Gusto vs. Paychex: Gusto Wins

Gusto and Paychex both offer cloud-based payroll products that include payroll processing, benefits administration services and human resources support. How do they stack up against each other? Gusto is the clear winner when it comes to providing the fundamental features a typical small business needs at an affordable price.

Paychex stands out for taking benefits to the level of a professional employer organization, or PEO, which offers a more comprehensive level of HR and payroll services, while Gusto partners with brokers to offer employee benefits. However, small businesses with just a few employees generally won’t need the amount of HR expertise presented by Paychex PEO.

» MORE: NerdWallet's best payroll software for small businesses

Deciding factors

Gusto plans and features

Gusto offers three plans to select from depending on the needs of your business. Each tier provides additional features at an increased price.

Gusto Simple

At a monthly base cost of $40 plus $6 per month per person, the Simple plan is for businesses looking for standard payroll features with some employee benefit options:

• Full-service payroll with unlimited payroll runs, tax filings and direct deposits.

• Employment benefits such as self-onboarding, mobile app and lifetime access.

• Gusto-brokered medical, dental and vision insurance administration.

Gusto Plus

The Plus plan also has a monthly base cost of $80, and a monthly per-person cost of $12. In addition to the features in the Simple plan, this plan offers more advanced hiring and team management tools:

• Time tracking, PTO management and workforce reports.

• Hiring and new employee onboarding tools.

• Team management tools and performance reviews.

Gusto Premium

The Premium plan, which offers quote-based pricing, provides more advanced HR and compliance features along with all the features in the other plans. This includes the following:

• Unlimited access to certified HR experts.

• Priority phone support through a direct line.

• HR resource center.

Additional benefits and tools can be added to your plan. Some of these include 401(k) plans, device management, 529 college savings plans, commuter benefits, health savings accounts and flexible spending accounts. Some of these are free while others have fees that apply.

Paychex plans and features

Paychex offers four Flex plans for small to large businesses. Additional features become available as you move up each tier.

Flex Essentials

Flex Essentials is for businesses with nine or fewer employees. It's the only plan with pricing provided on the website. At a monthly base cost of $39 plus $5 per month per person, you’ll get the following features:

• Payroll services including direct deposit.

• Calculation, filing and payment of federal, state and local payroll taxes. (Additional fees may apply.)

• New hire reporting and compliance posters.

• HR library.

An employee assistance program is an optional service that can be added to this plan at no additional cost. However, fees do apply for workers’ compensation insurance and year-end W-2 and 1099 tax forms.

Flex Select

Flex Select is offered to businesses of any size at a custom price. Except for garnishment payment services and the employee assistance program, Flex Select offers the same features as Essentials plus these additional features:

• Dedicated payroll specialist.

• Additional employee pay options: paper checks, check signing and logo service.

• Online e-learning courses.

Flex Pro

Full-service payroll plus hiring and onboarding services are available through Flex Pro. Some specific features include the following:

• Garnishment payment services.

• State unemployment insurance services.

• Employee screening and onboarding, and a handbook builder tool.

Flex Enterprise

Flex Enterprise provides full-service payroll and enhanced HR features that include:

• Onboarding essentials, handbooks and employee training.

• Custom analytics.

• Help with workers’ comp and state unemployment insurance.

Prepaid pay cards, a financial wellness program and tax credit services are optional and can be added to any Flex plan at no additional cost.

Why Gusto is a better choice

The combination of key features and affordability was the deciding factor in selecting Gusto as the winner. Solid benefits administration and employee access were secondary considerations that also helped to edge Gusto ahead of Paychex.

Key features at an affordable price

The features that most small businesses need are available with the lowest-tier Gusto Simple plan. At a monthly cost of $40 plus $6 per person, you get unlimited payroll runs in all 50 states and can also pay employees working in multiple states. Tax filings, health benefits administration and lifetime employee access to an online portal are also provided at this level. While the lowest-tier Paychex Essentials plan is priced at $39 per month plus $5 per person, there are additional costs related to payroll tax administration, W-2 and 1099 forms, and workers’ compensation insurance.

Gusto pricing (with the exception of the Premium plan) is transparent with few extra fees or add-ons. The majority of Paychex's plan offer quote-based pricing.

Solid benefits administration

Gusto offers health benefits administration on all three plans at no additional cost. It’s not at the PEO level that Paychex has available, but Gusto has licensed brokers to help you find medical, dental and vision plans within your budget. It doesn’t offer health benefits in every state so you’ll want to confirm coverage availability. Your employees can enroll online with advisors ready to assist and answer questions about coverage, prescriptions, etc. Add-on options such as 401(k) plans, 529 college savings accounts and a number of pretax accounts also are offered.

Employee access for life

Even with Gusto's lowest-tier plan, employees have lifetime access to pay stubs and W-2s, as long as there's an email address associated with the account. Plus, a self-onboarding feature allows new employees to enter their own personal information and bank details. W-2 employees can download a free app called Gusto Wallet. It has financial tools to assist them and an emergency cash feature called Gusto Cashout to access money between paydays.

» MORE: NerdWallet’s best apps for small businesses

Why you might want Paychex instead

PEO-level HR and benefits expertise

If you want to outsource your entire HR system or improve your health insurance options, then Paychex PEO offers more than Gusto. HR professionals are assigned to your business to help you manage payroll processing, employee benefits, recruiting, training systems, workers’ compensation, state unemployment insurance, employee relations issues and a lot more. Plus, by banding together with other businesses under the Paychex PEO, you can typically improve your buying power when securing retirement plans, health insurance, dental and vision coverage for your employees.

Personalized support for setup and after

If you're looking for personalized help, Paychex may be a better option. You can get dedicated onboarding help and assistance in setting up payroll, within 48 hours in some cases. This includes a team that will help gather the necessary company and employee information and may even be able to get your data directly from your previous system. You’ll also be assigned a payroll specialist after onboarding for all plans except Essentials. And customer support is offered 24/7 by phone and chat, which is more availability than Gusto provides.