Best Free Payroll Software for Small Business 2026

Free payroll software exists, but truly free options are limited and come with trade-offs. Most “free” payroll tools require a paid upgrade for tax filing, direct deposit, or full state coverage. For a small business with 5 or fewer employees, free options can still work — here’s an honest comparison of what’s available in 2026.

What “free” actually means for payroll software

When you see “free payroll software,” it usually means one of three things:

Truly free for limited employees (e.g., 10 or fewer)
Free calculation, paid filing/payment (you calculate net pay free, but pay for direct deposit and tax submission)
Free trial converting to paid (30-90 days free, then you must pay or migrate)

Always read the fine print on:

Maximum employees
Whether direct deposit is included
Whether federal/state tax filing and payment is included
Whether W-2 / 1099 year-end forms are included
Whether state forms (especially multi-state employer) are included

Free payroll software options compared (2026)

Payroll4Free.com — Best truly free option

Free for: Up to 10 employees, US-based.

What’s included free:

Federal, state, and local payroll calculations
Pay stubs
Federal & state tax forms (W-2, W-3, 940, 941, 944, state unemployment)
Vacation/sick time tracking
Reports

What costs extra:

Direct deposit ($30/month flat)
Tax filing & payment service ($30/month flat)
Multi-state employer (additional fees)

Best for: Small businesses that don’t mind manual ACH/check writing and tax submission.

Wave Payroll — Free trial, then paid

Free trial: 30 days

After trial:

“Tax service” states (14 states + DC): $40/month base + $6 per employee
“Self-service” states (other 36): $20/month base + $6 per employee

Worth it for: Wave’s free accounting + invoicing tools paired with cheap payroll. Strong for solopreneurs and small businesses with 1-5 employees.

eSmart Paycheck — Free calculator only

Free: Online paycheck calculator (no software install). You can calculate gross-to-net and print pay stubs.

Paid: Full payroll service with tax filing starts at $40/month.

Best for: One-off calculations or owners who want to verify their accountant’s numbers. Not a full payroll solution.

HR.my — Free for unlimited employees

Free:

Unlimited employees
Cloud-based, multi-language
Time tracking + leave management
Basic payroll calculation

Limits:

US tax tables are inconsistent (originally Asia-Pacific focused)
Doesn’t file US federal/state taxes
No US direct deposit

Best for: International companies or US businesses comfortable manually filing taxes elsewhere.

Patriot Software — Cheap, not free, but close

Lowest tier: Basic Payroll, $17/month + $4/employee. Includes pay runs, pay stubs, and W-2s.

Full-service tier: $37/month + $4/employee. Adds tax filing & payment.

Not free, but among the cheapest full-service options.

Square Payroll — Best for businesses already using Square

Pricing: $35/month + $6/employee (full-service).

Free if: You pay contractors only — $5/contractor/month, no base fee.

Best for: Restaurants/retail already using Square Point-of-Sale.

True cost comparison (5 employees, monthly)

Provider	Monthly cost	Tax filing	Direct deposit
Payroll4Free	$0 (manual) or $60 (with DD + tax)	Optional add-on	Optional add-on
Wave Payroll (tax-service state)	$70	Included	Included
Patriot Basic	$37	NOT included	NOT included
Patriot Full-service	$57	Included	Included
Gusto Simple	$89 (40 + 6×5 + adjustments)	Included	Included
Square Payroll	$65	Included	Included

For 5 employees with full-service tax filing, “free” options effectively start at about $40-$60/month after add-ons. Patriot Full-service at $57/month is often the best value.

Why most “free” payroll isn’t free for long

Running payroll has hidden complexity:

Multi-state employees trigger nexus tax obligations
Quarterly Form 941 filing federal payroll tax returns
State unemployment (SUI) reporting quarterly
W-2 / W-3 year-end filing with SSA
1099-NEC filing for contractors paid over $600
Workers’ comp reporting in most states
Local tax filing in jurisdictions with city/county income tax (NYC, Philadelphia, San Francisco, etc.)

Free tools that handle these accurately are rare. Most charge for tax filing because it’s labor-intensive and high-risk for the software vendor (mistakes = IRS penalties).

When manual payroll might work

If you have 1-2 employees and a simple structure:

Single state, no local taxes
Same pay rate every period
No benefits or pre-tax deductions
No contractors

You can manage with Payroll4Free + manual ACH bank transfers + IRS EFTPS for tax payments. Time cost: about 2-3 hours per pay period. Realistically, paying $20-50/month for software pays for itself in time saved.

When to upgrade from free to paid

Move to a paid service when any of these become true:

More than 5-10 employees
Operations in multiple states
Benefits administration needed (health insurance, 401k)
HR/PTO tracking needed
High employee turnover (lots of W-2 / W-4 paperwork)
Workers’ comp or 401k integration needed
Want time-tracking integration
Need mobile app for employees to view stubs

Frequently asked questions

Q: Is QuickBooks Payroll free? A: No, but the cheapest tier (Core) starts at $50/month + $6/employee. They offer a 30-day free trial. QuickBooks is generally more expensive than Patriot or Square but integrates seamlessly with QuickBooks accounting.

Q: Is Gusto free for small business? A: No. Gusto’s cheapest tier (Simple) is $40/month + $6/employee. They have a free trial. Gusto is premium-priced but consistently rated #1 for user experience and customer support.

Q: Can I do payroll without software? A: Yes, with Excel/Google Sheets templates, paper checks, and manual tax filing. Realistic only for 1-2 employees. The IRS provides Publication 15 (Circular E) with withholding tables. Manual payroll for more employees becomes error-prone fast.

Q: What’s the cheapest payroll for 1 employee? A: For a single-employee business (often a husband-wife setup): Patriot Software at $21/month full-service is the cheapest reliable option. Payroll4Free is technically free but you’d manually file taxes. Wave Payroll at $26/month in self-service states is also competitive.

Q: Does the IRS offer free payroll software? A: No. The IRS provides withholding tables and forms but no software. They do have EFTPS (Electronic Federal Tax Payment System) for free electronic tax payments, but you still need to calculate and file separately.

Q: Is open-source payroll software available? A: Yes — projects like Frappe HR and PayHero offer open-source payroll modules. However, US tax compliance for open-source software is inconsistent — most are designed for international use. Not recommended unless you have technical resources to maintain tax tables.

Quick decision tree

Just want to calculate paychecks? → Use a free paycheck calculator
1-2 employees, single state, willing to do manual filing? → Payroll4Free (free)
1-5 employees, want everything done? → Patriot Software ($37-57/month)
5+ employees or multi-state? → Patriot Full-service or Gusto
Already using Square POS? → Square Payroll
Need accounting + payroll combo? → Wave (cheaper) or QuickBooks (more features)

Take-Home Pay Calculator — Free paycheck calculations for any state
Self-Employment Tax Calculator — For sole proprietors and freelancers
California Paycheck Calculator — State-specific tax tables (51 state pages available)

Free payroll software has its place, but for most growing businesses, the $20-60/month for full-service software pays for itself in time saved and penalty avoidance.