Small businesses and startups can benefit greatly from using a payroll service, but doing a payroll comparison can get complicated. That’s why Nav put together a payroll service comparison for Gusto vs. ADP — to help you find the best payroll software for your business.

Learn why it’s essential to choose a payroll service that suits your business, what to look for when choosing a provider, what Gusto and ADP offer their customers, as well as pros and cons of each in this Nav article.

The Importance of Choosing the Right Payroll Service

Choosing the right payroll service matters in terms of keeping your top employees around and remaining compliant with the law. Your team expects to get paid on time and the correct amount, and any variation in this might cause them to start looking for a new job. Using a good payroll service will help you keep accurate records and reduce errors from the time of employee onboarding compared to running payroll manually.

Additionally, you’ll need to pay them the correct amount in payroll taxes and local taxes, and they need to be filed on time. Most payroll services file taxes with each payroll run automatically, so you don’t have to think about it. The calculations for things like taxes, pay rates, and garnishments are calculated and updated automatically when they change.

Contractor payments differ from employee paychecks and are also essential to get right. A good payroll software can make those calculations easy. 

Establishing Your Payroll Service Selection Criteria

It can be a challenge to figure out what you need to look for when choosing a small business payroll company. The option you choose depends largely on the payroll features your business needs — and Gusto has several different features than ADP. 

Before you choose a company to provide payday services, you’ll need to decide whether you want a full-service payroll solution or self-service payroll software. A full-service option handles all the payroll work for you while you have to run payroll each month with software. While most payroll software makes running payroll incredibly easy and should only take a few minutes, you might want to not have to think about it at all and trust a payroll service to handle it completely.

It’s a good idea to consider the integrations and features you need in a payroll company. For example, you may need human resources (HR) support like an HR resource center that’s integrated with the platform to help you with onboarding and ongoing employee management. Or you might need it to connect with your external accounting software, like QuickBooks or FreshBooks.

The ease of use of a software is also a large determinant of which payroll provider you choose. The platform should be intuitive and easy to use for both you and your staff. Employees should be able to view their own paystubs and documentation quickly. Additionally, think through how your employees prefer to get paid and whether online payroll is sufficient — some payroll providers only offer direct deposit and others will send out physical checks.

Last but not least, consider the cost. Any business solution should fit within your budget. Look into the base fee of each payroll service provider, as well as the cost for the number of employees you need to bring on. 

Gusto Payroll Services

Gusto is an award-winning payroll software with overall positive reviews. Because it’s a payroll software, you have to run payroll yourself, but the company claims it only takes a few clicks (or you can set it to run automatically). The company does have a well-rated mobile app, Gusto Wallet, but it was created for employees rather than employers. Let’s take a look at the details of whether or not Gusto would work for your payroll needs.

Features and benefits

Gusto is user friendly and has many features and perks that can ease the burden of running payroll. Here are the highlights:

• Unlimited payroll runs: You can pay your employees as many times as you need.
• Registration for state taxes: Get registered automatically with your state to file your payroll taxes.
• Tax filing: Your payroll taxes are filed automatically with each payroll run. 
• W-2s and 1099s: These tax documents are issued automatically to your employees.
• Time tracking: Access cloud-based tools to track hourly employees’ time worked. Hours, paid time off (PTO), and holidays are synced with payroll.
• HR support: Get tools to support employee benefits like health insurance, workers’ compensation, and retirement plans; hiring and onboarding; and managing talent.

Pricing and plans

The monthly fee you pay depends on which plan you choose and how many employees you have. At the time of writing, the base plan (called Simple) costs $40 per month plus $6 per employee. This plan includes single-state payroll, a self-service platform for your employees, basic onboarding tools, employee benefits, payroll reporting, and integrations with accounting, time tracking, and expense management software.

Gusto’s core plan (called Plus) contains everything in the base plan plus multi-state payroll, next-day direct deposit, upgraded HR tools, the ability to manage PTO, built-in time tracking, forecasting for workforce costs, and other team support tools. This plan costs $80 per month plus $12 per month per person at the time of writing.

Its Premium plan offers elite members an HR Resource Center, alerts about compliance changes, hands-on assistance with payroll migration from other platforms, and more. You have to speak with a Gusto sales representative to get pricing for the Premium plan. There is also a more affordable plan for businesses that only pay contractors.

Customer service options

Your customer support will depend on which plan you choose. With the base plan, you get basic support, which includes chat, email, or phone support with limited live support. The online help center is also always available. 

Upgrading to the Plus plan gives you full support with more hours of live support available. With the Plus plan, you can also pay an additional fee to get more direct customer support with the optional add-on for priority support and HR assistance (which at the time of writing costs $8 per person per month).

If you’re a Premium plan member, priority support is included and you get a dedicated customer success manager. 

ADP

The payroll solution for small businesses from ADP is called RUN Powered by ADP®. It’s made for a business with anywhere from one to 49 employees and is also a payroll software, so you have to run payroll yourself. You can run payroll from the web, over the phone, or with the mobile app. Reviews are mostly positive for ADP, and its ADP Run mobile app is especially well rated (4.7 stars out of 5 for Android and 4.9 out of 5 stars on iOS). 

Features and benefits

ADP offers many features that small businesses can utilize to make their payroll process smoother, like:

• Run payroll quickly: You can complete payroll in minutes using ADP’s platform.
• Integrations: You can integrate ADP with popular accounting, point of sale, HR, and other business software.
• Compliance tools: ADP will report new hires and create and deliver W-2s and 1099s to employees.
• Tax filing: Your payroll taxes get filed automatically with each payroll run, and ADP will pay any fines or penalties if the company makes a filing error.
• Payment options: Pay your employees using direct deposit or check.
• Marketing tools: Get help with Google Ads setup and management. 
• HR tools: Get an employee portal where new employees can fill out paperwork ahead of their first day.

Pricing and plans

Pricing for ADP isn’t as straightforward as Gusto. You have to fill out a questionnaire and provide your email address before you are able to get pricing for each plan.

The base plan (called Essential) includes all the tools mentioned above, as well as a debit card you can use as a prepaid account to accept direct deposits and other income. The next tier, the Enhanced plan, also offers secure check signing and assistance with managing state unemployment insurance. You also get a few more HR tools, like access to ZipRecruiter posting and background checks. The next tier is called Complete and offers upgraded HR tools, like an HR HelpDesk, a tool to create an employee handbook, forms and documents, and more. The final tier is called HR Pro, where you get even more HR capability, like applicant tracking and employee or employer training. You’ll also get more marketing tools and legal assistance with HR Pro.

For every plan, time tracking and benefits administration come as add-ons, like for retirement, workers’ comp, and health benefits. 

Customer service options

The support team you have access to depends on which plan you choose. All customers have access to the online support center, as well as phone support. You’ll get access to a dedicated HR support team with the Complete Plan, and the HR Pro plan has even more advanced HR support.

Pros and Cons

Gusto

ADP

Nav’s Verdict

Deciding between payroll platforms can be complicated for small business owners, but it really depends on your distinct business needs. If you’re looking for a well-known industry name with a proven track record, ADP might make sense for your business. ADP could work well for a business that’s planning to scale in the future since you can swap over to its large business option. 

On the other hand, if you’re looking for up-front pricing and more features built into its plans, Gusto might be a better fit. Gusto could be the right choice for a small business that’s not planning to expand into a larger business anytime soon and needs an affordable and easy-to-use option.
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