Free software usually has fewer capabilities than its paid equivalent. But one shouldn't rely too much on such generalizations. With a fair analysis of your needs and what a particular program has to offer, you could discover that the free application would be a good choice after all. A small-scale business for example that has an uncomplicated pay structure may computerize its payroll procedures without having to invest in paid payroll software. Here are some of the things you need to look for and analyze in free payroll software.
- Evaluate the application's input fields and menu options. The program should have input fields and menu options that include various aspects of payroll earnings such as regular paid hours, overtime hours, project-based hours, paid vacation leaves and sick leaves. It should be able to list the accrued leaves and give a running balance each pay period. If your company has different pay types for various groups of employees -- hourly, weekly, bi-weekly, commission-based, etc., then it should be able to handle these as well.
- Assess its computation capabilities. There are a lot of calculations involved in payroll processing not the least of which are the deductions. The software should be able to manage health and dental care insurance, social security and employee loans. It should especially be able to keep track of Federal and State Income Tax.
- Look for automated procedures. Electronically paying taxes, filing income tax returns, and direct deposits to employee bank accounts are some of the automated payment and filing functions that paid payroll software are capable of. It's not such a remote possibility that such features may also be found in free payroll software. Even having only one of these functions would already be a significant step in automating payroll tasks.
- Check if the software supports relevant forms and can generate reports. Federal W-4, I-9. Employer Registration, New Hire Registration -- these are just some of the forms involved in payroll processing. A useful payroll software should be able to at least offer electronic or print out copies of such forms. It should also be able to generate the appropriate reports so that the process is well-documented.
- Judge the software's security. Payroll software, free or paid, necessarily handle a lot of employee personal information. No matter what other features the application may have, security should be the number one consideration. At the very least free payroll software should be able to back-up data, employ some form of user access control and have network security features.
Some payroll software titles have free or trial versions with trial periods usually lasting 30 days. This allows customers to evaluate the application and help them make a better investment decision.