Paychex vs. Gusto: Which Payroll Service Should You Choose in 2024?
Updated: August 11, 2024
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Written by
eleonorab
Whether you require basic payroll processing or a comprehensive solution encompassing all HR functions, finding a provider that balances features, cost, and user-friendliness is essential for ensuring tax compliance. The payroll landscape offers options for businesses of all sizes, from streamlined services for startups to powerful platforms for enterprises.
Paychex and Gusto consistently emerge as leading payroll service providers. These platforms have garnered significant popularity among small to medium-sized businesses.
This article provides an in-depth comparison of Paychex and Gusto. By examining their core capabilities, pricing, and user experience, this comparison will help you choose the right payroll service.
Our top picks for November 2024
Overview of Paychex
Key Features
Paychex offers a strong payroll solution tailored to meet the needs of businesses of any size. Key features include:- Automated Payroll Processing: Employees can be registered and payroll can be run through an online platform or on a mobile device.
- Tax Filing & Compliance: Automatically calculate and file payroll taxes with the appropriate agencies, reducing the risk of penalties for late or inaccurate payments
- Direct Deposit: Paychex Direct Deposit uses the Automated Clearing House (ACH) network to transfer funds from an employer’s bank account to employees’ accounts. The process requires two business days to complete.
- Employee Self-Service Portal: Employees can manage daily activities, view pay and tax information, and stay informed and engaged with business activities.
- Time & Attendance Tracking: Track time, manage schedules, and support compliance with the Paychex Flex app.
- Benefits Administration: Allows businesses to manage employee benefits like health insurance and 401(k) plans through an integrated platform that simplifies enrollment and administration.
- Customizable Reporting: Manage HR, payroll, and benefits with more than 160 standard reports and the ability to create custom reports.
- Mobile Access: Run your business from anywhere with the Paychex Mobile App. Manage payroll, HR, and more.
- Customer Support: Offers 24/7 phone support, an online chat, and email for non-urgent inquiries.
- Integration with Other Systems: The platform has a healthy integration ecosystem where over 100 providers are represented. It includes partners across many categories like Bank of America in banking and Clover in POS systems.
Pricing Structure
Paychex offers a flexible pricing structure tailored to accommodate the needs of various businesses. The pricing is generally customized based on the specific requirements of each company, but here’s a general overview: Paychex Go: The entry-level plan brings the core payroll features for smaller teams and costs $59/m +$4/m/user. It includes online payroll, tax filing for all levels of government, time tracking, integrations with popular accounting tools, and basic reports. Paychex Flex Select: Paychex Flex pricing is only available through a quote because things are customized based on your needs. This plan caters to larger brands and builds on top of the entry-level plan with a mobile app, an integrated system for HR management, $1,000 in digital marketing services, and a dedicated payroll expert. Paychex Flex Enterprise: The final plan is geared towards large enterprises and continues to build on top of the previous plans. It adds state unemployment insurance, workers comp reporting, a custom reports builder, the ability to garnish wages, employee onboarding, employee screening, and advanced HR administration. Consider that Paychex includes many services in its core offering that other providers might charge as add-ons.Overview of Gusto
Key Features
Gusto is a cloud-based application that can be accessed from any location as long as you have an internet connection. It also has a mobile application for employees with many useful features. Since it’s so popular, it has a large ecosystem of accountants that are familiar with the system. This makes generating important documentation even easier.- Automated Payroll Processing: Automate payroll for salaried or hourly employees with fixed hours by setting the pay date. You’ll receive a reminder a day before, allowing time for any necessary changes.
- Tax Filing and Compliance: Streamline federal, state, and local tax filing with Gusto. Each time you run payroll, Gusto handles tax payments, deductions, and form filings, ensuring compliance.
- Direct Deposit: Gusto offers both 2-day and next-day direct deposit schedules. For a 2-day schedule, this means you need to run payroll two days before you want your employees to see their paychecks in their accounts.
- Employee Self-Service Portal: Employees can manage benefits, submit hours, log expenses, check PTO, request time off, and access learning and financial planning tools.
- Time and Attendance Tracking: You can track, review, and approve your team's hours in Gusto and then run payroll as usual—it's all automatic.
- Benefits Administration: Enables businesses to manage health insurance, 401(k) plans, and other perks through an integrated platform that simplifies enrollment and management.
- Customizable Reporting: Generates a wide variety of reports, including pay stub history, time off balances, taxes prior to Gusto, and more. You can also create custom reports tailored to your business needs.
- Mobile Access: Manage your Gusto profile, view paychecks, and access Gusto Wallet features anytime, anywhere with their mobile app.
- Customer Support: Phone and live chat support available 8 AM-3 PM PST. Email support with quick response times.
- Integration with Other Systems: Gusto has a large collection of add-ons and integrations. Some of them are premium add-ons while others are free to access. In addition to popular integrations like QuickBooks and FreshBooks, there are niche integrations like allGeo.
Pricing Structure
Gusto has three core pricing plans and multiple add-ons. The plans vary based on features you have access to and how quickly some operations, like direct deposit, are carried out. Simple: The Simple plan is designed for small teams and costs $40/mo +$6/user/mo. It has basic payroll features such as payroll automation for single-state employers, benefits administration, and basic support. Plus: The Plus plan is designed for teams that are a bit larger and don’t have complex needs associated with payroll. It costs $80/mo +$12/user/mo. It builds on the Simple plan with Payroll automation for multi-state employers, benefits administration, team management tools, and full support; Add-ons available for priority support and expert HR services Premium (Custom Pricing): The Premium plan offers more resources to ensure you’re compliant with regulations and taxes. Payroll automation for multi-state employers, benefits administration, team management tools, expert HR guidance and resources, R&D tax credit discount and other waived fees, priority support, and a dedicated customer success manager.Key Similarities Between Paychex & Gusto
Cloud-Based Systems
Both Paychex and Gusto are cloud-based systems. This means that they are accessible online from any device with an internet connection, allowing businesses to manage payroll, HR, and benefits remotely. Their cloud-based nature also ensures that updates, compliance changes, and data storage are handled automatically, providing convenience and security for users.Core Payroll Features
Paychex and Gusto share several core Paryoll features essential for business owners:- Automated Payroll Processing: Both services automate the calculation and distribution of employee wages, handling salaries, hourly wages, overtime, and bonuses. This automation ensures that payroll runs are accurate and timely.
- Tax Filing & Compliance: Each service automatically calculates, withholds, and files federal, state, and local taxes. They ensure compliance with tax laws and regulations, helping businesses avoid penalties and fines.
- Direct Deposit: Both platforms support direct deposit, allowing employees to receive their wages directly into their bank accounts, which eliminates the need for paper checks and streamlines the payment process.
- Employee Self-Service Portal: They both offer employee self-service portals where employees can access pay stubs, tax documents, and manage their personal information. These portals also allow employees to handle benefits, track time off, and update personal details.
- Time & Attendance Tracking: Each platform integrates with time-tracking systems to automatically calculate work hours, manage schedules, and ensure accurate payroll processing, including handling overtime calculations.
Benefits Administration
Both Paychex and Gusto offer comprehensive benefits administration, allowing businesses to manage health insurance, 401(k) plans, and other employee perks. These platforms simplify the enrollment process and provide integrated tools to manage and track benefits, helping businesses offer competitive packages to attract and retain talent.HR Integration & Support
Both platforms integrate essential HR functions such as onboarding, performance management, and compliance support into their payroll platforms. This integration helps businesses manage their workforce more effectively, ensuring that HR processes are streamlined and that compliance with regulations is maintained.Compliance & Reporting Tools
They each offer strong compliance and reporting tools that help businesses stay on top of legal requirements. Paychex and Gusto provide regular updates on regulatory changes and generate detailed reports that make it easier for businesses to demonstrate compliance during audits or reviews.Scalability for Business Growth
Paychex and Gusto are both scalable solutions that can grow with your business. Whether you’re managing a small startup or a larger enterprise, both platforms offer features that can be customized to fit your specific needs, ensuring that your payroll and HR processes remain efficient as your company expands.Integration with Third-Party Tools
Both offer seamless integration with various third-party tools, such as accounting software, HR management systems, and other business applications. This connectivity allows businesses to streamline operations, reduce manual data entry, and ensure that all their systems work together efficiently.Our top picks for November 2024
9.8
9.8
All size businesses
Key Differences Between Paychex & Gusto
Pricing Structure
Gusto:- Simple Plan: $40/month + $6/user/month. Basic payroll, single-state automation, benefits administration, and basic support.
- Plus Plan: $80/month + $12/user/month. Adds multi-state payroll, team management, and full support. Optional add-ons available.
- Premium Plan: Custom pricing. Includes advanced features like expert HR guidance, priority support, and a dedicated customer success manager.
- Paychex Go: $59/month + $4/user/month. Core payroll features, tax filing, time tracking, and basic reports.
- Paychex Flex Select: Custom pricing. Adds HR management, mobile app, marketing services, and a dedicated payroll expert.
- Paychex Flex Enterprise: Custom pricing. Includes advanced HR administration, state unemployment insurance, and custom reports.
Benefits Administration
One key difference in benefits administration between Gusto and Paychex is how these services are structured and priced. Gusto includes health benefits administration, covering medical, dental, and vision insurance, in all its plans, even the most affordable one. However, additional features like 401(k) plans and pretax accounts require add-ons, and Gusto does not offer health benefits in every state. In contrast, Paychex Flex requires an additional cost to manage benefits administration, but it provides a more comprehensive, PEO-level service. This includes access to enhanced benefits such as more robust retirement plans, health insurance options, and specialized coverages like life and disability insurance. Paychex's ability to offer a fully outsourced benefits solution gives it an edge for businesses seeking corporate-level benefits for their employees.HR Tools
Gusto offers tiered HR support, with premium plans providing access to an HR resource center. Paychex includes an HR document library across all plans. Paychex distinguishes itself with Professional Employer Organization (PEO) services, offering comprehensive HR outsourcing, including benefits administration and expert support. This model often provides access to Fortune 500-level benefits at lower costs.Self-Service Employee Portal
Both Gusto and Paychex offer employee self-service portals, empowering workers to access pay stubs, W-2s, and personal information. However, distinct features differentiate the two platforms. Gusto Wallet introduces innovative financial tools, including paycheck splitting, tax refund estimates, and time tracking. Paychex Oasis, while providing essential self-service functions, leans towards a more traditional approach, offering access to benefits enrollment and educational resources. While both platforms enable employees to view and request time off, Gusto Wallet uniquely allows for time tracking. Additionally, Gusto's tax refund estimator and paycheck-splitting features provide added financial management tools for employees.Customer Support
Effective customer support is crucial for businesses using payroll services. Both platforms work well but have their own pros and cons. Availability:- Paychex: Phone (24/7), Live Chat (24/7), Email.
- Gusto: Phone (8 AM-3 PM PST), Live Chat (8 AM-3 PM PST), Email.
- Paychex: Dedicated account representatives.
- Paychex: Offers 24/7 phone and live chat support with dedicated account representatives for personalized service.
- Gusto: Provides weekday phone and chat support with response times of a few hours for email inquiries.
Ease of Use & Setup
Paychex: Setting up and using Paychex can be more intricate, particularly for small businesses with straightforward needs. The platform offers a wide range of features and customization options, which may require a longer setup process and more in-depth training to navigate effectively. However, once configured, Paychex provides a powerful and flexible solution, particularly for larger businesses or those with more complex HR and payroll requirements. The platform also offers dedicated setup assistance to help businesses get started. Gusto: Gusto is designed with simplicity in mind, making it easier to set up and use, especially for small to mid-sized businesses. The platform features a clean, user-friendly interface that simplifies the payroll process, from setup to daily use. Gusto’s straightforward design and intuitive navigation allow users to quickly get up to speed without extensive training. Additionally, Gusto offers guided onboarding and helpful resources, making the setup process smooth and efficient, even for those with limited payroll experience. In summary, Paychex offers comprehensive capabilities that might require more time to master, while Gusto prioritizes ease of use and quick setup, making it a better choice for smaller businesses or those seeking a more streamlined experience.Reporting and Analytics
Paychex: Paychex offers an extensive reporting and analytics suite designed for businesses with more complex needs. Users can generate a wide range of customizable reports, including payroll summaries, tax liabilities, and detailed workforce analytics. The platform also provides advanced options such as custom report builders and data integration from multiple sources. These analytics tools deliver in-depth insights into employee performance, payroll costs, and compliance, helping businesses make informed decisions. Gusto: Gusto takes a more straightforward approach to reporting and analytics, focusing on ease of use. The platform offers essential payroll and HR reports, like payroll summaries, tax filings, and benefits administration. While Gusto’s reporting capabilities are less customizable than Paychex, they are adequate for small to mid-sized businesses that need simple, clear data analysis. Gusto also provides basic analytics features to monitor payroll trends, track employee data, and stay compliant. Comparison: Paychex is ideal for businesses that require detailed, customizable reporting and advanced analytics. In contrast, Gusto’s simpler, user-friendly reporting tools are better suited for smaller businesses or those with less demanding needs.Final Verdict
Choosing between Paychex and Gusto depends on your business's size and specific needs. Paychex is a strong choice for larger businesses or those with more complex payroll and HR requirements. It offers extensive features, including advanced reporting, comprehensive benefits administration, and detailed HR integration. Paychex provides a flexible and scalable solution that can handle the demands of a growing or complex business. However, it comes with higher costs and a more involved setup process, which might be more than necessary for smaller companies. Gusto, on the other hand, is ideal for small to mid-sized businesses looking for a simple, user-friendly payroll solution. Gusto excels in ease of use, with a straightforward interface and affordable pricing. It covers all the essential payroll and HR functions most small businesses need, making it a practical choice for those who prioritize simplicity and cost-effectiveness. In conclusion, if your business has complex needs and can benefit from a more detailed and flexible solution, Paychex might be the better option. If you’re a smaller business seeking a cost-effective, easy-to-use payroll system, Gusto is likely the best fit.Liked this article?
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eleonorab
Eleonora is a seasoned expert in payroll and small business operations, with a rich background in the publishing industry. She focuses on complex payroll topics, making them accessible to business owners and professionals. Always eager to stay updated on the latest advancements in payroll software and services, she envisions a future where technology enhances everyday convenience—like teleporting past the morning commute.
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