Most Indian small businesses don’t struggle with sales. Their main challenges are salary calculation, PF/ESI, TDS, compliance, and payslip management.
When a business has more than two or three employees, Excel sheets often become unreliable.
One mistake in PF or tax deductions can lead to penalties.
compliance requirements, and budget, rather than relying on marketing claims.
Why Payroll Software Becomes Necessary (Not Optional)
Once your business employs more than two or three people, you risk errors if you manage salaries by hand.
- If you make mistakes with PF or ESI manually, you could face penalties.
- If you miscalculate TDS, authorities can send you official notices.
- If you issue incorrect salary slips, employees may lose trust in you.
- When you mismatch attendance and payroll, you create confusion.
Payroll software not only makes tasks easier, but also helps ensure compliance. You need it to stay compliant, ensure accuracy, and support growth.
Who Actually Needs Payroll Software?
| Business Size | Need Payroll Software? | Reason |
|---|---|---|
| 1 Employee | Not urgent | Manual handling possible |
| 2–5 Employees | Recommended | Deductions & payslips start |
| 5–20 Employees | Necessary | Compliance complexity increases |
| 20+ Employees | Critical | HR process automation required |
Payroll Software vs Excel: Reality Check
| Factor | Excel | Payroll Software |
|---|---|---|
| Salary calculation | Manual | Automatic |
| PF/ESI/TDS | Risky | System driven |
| Payslips | Manual creation | One-click |
| Leave integration | Difficult | Automated |
| Compliance | Error-prone | Structured |
Payroll Software vs Excel (Reality)
Excel Payroll
- Manual calculations
- Error-prone
- No compliance automation
Payroll Software
- Automatic salary + deductions
- PF/ESI/TDS ready
- Payslip generation
- Compliance tracking
Payroll Software Pricing in India (2026)
| Employees | Monthly Cost | Best Fit |
|---|---|---|
| 1–10 | ₹500–₹1,500 | Basic payroll tools |
| 10–50 | ₹1,500–₹5,000 | Payroll + HR tools |
| 50+ | ₹5,000+ | Advanced HR suite |
Best Payroll Software in India (2026)
Zoho Payroll
- Best for: Small businesses
- Pros: Affordable, simple, Zoho ecosystem integration
- Cons: Limited advanced HR tools
GreytHR
- Best for: Compliance-heavy payroll
- Pros: Strong PF/ESI/TDS automation
- Cons: UI feels older
Keka
- Best for: Growing SMEs
- Pros: Payroll + attendance + performance tools
- Cons: Higher pricing
RazorpayX Payroll
- Best for: Digital SMEs
- Pros: Banking + payroll integration
- Cons: Needs tech familiarity
What Features Matter Most
- PF, ESI, PT, TDS automation
- Salary structure setup
- Payslip generation
- Employee self-service portal
- Leave & attendance integration
- Reports for CA & compliance
- Bank transfer compatibility
Common Mistakes While Choosing Payroll Software
- Choosing cheapest tool without compliance support
- Ignoring per-employee pricing growth
- Not integrating attendance system
- Manual overrides instead of automation
Smart Implementation Tips
- Make sure you set up salary structures the right way from the beginning.
- Connect your attendance system so it works smoothly with your payroll process.
- Choose one person to be in charge and make sure they get proper training.
- Check your compliance settings every three months to stay up to date.
- Use your software’s reports to help with California filings.
Final Verdict
It helps you stay compliant, saves time, and reduces mistakes.
For most Indian small businesses:
Zoho Payroll is a good option if you want something simple, while GreytHR is strong on compliance. If your company is growing, you might want to look at Keka.
Joginder Poswal is an IT professional who became an advocate, aiming to make digital and legal topics easier to understand for Indians. With over 15 years of experience in IT infrastructure and a law degree, he focuses on cybersecurity, digital compliance, and fintech solutions. He shares practical advice on how technology and finance work together within Indian regulations.