If you’re a kind of company owner who believes that manual payroll is getting overwhelmingly stressful and time-consuming.
That means it’s the perfect time to get laid back and automate the whole process with the help of payroll software.
It’s crucial to make the right decision when looking for payroll software because it can have severe impacts on your business operations.
And if you fail to do so, you not only squander investment but employee data.
If you’re a small venture based in the UK there are many options you can consider.
In this blog, we’ll talk about:
- What is payroll software?
- Difference between free payroll and paid payroll software?
- Top 5 payroll software for small businesses in the UK?
- What are the benefits of using free payroll software for small businesses?
What is payroll software?
The word “payroll software” is the combination of two separate words “payroll” and “software”.
First, let’s understand what is payroll.
Payroll is a way to compensate employees by employers.
This information could be a bit hard to digest.
Lets understand this in detail.
Payroll is a systemic process followed by companies and organizations to compensate their employee for their work.
This process includes:
- Calculating and distributing wages or salaries
- Managing deductions such as taxes and benefits
- Maintaining accurate records of earnings and withholdings.
A tool or application made specifically for companies to automate the entire payroll process is called payroll software.
Generally, there are 2 types of payroll software for small businesses.
- Free payroll software
- Custom-made payroll software
Software development companies make Custom Payroll software on the unique request submitted by companies to simplify their payroll process.
On the other hand, free payroll software is ready-made software that businesses can obtain for without any cost. However, it can’t be tailored according to the unique requirements of a business.
Pros of custom-made payroll software
- Tailored payroll software can address the unique problems of a company.
- It can easily scale and expand as the company grows.
- Custom payroll software can be designed to meet specific local, state, and federal regulations.
- Tailor payroll software is more secure as compared to off-the-shelf ones.
Cons of custom-made payroll software
- Customized payroll software is expensive to build
- A complex payroll software can take a year to build.
- To build custom payroll software you need to find a competent company with previous experience in payroll building to build.
- Custom software requires ongoing maintenance, updates, and support.
Pros of Free payroll software
- You can obtain free payroll software without paying anything. You only need to pay when you have to unlock any premium feature.
- Free payroll software can be acquired in less than a few hours.
- Most of the time you get all the basic features in a free plan.
- You can always check out the reviews and feedback before making a final decision.
Cons of Free payroll software
- If you want to have access to premium features you need to pay handsome prices.
- Unlike custom payroll software, free payroll software can’t be scaled.
- Free software is available for a limited day after that you need to pay a price.
- Data can be stolen if you use free off-the-rack payroll software.
Best Payroll Software For Small Businesses In The UK
Before we tell you about the top free payroll software for small businesses in the UK.
We want to address the most sought-after question coming from small business owners.
Do small companies even need payroll software?
Unlike large enterprises, small businesses might not necessarily need payroll software but if the payroll process is getting agonizingly difficult that means they need one.
The good thing here is that you can simplify the whole payroll process for free with a free payroll process.
Here are the top 5 payroll software for small businesses in the UK.
- HMRC Basic PAYE Tools (For Companies Less Than 10 Employee)
If you’re a small company in the UK with less than 10 employee and you want a free payroll software uk, the best you can get is HMRC Basic PAYE Tools.
The best part about this software is that you can access all the features without paying a single buck.
To use this software and set it up for your small company in the UK you must be registered with HMRC as an employer and have a login for PAYE Online.
Features of HMRC Basic PAYE Tools
- Calculate the amount of tax according to employee salary.
- Execute Payroll tasks
- National Insurance for your employees
- Send this information to HMRC
You can download the software on Windows 10 and 11, macOS version 13 ‘Ventura’ and 14 ‘Sonoma’, Ubuntu Linux version 20.04 LTS and 23.10.
2. IRIS Payroll Basics – (the most renowned payroll software in UK)
IRIS is a private software development based in the UK that makes this payroll software for small organizations based in the UK so they can automate the payroll process without any delay. You can only use this free software if the number of employees in your organization is less than 10.
This software is an ideal choice for businesses that want to streamline payroll without investing in custom software. To this date, more than 40,000 UK businesses have integrated IRIS Payroll Basics software into their businesses in order to pay their employee on time. Apart from being free payroll software, this software is also user-friendly ensuring employers will face no trouble when using it to pay their employees.
3. Xero
The third best payroll software that small enterprises can use for free for a limited period is Xero. The standout feature of this free payroll software is that it automatically calculates employee pay, leave, and pension deductions.
Although Xero is a New Zealand-based company it has offices located all over the world including Australia, the United Kingdom, the United States, Canada, South Africa, and Singapore. Small businesses in the UK can use this free payroll software with total peace of mind as adhere to HMRC rules and regulations.
Some of the top features of Xero Payroll software
- Automated online payroll
- Payroll tasks and reminders
- Multiple pay frequencies
- Off-payroll workers (IR35)
- Directors payroll
- Fully automated workplace pensions
- Calculations and deductions
- Statutory leave and payments
- Payroll reporting
4. Primo Payroll
For technologically illiterate small business owners Primo Payroll brings an easy-to-use payroll software with an easy-to-navigate interface. Not only this but free customer services also come with a free plan that no other payroll software provider offers.
The free plan is ideal for small businesses with less than 10 employees. With the free plan, you get access to the following features.
- Auto Enrolment Module
- RTI Submission
- Unique payslip style period
- Payslips by email
- Calculators for Gross to Net and Net to Gross
5. Shape Payroll
Shape Payroll due to its high functionality and advanced security features deserves to be on the list of all-time best free payroll for UK small businesses.
The company guarantees efficiency and builds a happier workforce when you integrate the system into your business operations. Undoubtedly it’s one of the widely used payroll software as more than 3000 agencies are using it to make their lives easier.
Features that you can enjoy with a free plan
- The software is totally free for up to 3 employees making it a great choice for small businesses.
- HMRC compliant
- Pensions integration with NEST
- Employee payslip portal
- For businesses, bureaus
- The first 30 days are totally free. If you like it, you can transfer to the paid software.
- Advanced security algorithms make the software completely protected.
What are the benefits of using free payroll software for small businesses?
Free payroll software offers several benefits to small companies.
- Small businesses can focus on core business while the payroll process can be automated by payroll software.
- Fill employee tax returns on time with the help of free payroll software.
- Free payroll software can perform complex calculations in seconds.
- Manual human work can be automated with payroll software which can lead to the prevention of financial losses and time consumption.
- Employees can get access to information in seconds.
Ending Remarks
If you run a small company in the UK with fewer than 10 employees, free payroll software can be a good option. However, some of the payroll software we’ve listed above either offer free access for a limited time, or their premium features come at a cost.
Not to forget, if you’re looking for free payroll software for a medium to large-sized company, you’ll either need to opt for the paid version of the software mentioned above or invest in custom payroll software, which can be developed with the assistance of our company.
FAQs
- What payroll system is used in the UK?
Businesses in the UK use different types of payroll systems including HMRC Basic PAYE Tools, IRIS Payroll Basics, Xero, Shape payroll software, and many others. However, regardless of the payroll software they use it should adhere to HMRC rules and regulations.
- Who uses payroll software?
Payroll software is used by businesses, companies, and individuals who want to manage employee payments, calculate wages, and handle deductions.
- Do businesses use payroll software in the UK?
Yes! Businesses of all sizes use payroll software to make their lives easier. Payroll software is becoming popular among small businesses.
- How Can I Make Paid Payroll Software?
If you want to make paid payroll software in the UK, you need to get in touch with a custom software development company like Eleventh Tech. You can first build payroll software and then offer it to businesses and companies on a subscription basis and generate revenue.
- how will I use payroll software?
To use payroll software first you need to set it up by entering employee details, pay rates, and configuring benefits, then process payroll by tracking hours, calculating wages, and distributing payments.
- Does small business need payroll software?
If a small business wants to manage and simplify employee salaries process efficiently by following all the rules and regulations needs payroll software.
- What is HR payroll software?
Payroll software when comes with additional HR-related functionalities called HR payroll software. HR payroll software allows the human resources department to automate employee payroll processes within a company.
- Does QuickBooks do payroll software?
Yes, QuickBooks enables business owners to simplify the payroll process.