The Best Payroll Software for Nonprofits for 2024: Compared

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Nonprofits need payroll software to handle multiple tasks, like paying staff from different grants and managing multi-state tax regulations. The best payroll software ensures compliance, manages employee benefits, and streamlines operations, letting nonprofits focus more on their mission and less on administrative tasks.

However, choosing the right payroll for nonprofits can be tough with many options on the market. That’s why I’ve reviewed the top picks to help you select the best software for your needs.

The Best Nonprofit Payroll Software 2024

Rippling - Streamlined Nonprofit Payroll Software

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ADP - Expansive Payroll and HR Features

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OnPay - Best-in-Class Integrations for Payroll

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Deel - Compliant Global Payroll Software

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QuickBooks - Popular Payroll and Accounting Software

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Patriot - Affordable and Intuitive Payroll

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Gusto - Fast and Easy Payroll Software

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Paychex - Scalable Payroll Software for Nonprofits

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Sage - In-Depth Advanced Payroll Reporting

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OysterHR - Excellent International Nonprofit Payroll

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The Best Payroll Software for Nonprofits

  1. Rippling: Best for Automated Workflows
  2. ADP: Best for Growing Nonprofits Payroll and HR
  3. OnPay: Best for Transparent Pricing
  4. Deel: Best for Global Teams
  5. QuickBooks: Best for Seamless Integrations
  6. Patriot: Best for Affordability
  7. Gusto: Best for Small Nonprofit Organizations
  8. Paychex: Best for Tax Compliance
  9. Sage: Best for Integrated Payroll and Core HR Tasks
  10. OysterHR: Best for Employee Management

The Best Payroll Software for Nonprofit Organizations Reviewed

I’ve tested each payroll software in detail, comparing their prices, features, and ease of use. For a comprehensive understanding of the testing process, you can find a full breakdown of Techopedia’s testing criteria further down in this article.

1. Rippling – Best for Automated Workflows

Rippling Logo

Free Trial N/A
Starting Price $8/user/month
Countries Covered 185+
Top Features Recruiting, Time and Attendance, Benefits Administration
Why We Picked It

Rippling is a strong choice for nonprofits that need automated workflows to help them focus more on their mission. You can choose from its pool of templates to improve your workflow and reporting processes.

Another fantastic feature that I appreciate about Rippling is its 600+ integrations, making it a suitable option when compared with competitors like OnPay and ADP.

Features
  • Recruiting: Customize your team’s hiring process with specific interview questions and tests. This works well for hiring W-2 employees, 1099 contractors, volunteers, and board members.
  • Time and Attendance: You can use time cards to easily track when employees and volunteers start and finish work, with alerts for overtime. It syncs with payroll to help with tax withholdings and FUTA exemptions.
  • Benefits Administration: Easily sign up employees for benefits. It also makes it easy to comply with state and federal laws and make custom benefit packages for nonprofits working in other countries.
Pricing

Rippling offers pricing starting at $8 per user per month, which varies based on selected modules and employee count. Plans include Core, Pro, Unlimited, and Enterprise, with exact payroll costs available upon contacting sales.

The Core plan handles global workforces with automated compliance and analytics. In contrast, the Unlimited plan supports unlimited workflows, advanced reports, and seamless integrations like webhooks, catering to smaller to medium-sized organizations seeking tailored HR solutions.

Who's It Best For
Rippling is ideal for small and medium-sized nonprofits aiming to simplify and automate payroll operations efficiently. It offers nonprofit-specific features that help you grow and track your impact.

Pros

  • User-friendly interface
  • Extensive app integrations
  • No-code workflow automation
  • Customizable pre-built reports

Cons

  • Limited mobile payroll functionality
  • Total cost can be pricey for small organizations
Rippling Payroll

 

2. ADP –  Best for Growing Nonprofits Payroll and HR

ADP Logo

Free Trial N/A
Starting Price Custom
Countries Covered 140+
Top Features HR Outsourcing, Compliance Support, Self-Service Portal
Why We Picked It

I chose ADP as the best payroll software for growing nonprofits because it offers several features that can help startup nonprofits grow easily. These features include a donations tracker, cash flow management, compliance management, workforce analytics, and dedicated expert services.

Compared to the regular help-desk service that many payroll systems on this list offer, ADP’s employee self-service helps employees resolve complaints quickly.

Features
  • HR Outsourcing: Focus on your mission while the software handles essential HR tasks for your W-2 employees with efficiency and expertise. This frees up budget to cover payroll expenses.
  • Compliance Support: With ADP SmartCompliance, you can simplify HCM compliance tasks like ACA reporting.
  • Self-Service Portal: You can access historical payroll data, book time off, and manage benefits easily through ADP’s user-friendly portal.
Pricing

ADP doesn’t publicly list its prices. Like most enterprise software, ADP customizes costs based on each company’s needs. You’ll need to contact ADP directly for a personalized quote.

However, here’s a full breakdown of the available plans:

  • Essential Payroll: Perfect for automating multi-jurisdiction payroll, tax filing, and onboarding, ideal for managing W-2 employees and volunteers.
  • Enhanced Payroll: Includes everything in Essential, plus job costing and ZipRecruiter job postings, which benefits nonprofits needing to manage costs and recruit efficiently.
  • Complete Payroll + HR: Provides HR helpdesk support, salary benchmarks, and additional HR tools essential for nonprofits looking to streamline HR processes and compliance.
  • HR Pro Payroll + HR: Offers advanced HR features such as applicant tracking and learning management, which is ideal for nonprofits needing comprehensive HR support and employee development.
Who's It Best For
ADP is ideal for nonprofits that need comprehensive payroll and HR management solutions to empower their growing team. Its AI-based systems proactively resolve employee issues while using the software, boosting workplace productivity.

Pros

  • Supports multiple pay rates and jurisdictions
  • Offers health insurance and retirement plans
  • Provides access to legal services and employee assistance
  • Automates payroll and tax filings

Cons

  • Non-transparent pricing
  • Additional costs for benefits administration
  • No document management storage feature

 

3. OnPay – Best for Transparent Pricing

OnPay Logo

Free Trial 30-day free trial
Starting Price $40/month + $6/user/month
Countries Covered US only
Top Features Multi-State Payroll, Customizable Reporting, PTO Management
Why We Picked It

I’ve ranked OnPay as one of the best payroll software for all kinds of nonprofits, either public or private, for two major reasons. First, its simple and transparent pricing is a great advantage to nonprofits, helping them make smart financial goals.

Second, its super-powerful features empower nonprofits to pay W-2 employees, 1099 contractors, volunteers, team members, and more. As a result, OnPay is good for organizations that prioritize transparency and affordability.

Features
  • Multi-State Payroll: OnPay allows you to handle payroll complexities effortlessly across multiple states (in the US), accommodating diverse workforce needs without hassle.
  • PTO Management: You can easily manage and track employee vacation and leave with OnPay’s integrated PTO management system.
  • Customizable Reporting: Generate detailed payroll and benefits reports tailored to your nonprofit’s needs, facilitating financial transparency and strategic decision-making.
Pricing

OnPay charges a simple $40 base fee each month plus $6 for every employee, covering W-2s, 1099s, and year-end filings, unlimited pay runs and schedules, and federal, state, and local tax filings.

OnPay’s pricing is straightforward, ensuring you know what to expect as your team grows or shrinks. You also don’t have to worry about implementation or integration fees as expert support is available by phone, chat, and email.

Who's It Best For
OnPay is best for nonprofits seeking transparent and affordable payroll solutions with a straightforward pricing model. It’s a great choice for small and medium-sized nonprofits in the US.

Pros

  • Transparent and straightforward pricing
  • Customized payroll solutions
  • Reliable tax reporting
  • Seamless migration and setup process

Cons

  • Limited international support
  • Mobile app is iOS only
  • Limited third-party integrations

 

4. Deel – Best for Global Teams

Deel Logo

Free Trial N/A
Starting Price $29 per employee/month for payroll
Countries Covered 150+
Top Features Contractor Management, Employer of Record, Equipment Management
Why We Picked It

I picked Deel as the best for global teams because it helps companies hire and manage employees worldwide. As a popularly regarded global people platform, Deel scales with businesses of any size and type.

Unlike solutions like Gusto and QuickBooks, Deel offers services like Employer of Record (EOR), visa support, and background checks to help businesses expand and hire internationally effortlessly.

Features
  • EOR: Hiring employees from all over the globe is easy with Deel’s Employer of Record services. The software handles taxes and compliance for W-2 employees and 1099 contractors, including state and federal taxes, and allows you to provide competitive benefits packages tailored to each country.
  • Equipment Management: Effortlessly manage work-from-home equipment for your global team. You can track, ship, and manage devices like laptops, monitors, and headphones across borders, ensuring a smooth setup for remote work.
  • Contractor Management: Onboard, manage, and pay international contractors, automate HR tasks, reduce misclassification risks, and ensure compliant, on-time payments.
    Pricing

    Here’s a list of Deel’s various payroll plans:

    Plan Deel Payroll Deel US Payroll Deel US PEO
    1 month $29/user/month $19/user/month $79/user/month
    • Deel Payroll: Deel Payroll is designed for international payroll management. It offers comprehensive services including payroll processing, tax payments, and employee benefits administration. It also provides 24/7 support, customizable reporting, and a single point of contact for each country.
    • Deel US Payroll: This focuses on streamlined payroll processing within the United States. It offers instant tax and wage calculations, support for all 50 states, and automated filing for various tax forms.
    • Deel US PEO: This provides an HR solution for businesses operating across all 50 US states. It covers compliance, payroll, taxes, and benefits administration, offering Fortune 500-level benefits at competitive prices.
    Who's It Best For
    Deel is great for businesses with workers in different countries. It makes it possible to pay employees and contractors in various currencies and set up workers in new places, reducing the workloads of the internal HR team.

    Pros

    • Free HR tools for nonprofits with under 200 employees
    • Accessible immigration
    • Dedicated EOR service in over 150 countries
    • Advanced reporting for hiring, headcount, and payroll

    Cons

    • No built-in time-tracking tools
    • High cost with per-worker pricing

     

    5. QuickBooks – Best for Seamless Integrations

    QuickBooks Logo

    Free Trial 30-day free trial
    Starting Price $75/month +$6/employee/month (70% off for first 3 months)
    Countries Covered 170+
    Top Features Tax Penalty Protection, QuickBooks Workforce, Tax Filing
    Why We Picked It

    I chose QuickBooks as the best payroll for seamless integration with several tools like QuickBooks Online accounting software, TSheets for time tracking and Expensify for expenses.

    Although ADP offers additional talent management tools and OnPay provides a single plan with PTO management, QuickBooks stands out for its competitive price offers, user-friendly approach, and strong compliance features.

    Features
    • Tax Penalty Protection: QuickBooks Payroll provides unmatched tax penalty protection, covering up to $25,000 in penalties annually. This lets you handle IRS issues with ease.
    • QuickBooks Workforce: QuickBooks Workforce makes payroll setup simple and lets your team easily manage pay details and track time. Employees can check pay stubs, W-2s, and time-off balances whenever they need.
    • Tax Filing: Easily file your 1099 forms online with the 1099 E-File feature. This is available in all pricing plans.
    Pricing

    Here’s an overview of QuickBooks payroll pricing:

    Plan Payroll Core + Simple Start Payroll Core + Essentials Payroll Premium + Plus
    1 month $75/month +$6/employee/month $105/month + $6/employee/month $170/month + $8/employee/month
    • Payroll Core + Simple Start: This entry-level plan combines essential payroll services with basic accounting tools, offering automated tax filing, next-day direct deposit, income and expense tracking, and invoice generation to help small nonprofits manage their finances and employee payments efficiently.
    • Payroll Core + Essentials: Building on the Simple Start plan, this option adds bill management, time tracking, and multi-user support, along with enhanced reporting and multiple sales channel connections.
    • Payroll Premium + Plus: The most feature-rich plan includes advanced payroll options like same-day direct deposit, comprehensive HR support, project and inventory tracking, and unlimited sales channel connections, catering to larger nonprofits with complex payroll, HR, and financial management needs.

    QuickBooks gives you a 70% discount on the base price for the first three months.

    Who's It Best For

    QuickBooks is ideal for businesses and nonprofits seeking a payroll solution that integrates smoothly with various financial and management tools. Its easy-to-use design and automation make managing finances simple and fast.

    Pros

    • Easy-to-use payroll dashboard
    • Integrates with QuickBooks Online
    • Next-day direct deposits
    • Tax penalty protection

    Cons

    • High monthly base price
    • Limited HR features
    • Time tracking available for higher-tier plans
    QuickBooks Payroll

     

    6. Patriot Software – Best for Affordability

    Patriot Logo

    Free Trial First 6 months free
    Starting Price $17/month + $4 per employee (or 1099 contractor)
    Countries Covered US only
    Top Features Customizable Payroll, Time and Attendance Integration, Multi-Location Support
    Why We Picked It

    Patriot made it to the list because of its super affordability, making it an excellent option for budget-minded nonprofits that have internal HR and payroll expertise. It offers essential features like customizable payroll, time-off tracking, tax services, an employee self-service portal, and department-specific cost reporting.

    To prove its affordability, Patriot offers users 6 months of free usage, and its add-ons, like time tracking and HR, come at a reasonable cost.

    Features
    • Time and Attendance Integration: The system integrates with time and attendance software, allowing for effortless import of employee hours directly into the payroll system, streamlining the overall process.
    • Customizable Payroll Options: Patriot offers customizable hours, money, and deductions options, along with time-off accruals, giving employers flexibility in managing various aspects of employee compensation.
    • Multi-Location Support: Patriot supports multiple pay rates, departments, and locations, making it suitable for businesses with complex organizational structures or diverse employee types.
    Pricing

    Patriot offers affordable plans catering to small businesses on a budget:

    Plan Basic Payroll Full-Service Payroll
    1 month $17/month + $4 per employee (or 1099 contractor) $37/month + $4 per employee (or 1099 contractor)
    • Basic Plan: This entry-level option provides essential payroll processing features, including unlimited payrolls, multiple pay rates, customizable deductions, and comprehensive reporting.
    • Full-Service Plan: Building on the Basic Plan, this comprehensive option adds complete tax filing and deposit services for federal, state, and local taxes, along with year-end tax filings and a tax filing accuracy guarantee.

    Patriot’s basic plan is great if you prefer handling your taxes yourself. Their full-service plan is also very budget-friendly, especially compared to OnPay and Gusto’s cheapest plan (which starts at $40 per month plus $6 per user per month).

    Who's It Best For
    Patriot is best suited for budget-conscious nonprofits that are based in the US and have in-house payroll experts and HR but require more flexibility with payroll software. Patriot provides organizations with the flexibility to handle their own taxes and the option to choose full-service tax management.

    Pros

    • Affordable Pricing
    • Easy to Use Interface
    • Free Trial Available
    • Guaranteed Tax Accuracy

    Cons

    • No Benefits Tracking
    • Limited Mobile Access
    • No International Pay
    • Extra State Filing Fee
    Patriot Payroll

     

    7. Gusto – Best for Small Nonprofit Organizations

    Gusto Logo

    Free Trial 3 months free trial
    Starting Price $40/month + $6/user/month
    Countries Covered 120+
    Top Features Global Hiring and Payroll, Performance Management, State Tax Registration
    Why We Picked It

    I found Gusto to be the ideal payroll software for small nonprofits who need a comprehensive and scalable payroll solution based on its easy usage, cost-effectiveness, and employee management tools. It also offers automated payroll processing across all 50 states, handles tax filing, and includes additional HR tools.

    Gusto’s intuitiveness and combination of essential tools in one plan make it a preferable option when compared with competitors like Rippling with a multi-module structure

    Features
    • Global Hiring and Payroll: Through its Gusto Global service, powered by Remote, the platform enables businesses to hire and pay employees worldwide while managing local tax compliance and regulations.
    • Performance Management: The software provides tools for collecting feedback, writing reviews, and rating employee performance, helping businesses develop and maintain high-performing teams regardless of location.
    • State Tax Registration: Gusto helps businesses register for payroll taxes in all 50 states, automatically syncing correct tax rates with payroll to ensure compliance across multiple locations.
    Pricing

    Gusto has three main pricing plans listed below:

    Plan Simple Plus Premium
    1 month $40/month + $6/person $60/month + $9/person Quote-based
    • Simple Plan: This offers streamlined automatic payroll, benefits integration, employee self-service, basic hiring tools, and more—all essential for single-state operations.
    • Plus Plan: This builds on the Simple plan with advanced features like multi-state payroll, comprehensive HR tools, time tracking, and performance reviews, all ideal for growing businesses.

    While Gusto doesn’t offer a free trial, its pricing is competitive compared to other options. Patriot’s higher-tier plan costs $37 per month plus $4 per user per month, but it lacks features like benefits administration, auto-payroll, and hiring/onboarding tools included in Gusto’s plans.

    Who's It Best For
    Gusto is particularly ideal for small nonprofits that are growing, operating across multiple states, or looking to streamline their payroll and HR processes with features like automated tax filing, employee self-service, and performance management tools.

    Pros

    • User-friendly interface
    • Automated tax filing
    • Dedicated HR support
    • Contractor payroll

    Cons

    • Pricing scales with employees
    • Limited reporting customization
    • Slow customer support response
    Gusto Payroll

     

    8. Paychex – Best for Tax Compliance

    Paychex Logo

    Free Trial N/A
    Starting Price $39/month + $5 per employee
    Countries Covered 140+
    Top Features Employee Benefits, Automated Tax Management, Donation Tracking
    Why We Picked It

    Paychex is a top choice for nonprofits needing frequent alerts and detailed reports to ensure tax compliance. I appreciate its support for various payment methods and tasks like donation tracking and tax filing, making it ideal for managing finances efficiently while meeting regulatory requirements.

    Although it has a higher learning curve than a payroll system like Gusto, it’s more customizable.

    Features
    • Automated Tax Management: Paychex simplifies payroll and tax processes, eliminating manual calculations and offering flexible payment methods such as direct deposit and prepaid cards.
    • Donation Tracking: The solution facilitates efficient tracking of both monetary and in-kind contributions, enabling accurate financial reporting and donor receipt generation.
    • Employee Benefits: Nonprofits can offer health benefits and retirement plans through Paychex, with the option to integrate seamless benefits administration.
    Pricing

    Paychex’s pricing is only available on demand. There are, however, three main payroll payment plans:

    • Paychex Flex Essentials: This is designed for small nonprofits with fewer than 20 employees. It offers full-service payroll processing, tax administration, an employee self-service app, and HR library access. The plan costs $39 per month plus $5 per employee.
    • Paychex Flex Select: This includes all features of Paychex Flex Essentials, plus a learning management system, hiring tools, and integration with accounting software.
    • Paychex Flex Pro: This expands on these with additional HR tools, such as an employee handbook template, and payroll features, such as wage garnishment.

    For the higher tier plans (Select and Pro), interested prospects have to contact Paychex sales team for a custom quote due to its highly customizable packages and add-ons.

    Who's It Best For
    Paychex is great for nonprofits that need to keep a close eye on tax compliance. Its comprehensive payroll and HR tools, including advanced reporting and integrations, help nonprofits manage tax responsibilities as they expand and encounter more complex regulations.

    Pros

    • High-level customization
    • Easy attendance and time tracking
    • Supports multiple third-party integrations

    Cons

    • Pricing is not transparent for top-tier plans
    • Additional fees for essential tools

     

    9. Sage – Best for Integrated Payroll and Core HR Tasks

    Sage Logo

    Free Trial 60-day free trial
    Starting Price $12.80/month + $2.56/employee/month
    Countries Covered 200+
    Top Features Automated Tax Management, Leave Management, Shift Scheduling
    Why We Picked It

    Sage is one of the best payroll software for nonprofits because of its advanced features, which support the integration of payroll and HR tasks – all in one place.

    It offers streamlined payroll management alongside core HR capabilities like leave management, payroll expenses tracking, and shift scheduling, allowing businesses to handle both payroll and basic HR tasks from a single platform.

    Features
    • Automated Tax Management: The software automates PAYE, national insurance, and pension calculations, ensuring compliance with tax regulations.
    • Leave Management: Sage enables easy tracking and approval of employee leave, ensuring accurate payslips and up-to-date records. This feature helps businesses maintain clear visibility of staff availability and ensures that time off is correctly reflected in payroll calculations.
    • Shift Scheduling: Sage offers tools to efficiently manage team resources and accurately reflect overtime in payroll calculations. This functionality helps businesses optimize staffing levels, manage labor costs, and ensure that employees are paid correctly for their time worked, including any overtime.
    Pricing

    Sage offers three major payroll plans:

    Plan Payroll Essential Payroll Standard Payroll Premium
    One month $12.80/month + $2.56/employee/month $25.60/month + $5.12/employee/month $38.40/month + $7.68/employee/month
    • Payroll Essentials: This entry-level plan offers basic payroll processing and essential HR functions, including employee self-service for payslips and P60s, HMRC real-time information, and holiday tracking for up to 5 employees.
    • Payroll Standard: Building on the Essentials plan, this option adds features like a personalized onboarding portal, company org chart creation, automated approval workflows, and mobile expense submission and approval.
    • Payroll Premium: The most comprehensive plan includes advanced HR features such as online timesheet and overtime management, project-based time logging, detailed timesheet reporting, and simplified shift scheduling capabilities.
    Who's It Best For
    Sage is best suited for small- to medium-sized nonprofits that need a unified platform that combines efficient payroll processing with fundamental HR functionalities. This functionality helps nonprofits manage employee compensation, time off, scheduling, and basic HR tasks within a single, user-friendly system.

    Pros

    • Budget-friendly
    • Automated pensions and taxes
    • Includes timesheets and scheduling

    Cons

    • Fewer integrations compared to other providers
    • Time tracking is limited to Payroll Premium
    • Non-intuitive interface and payroll process
    Sage Payroll

     

    10. OysterHR – Best for Employee Management

    Oyster Logo

    Free Trial 30-day free trial
    Starting Price $29 per contractor/month
    Countries Covered 180+
    Top Features Automated Payroll Management, Compliance, Employer of Record
    Why We Picked It

    I chose OysterHR as the best for employee management due to its comprehensive suite of tools designed for handling global workforces. It offers robust payroll and hiring capabilities, broader country coverage compared to competitors like Deel (180+ vs 150+ countries), and a cost-effective self-serve platform for efficiently managing international payroll and compliance needs.

    Features
    • Automated Payroll Management: The system supports payroll processing in 140+ currencies, automating tax deductions and compliance requirements across multiple countries.
    • Employer of Record (EOR) Services: Oyster’s EOR service allows small nonprofits to expand globally swiftly without setting up local offices. Oyster legally employs staff on your behalf, handling legal and administrative complexities while ensuring compliance.
    • Compliance and Risk Mitigation: With built-in compliance measures, localized knowledge, and in-house legal expertise, Oyster ensures adherence to local employment laws in each country. The platform offers extensive insurance coverage and privacy compliance, including GDPR and SOC II, to protect businesses from potential legal risks.
    Pricing

    OysterHR offers four transparent pricing plans:

    Plan Contractor Global Payroll Employer of Record Scale
    One month $29/contractor/month $50/employee/month $599/employee/month billed annually Quote-based
    • Contractor Package: For businesses focusing solely on managing international contractor hires. This plan favors quick onboarding, compliant contract generation based on local labor laws, and invoice payments in over 140 currencies.
    • EOR Plan: Serves as their primary EOR solution for global payroll needs across over 130+ countries.
    • Scale Plan: This is designed for companies hiring 5 or more full-time employees; Oyster provides custom pricing with additional benefits such as reduced annual rates, the ability to reuse seats at no extra cost, speedy bulk onboarding, and access to dedicated support managers.
    Who's It Best For
    Oyster is suitable for any business hiring globally or planning to expand internationally without the hassle of setting up foreign entities. It’s particularly useful for smaller nonprofits that want to hire and manage global talent easily, handling everything from payroll to legal compliance across multiple countries.

    Pros

    • Automated workflows
    • Supports cross-border payment
    • Integrated cost calculator

    Cons

    • No PEO options
    • Limited reporting capabilities
    • Expensive for small businesses
    OysterHR Payroll

     

    The Best Payroll Software for Nonprofits 2024 – Compared

    Here’s an overview of the ten software reviewed.

    Payroll Software Best For Free Trial Starting Price Countries Covered Top Features Time Tracking
    Rippling Automated Workflows No $8/user/month 185+ Recruiting, Time and Attendance, Benefits Administration Yes
    ADP Growing Nonprofits Payroll and HR No Custom 140+ HR Outsourcing, Compliance Support, Self-Service Portal Yes
    OnPay Transparent Pricing 30-day free trial $40/month + $6/person US only Multi-State Payroll, Customizable Reporting, PTO Management No
    Deel Global Teams No $29/employee/month 150+ Contractor Management, Employer of Record, Equipment Management No
    QuickBooks Seamless Integrations 30-day free trial $75/month +$6/employee/month (70% off for first 3 months) 170+ Tax Penalty Protection, QuickBooks Workforce, Tax Filing Yes
    Patriot Affordability Yes, 6 months free $17/month + $4 per employee (or 1099 contractor) US only Customizable Payroll, Time and Attendance Integration, Multi-Location Support Yes
    Gusto Small Nonprofit Organizations 3 months free trial $40/month + $6/person 120+ Global Hiring and Payroll, Performance Management, State Tax Registration Yes
    Paychex Tax Compliance No $39/month + $5 per employee 140+ Employee Benefits, Automated Tax Management, Donation Tracking Yes
    Sage Integrated Payroll and Core HR Tasks 60-day free trial $12.80/month + $2.56/employee/month 200+ Automated Tax Management, Leave Management, Shift Scheduling Yes
    OysterHR Employee Management 30-day free trial $29 per contractor/month 180+ Automated Payroll Management, Compliance, Employer of Record Yes
    Methodology

    How We Review And Test Payroll Products

    To provide our readers with accurate and well-informed recommendations, we test the most popular payroll products on the market to find the best options for you. Our methodology consists of the following criteria:

    • Features: We examine the features to determine what capabilities are offered, how useful those capabilities will be for the user, and how the variety of features compare to competitor software.
    • Scalability: We look at how many users can be added to a platform, and how easy it is to do so, to ensure companies can bring more employees on payroll with ease as they scale their operations.
    • Error Handling: Errors in payroll can be disastrous for a company, so it’s critical payroll software safeguards against them. We evaluate how quickly each software can adjust and fix errors to ensure there are no interruptions in payroll operations.
    • Price and Value for Money: We look at the features, integrations, customer service, and extras to determine if the price matches the value it provides. We score a product higher if it offers a free trial, and if it is transparent about its pricing plans.
    • Integrations: We evaluate the integrations of each piece of software to determine how well it fits in with other key pieces in a business’s software stack, and whether its functionality can be expanded as required.
    • User Experience: We get hands-on with each product to put ourselves in the shoes of a new user, testing each platform to gain understanding if the platform is easy to use or requires onboarding.
    • Security: We dig into the security policies of each company, interrogating the safeguards they have in place to ensure the software protects user data properly.
    • Compliance: We evaluate payroll software based on whether it offers local compliance when it comes to accounting, taxes, documentation, and more.

    How Does Payroll for Nonprofits Work?

    Nonprofit payroll operations share many similarities with those of for-profit businesses, but they also require specific considerations. Nonprofits must correctly classify workers as employees or independent contractors and determine appropriate wages within budget constraints and available funding. 

    Key payroll responsibilities include withholding and remitting payroll taxes such as state and federal income taxes, Social Security, Medicare (Federal Insurance Contributions Act (FICA) taxes), and unemployment taxes (FUTA and SUTA). While most nonprofits are tax-exempt organizations, they still must pay federal income taxes on any unrelated business income.

    Complying with relevant federal and state regulations, including the Fair Labor Standards Act (FLSA), is also essential for nonprofits. Regularly filing payroll tax reports and issuing W-2 forms to employees are also necessary tasks that must be completed accurately and on time.

    How to Pay Nonprofit Workers

    When paying workers at a nonprofit organization, it’s important to follow specific guidelines to ensure federal and state law compliance. Here are some key points to keep in mind:

    • Minimum Wage for Nonprofits: The federal minimum wage is $7.25 per hour, but some states have higher minimum wages. Nonprofits can pay employees with disabilities a lower rate with a certificate from the Department of Labor, and employees under 20 can be paid $4.25 per hour for the first 90 days of employment.
    • Independent Contractors Working for Nonprofits: Nonprofits don’t have to withhold or pay payroll taxes on payments made to independent contractors. Independent contractors must complete a Form W-9 and will receive a Form 1099 at the end of the year for their earnings. However, nonprofits should be cautious when classifying workers as independent contractors, as the IRS may reclassify them as employees if certain criteria are not met.
    • Volunteer Compensation: Volunteers donate their services without contemplation of pay. The amount must be nominal (insignificant and irregular) if a volunteer is paid. Payments over 20% of a full-time employee’s earnings for the same services are not considered nominal. Paying volunteers a regular or significant amount may result in them being classified as employees.
    • Board Members of Nonprofit Organizations: When it comes to paying board members in nonprofits, the IRS doesn’t set a specific amount but requires payments to be fair. Compensation for board members, officers, and key employees should be decided by someone impartial. To ensure fairness, get approval from a qualified group, compare with similar roles, and document how decisions are made.

    Labor Laws for Nonprofits

    Nonprofits are typically exempt from certain labor laws governing volunteers, such as overtime rules and paid time off policies. However, it is important to understand and adhere to these regulations when establishing employee HR policies.

    Here are some key labor laws to consider:

    Labor Law Posters

    Nonprofits with at least one employee must display labor law posters in the workplace, just like for-profit organizations. These posters, required by the Department of Labor (DOL), include the Federal Minimum Wage poster and, if federal funds are received, the Equal Employment Opportunity poster. Displaying these ensures employees know their rights and helps the organization comply with labor laws.

    Paid Time Off (PTO)

    No federal laws require nonprofits to provide paid time off (PTO) to employees. PTO policies, including vacation, holidays, and sick leave, are generally set by the nonprofit and must comply with state laws where applicable.

    Overtime

    Nonprofits must follow the rules for overtime pay set by the Fair Labor Standards Act (FLSA). This means that employees who work more than 40 hours a week must be paid extra, at least one-and-a-half times their usual pay.

    Meals and Breaks

    The law doesn’t require lunch breaks; breaks shorter than 20 minutes must be paid. Employees usually get a 30-minute break if they work five or six hours straight, but they must be free from duties during this time.

    FMLA Leave

    Nonprofits with 50 or more employees must provide up to 12 weeks of unpaid, job-protected leave under the Family and Medical Leave Act (FMLA). This leave can be used for reasons like maternity or caring for a sick family member. Only eligible employees who have worked at least 12 months or 1,250 hours in the past year can take FMLA leave, ensuring they can attend to personal or family health needs without losing their jobs.

    Recordkeeping

    Proper record-keeping is essential for nonprofits to ensure transparency, comply with laws, and manage finances effectively. This includes maintaining detailed records for each employee, including their name, job details, daily hours worked, and earnings. These records help nonprofits track financial transactions, donations, governance activities, employment taxes, and asset management.

    What’s the Best Free Nonprofit Payroll Software?

    Although not completely free, I find that Gusto is the best free nonprofit payroll software because of its affordability, free payroll setup, global coverage, and nonprofit features. Depending on the promotional offer, Gusto offers discounts such as 25% off for the first 3 months. Also, I found that the interface is easy to learn, which makes it easy for nonprofits without a dedicated payroll manager to understand the system.

    While using free payroll software may be cost-saving for nonprofits, the limitations that come with it can disrupt the smooth running of an organization. For instance, completely free payroll software like Payroll4Free can only handle limited payroll processes and won’t automate tax filing as with freemium tools like Gusto.

    How to Choose the Best Payroll Software

    When choosing your payroll platform, it’s essential to consider several key factors:

    BudgetEase of UseCompatibilityKey FeaturesScalabilityCustomer Support

    Determine your monthly payroll software budget (e.g., $100, $500, or $1,000) and prioritize platforms within this range. Decide which features are essential and which are nice-to-have extras that can be included in your budget.

    Test the software’s user-friendliness in a demo to ensure your team can use it effectively. Look for beginner-friendly software that is easy to set up and can run payroll with just a few clicks. This saves on training costs and reduces the risk of payroll errors.

    Check if the platform integrates with other software your organization uses, such as accounting, time tracking, and hiring tools. Some providers may limit certain integrations to higher-tier plans, so it’s important to verify compatibility.

    Prioritize essential features such as auto-payroll, tax filing, expense and time off management, and benefits administration. Consider tools that support compliance, time tracking, and hiring processes.

    Choose a platform that can grow with your organization. Look for options that offer multiple plans and add-ons to accommodate changes in your workforce. For instance, one-click time tracking can streamline timesheet approvals and reduce time theft as your team expands.

    Evaluate the provider’s customer support options, including availability via chat, email, and phone. Read user reviews to gauge the quality and responsiveness of their support teams.

    FAQs

    Do nonprofits have to pay payroll taxes?

    How does nonprofit payroll work?

    What is the easiest payroll software to use?

    Does Gusto have nonprofit pricing?

    Does ADP work with nonprofits?

    What percentage of a nonprofit budget should be payroll?

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    John Iwuozor
    Tech Writer
    John Iwuozor
    Tech Writer

    John Iwuozor is a writer at Techopedia with over three years of experience and expertise covering topics on HR, business software, IT security, and finance for small and medium-sized businesses. His work has been featured on reputable platforms like Forbes Advisor and EsecurityPlanet. Leveraging his background in mathematics and data analysis, he specializes in delivering original and high-quality content with a keen eye for detail and accuracy.