analytics
• Easy-to-use, intuitive interface

Cons

• The learning curve is higher
• You might need help setting up the system
• Limited integration options
• Setting up workflows is complex

5. Paymaster

Paymaster is a web-based payroll software solution that offers comprehensive features to streamline payroll processes. It has direct deposit, employee self-service, tax reporting, and more. You can customize the solution to meet your business’s unique needs. Plus, you can access it from anywhere, anytime. 

Key Features

• Tax credit facility helps to verify eligibility, wages paid, and applicability of credit
• Integrated attendance and payroll
• Comfortable pension and tax credit management
• Manage the timesheet of employees
• Manage leave requests sent by the employees and approve or cancel those requests
• Intuitive interface that allows you to calculate taxes, expenses, arrears, and increments for employees
• Electronic fund transfer system
• Online employee self-service functionality

Pros

• User-friendly interface that is easy to navigate
• Offers strong security and compliance features
• Highly customizable solution
• Proactive customer support

Cons

• Limited integration options
• Its mobile app is not as robust as its web app
• While Paymaster does offer benefits management features, they are limited compared to other payroll and HR software solutions
• Does not scale with your business

6. Talypayroll

Talypayroll is an open source payroll software solution catering to small and medium-sized businesses in South Africa. It helps accurately calculate employees’ salaries and tax requirements and deductions, helping companies ensure they meet legal requirements. The software offers a free version that supports up to five employees, making it a great choice for small businesses. 

Key Features 

• Create payslips, print payslips, and save them as PDF
• Helps to sanction and manage employee loans
• Create a coinage report for cash employees
• Employees can view their payslips online
• Employment tax incentives supported
• Quickly generate tax reports and export tax certificates
• You can divide employees based on weekly, fortnightly, and monthly payroll runs

Pros

• Has an employee portal that allows them to view their own payslips online
• Helps generate EMP201, IRP5 and EMP501 reports 
• Has a payroll calculator to help calculate payroll taxes
• Helps comply with SARS (South African Revenue Services) laws

Cons

• Does not have a mobile app
• Only suitable for businesses in South Africa
• Limited features for growing businesses
• The free version only supports up to five employees

7. Payroll4free

Payroll4free is a free payroll solution that empowers you to manage payroll for up to 25 employees. It supports tax management, direct deposit, employee self-service, and more. Payroll4Free aims to simplify and automate the payroll process, allowing businesses to save time and reduce errors. 

Key Features

• Accurate payroll calculation of contractors and employees
• File tax forms of employees
• Option for electronic fund transfer to employees as well as paper check payment
• Track employee leave and attendance
• Employees can view their information online
• Easy integration with any existing banking or accounting software
• Easy reporting on tax and other compliance matters

Pros

• Supports basic payroll services
• Integrates with popular accounting tools like Quickbooks
• Knowledgeable customer support
• Automates basic payroll tasks

Cons

• Since the app runs on ads, they’re too frequent and distracting
• Supports 25 or fewer employees
• Does not have a mobile app
• The user interface could be improved

8. WebHR

WebHR is a leading HR and payroll software helps manage payroll, attendance, compliance, and other HR requirements. This software aims to aid companies in paying all types of employees they hire effectively, be it full-time, contractual, part-time, or even freelance.

WebHR is neatly designed to manage even workflows of employees working for different time shifts, overtime, holidays, etc. It helps you comply with various legislative regulations and stay updated with them.

Key Features

• Cloud-based software that can be operated from any place
• Promotes employee engagement and collaboration at all levels
• Salary calculation per employee classification, i.e., full-time, freelance, part-time, etc.
• Easy regulation of workflow and attendance of employees in different shifts
• Online funds transfer
• Ease in payroll taxing process, i.e., withholding employees’ tax, filing and paying tax as per regulations
• Extensive reporting allows generating of reports in graphical and tabular form

Pros

• Supportive and cooperative customer support
• Robust approval stages
• You can choose the modules you need, eliminating unnecessary complexities
• Highly flexible and reliable

Cons

• It does not provide in-depth reports
• It is not very user friendly
• Bugs and glitches are common in its mobile app
• It does not support multiple languages

9. PHP Payroll

Built using the PHP programming language, PHP Payroll is an open source payroll solution for small and mid-sized businesses. It helps companies improve their payroll efficiency and allows you to automate tedious tasks, such as attendance and leave management and generating salary slips. It also has a holiday management system wherein employees can see the company’s holiday plan, apply for leaves, and check their leave balance.

Key Features 

• Easy computation of all the allowances and tax deductions
• Detailed report generation
• Gather information on employment costs 
• Seamless calculation of taxes, medical & tax credits, increments, arrears, etc.
• Calculate and credit salary as per the assigned salary structure
• Holiday management system for effective attendance management and forecast
• Employees can see the holiday plan, apply for leave and see the balance of leaves 
• Generate payslip with a single click
• Generates statutory reports

Pros

• Integrates with third-party biometric devices
• Helps manage employee details and work report
• It comes with several modules, including attendance management and employee performance software
• Has unique solutions for different industries

Cons

• High learning curve
• Customer support isn’t very proactive
• UI/UX could be improved
• Does not have a mobile app

10. IceHRM

IceHRM is a human resource software explicitly designed for small organizations. It centralizes entire data and allows access only to authorized persons, maintaining high security. This helps track when an employee has clocked in and out. It also caters to other roles and responsibilities of HR professionals, like onboarding, salary dispensing, leave management, and compliance.

Key Features

• Compile data related to employee salary and group it into salary components
• Calculate various tax and other statutory deductions
• Calculation of overtime payment and including that information in salary slips
• Add additional salary components based on attendance 
• Employees can download salary slips in PDF form
• Easy calculation of performance appraisal
• Easy employee lifecycle management for current and ex-employees

Pros

• User-friendly interface
• Gives total control of payroll without compromising on security
• New versions are rolled out regularly
• The time tracking feature helps calculate payroll more accurately

Cons

• Poor documentation on API and the development environment
• Limited functionalities for growing businesses
• Offers fewer training materials, making initial setup difficult
• It does not have a robust mobile app

Wrapping up

Almost all organizations today seek automated payroll software to simplify salary payments and time management and ensure adherence to legal and tax-related laws. However, choosing an excellent open source payroll software that blends in with the organization and shows consistent results is essential.

The tools mentioned above can help you save costs while empowering you to manage your payroll more effectively. 

Have you come across any of these payroll systems? Let us know your experience with the tool in the comment section below.