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Payroll providers are one of those things that small business owners, like myself, have a necessity for. Whether it’s for paying ourselves a salary, or automating taxes, it saves hundreds of hours that would’ve been spent on manually tracking and running. Chances are if you’re a business owner, you’ve been on the market for a payroll provider and furthermore, you probably have heard of Gusto and/or Paychex as two viable options. So let’s cover how these two services stack up against each other, the verdict on which one comes out ahead in both price and quality, and some absolute ‘must knows.’
What Is Gusto?
Definitely going to preamble this that their is absolutely some bias on my side towards Gusto, as it’s the service I use to run my own payroll to pay myself a salary plus takes care of my taxes and saves me the big bucks: but let’s get to what it is. Gusto is a payroll and HR platform that specifically specializes in small businesses thus serving over 200,000 of them, including my very own.
Payroll isn’t the only service Gusto offers, as it’s a whole human resource management software. Here’s more that it offers:
- Benefits. From 401ks, to HSAs, to FSAs and even to medical/dental/vision insurances, Gusto offers the whole package.
- Time tracking. Gusto offers basic time tracking plus tools like time off requests and even PTO policies.
- Onboarding and hiring tools. From offer letters, to checklists, Gusto offers beginning to end hiring resources.
What Is Paychex?
Similar to Gusto, Paychex is an HR and payroll platform for businesses. However, Paychex is more-so prioritized towards larger businesses, rather than small.
In fact, a number of part time jobs I held while growing up used Paychex to pay me…well…paychecks! Now because they tailor towards larger businesses, they have somewhat of an enterprise pricing model: you call in and get a customer quote based of your specific needs (not a fan as a small business owner). Now they do offer a bare-bones option called Paychex Flex which is slightly less user-friendly, but is however tailored more towards small businesses.
To see the full rundown of both Gusto vs Paychex, check out my comparison here!
Gusto: Pros and Cons
Pros
Pricing. Gusto’s pricing model is much more straightforward than Paychex’s. Gusto has several ‘tiers’, but the base price starts at $40 per month, with an extra $6 every employee added. So for my own ‘solopreneurship,’ it’s a total of $46 per month! Not to mention there is a $100 Visa gift card when you sign up through my link, so if you’re ready to pull the trigger, do so right here.
Features and quality. Rather than being a strictly payroll service, Gusto offers the whole nine yards. From benefits, to time tracking, to automated taxes, withholdings, statements, and more, you really do get the biggest bang for your buck.
Also, payroll is just one of those things many business owners would rather just not do manually because odds are, your time is probably best used elsewhere. So having a streamlined platform that runs your payroll at the click of a button is an enormous convenience and time saver.
Cons
Shortcomings or letdowns are just a part of any service or product and Gusto is no different. The most commonly recurring one is complaints about their customer support. There may be some valid concerns as with any customer service, but I’ve used it myself maybe a handful of times and haven’t had any issues yet.
Now given, I’ve used it maybe less than five times for reasons like switching my business to a different state and then around tax time with some questions, so definitely a limited amount. They also don’t offer 24/7 support and won’t answer on weekends, so evaluate what your business needs are before selecting.
Con number two is that it’s not free. Now, let’s be honest, none of these options would ever be ‘free’: they’re businesses, they make money somehow. And the so called ‘free’ alternative, would be to do all of the manual payroll yourself, but how ‘free’ would that really feel with all the hours put into it at that point.
The good news is, Gusto doesn’t start charging you until you run your first payroll. I know I, personally, have taken advantage of that little perk and held off on running a payroll until I was ready to begin to save some money.
Paychex: Pros and Cons
Pros
Customer service. This is where Paychex shines over Gusto. They have 24/7 customer service rather than just weekdays like Gusto. And especially for the larger businesses that they are targeting, odds are the larger businesses needs may align with the 24/7 customer service and always available support.
More features and functionality for big businesses. If you have dozens or even hundreds of employees, Paychex will make more sense to you rather than a smaller business targeted service like Gusto. Places like restaurants I worked at growing up that used Paychex, it made more sense.
Cons
Pricing. While the Paychex Flex option comes in at $44 per month, the downsides are it costs to run payroll, costs to run taxes, pay to file W-2s…basically if you want anything beyond just the base subscription, it’ll cost more. That’s the big downside: feature after feature will cost more and it can add up rather than just a simple cost like Gusto.
The ‘enterprise’ pricing model Paychex has can be very tough especially for small businesses like myself because there are so many add-ons, and extra fees, and paid features that it’s virtually impossible to get an accurate estimate until you’re already paying for it all.
Gusto vs Paychex: The Verdict?
Business owners are going to need a payroll provider. That’s a given. The largest difference between Gusto and Paychex is their target audiences: one gearing towards small businesses and the Paychex on the other spectrum towards larger. Between the dozens of hours I’ve spent researching the two, in my admittedly semi-biased opinion, Gusto takes the trophy.
The Verdict
While it does gear towards smaller businesses and Paychex would be a more streamlined option for larger restaurants or businesses, the features and quality and price points for Gusto puts it ahead as the top option.
So if you’re in the market for a payroll provider, I really do recommend Gusto as a tried and true option that I personally use myself. If you’re ready to sign up, do so here and make sure you get that $100 Visa gift card!
