Most owner of small businesses choose Gusto because they had a bad experience with payroll before. They call and ask about a delayed tax deposit, an employee who was underpaid or overpaid, or time they spent working out the state withholding for a new hire who works in a different state than them. Gusto fixes the mechanical part of the problem: payroll processes on time, taxes get filed, employees take care of their own paperwork.
The things that went wrong in the first place, however, are likely to continue being a problem. If a state tax account was never registered, an employee was initially entered into the wrong work location, or benefits deductions were tied to the wrong set of accounts, those mistakes will continue to happen every pay period until someone notices.
Gusto is a cloud-based payroll, HR and benefits platform that serves U.S. small and midsize businesses. It offers full-service payroll, which includes direct deposit, payroll tax filings and year-end W-2s and 1099s. The platform also supports employee onboarding, time and PTO tracking, and benefits administration, and it can connect to accounting systems like QuickBooks Online and Xero.
The Gusto problem I see most isn't in the payroll itself. It's in how payroll lands in the books. The integration posts a journal entry after every run, but if nobody mapped wages, employer taxes, and benefit deductions to the right accounts, the P&L puts everything into one payroll line and the balance sheet collects liabilities that never clear.
The other common gap is state registration. A business hires a remote employee in a new state, Gusto flags the missing tax account, and it sits unresolved for months. Map the accounts and register the states before the first run, not after.
Ankit Sagatani, MBA, B.Com · LinkedInGusto Pricing Plans
| Plan | Approx. Base Fee | Per-Employee Fee | What's Included |
|---|---|---|---|
| Simple | ~$49/month | ~$6/employee/month | Full-service payroll, W-2/1099, unlimited payroll runs, direct deposit, basic HR |
| Plus | ~$80/month | ~$12/employee/month | Everything in Simple + time tracking, PTO management, next-day direct deposit, team management tools |
| Premium | Custom quote | Custom | Everything in Plus + HR resource centre, priority support, compliance alerts, dedicated CS manager |
| Contractor Only | ~$6/contractor/month | No base fee | For businesses with only 1099 contractors and no W-2 employees |
IMPORTANT: The Contractor Only plan exists for businesses that pay 1099 contractors but have no W-2 employees, there is no base monthly fee, only a per-contractor charge. This is significantly cheaper than the full payroll plans for contractor-heavy businesses.
Key Features of Gusto
| Feature | Description |
|---|---|
| Full-Service Payroll | Calculates, files, and pays federal, state, and local payroll taxes automatically; files W-2s and 1099s at year-end |
| Unlimited Payroll Runs | Run payroll as often as needed, weekly, bi-weekly, semi-monthly, monthly, all plans |
| Multi-State Payroll | Pay employees across multiple US states; Gusto handles each state's payroll tax requirements |
| Direct Deposit | Employee pay deposited directly to bank accounts; next-day or 2-day delivery depending on plan |
| Employee Onboarding | Digital onboarding, employees self-complete I-9, W-4, direct deposit setup, and benefits enrolment |
| Time Tracking | Clock-in/out, PTO requests and approvals, overtime tracking, Plus plan and above |
| Benefits Administration | Health insurance, dental, vision, HSA/FSA, commuter benefits, 401k, Gusto is a licensed insurance broker |
| Workers' Comp | Pay-as-you-go workers' compensation insurance, eliminates large upfront audit-based policies |
| Accounting Integration | Native QuickBooks Online and Xero integration, payroll journal entries sync automatically post-run |
Gusto vs ADP vs QuickBooks Payroll
| Dimension | Gusto | ADP RUN | QuickBooks Payroll |
|---|---|---|---|
| Best For | Small-to-mid US businesses; Xero users | Established businesses needing compliance support | Businesses already in the QBO ecosystem |
| Starting Price | ~$49 to 80/month + per-employee fee | Custom, typically $60 to $250+/month + per-employee | ~$50 to 130/month + $6 to 11/employee |
| Interface | Clean, modern, self-service | Comprehensive but older UI | Embedded in QBO, seamless for QBO users |
| Xero Integration | Yes, native, widely used | Yes, via integration | Yes, via integration |
| QBO Integration | Yes, native | Yes | Native (same company) |
| HR Features | Moderate (Simple/Plus/Premium tiers) | Extensive, ADP has a full HR suite | Basic, payroll-focused |
| US Only? | Yes, US payroll only | US + some international capability | Yes, US payroll only |
Setting Up Gusto for Your Business
- Register your business details. Enter your EIN, federal deposit schedule, and state tax account numbers, and connect the bank account payroll will be funded from. Any missing state registration should be sorted out before the first run.
- Add employees and contractors. Enter pay rates, start dates, and work locations, then invite each person to finish their W-4, direct deposit, and other details online.
- Set the payroll schedule. Choose the pay frequency and first pay date, and check the funding deadline for direct deposit.
- Connect and map your accounting system. Link QuickBooks Online or Xero, and map wages, employer taxes, benefits, and deductions to the right accounts before any journal entries post.
- Add benefits and deductions. Set up health plans, retirement contributions, and any garnishments so they're taken out correctly from the first paycheck.
- Review and run the first payroll. Check hours, gross pay, deductions, and net pay for each employee, then approve. Afterward, confirm the journal entry posted where it should.
We moved our payroll to Gusto after repeated manual errors were creating extra work and we were spending too much time checking payroll and tax filings. Profitjets helped us set up the payroll correctly and manage the transition, and afterward payroll took far less time to review and we had much more confidence that our filings and employee records were up to date.
Approximately 45% of Profitjets payroll clients use Gusto, making it one of the most common payroll platforms among businesses supported by the firm.
Book a free consultation and we will run it and reconcile it for you.
FAQs
Does Gusto file payroll taxes automatically?
Yes, on its full-service plans. Gusto calculates and remits federal, state, and local payroll taxes, and it files quarterly returns and year-end forms, including W-2s and 1099s. It depends on accurate setup, though. Missing state registrations or wrong employee work locations can lead to filing problems and notices.
Can Gusto pay employees outside the US?
Gusto runs payroll for US employees. It offers payments to contractors in a number of other countries, but employees based abroad usually need an employer-of-record or international payroll provider instead.
Does Gusto work with Xero and QuickBooks?
Yes. Gusto connects with both and posts a payroll journal entry after each run. Map every wage, tax, benefit, and deduction item to the correct account during setup. Otherwise payroll costs and liabilities won't show properly in your reports.
What happens if I hire an employee in another state?
You'll generally need to register for payroll tax accounts in that state before paying the employee, including state withholding and unemployment insurance where they apply. Gusto can help with parts of the registration, but the business is responsible for making sure the accounts exist and the numbers are entered.
Is Gusto worth it for a business with only contractors?
It can be. Gusto has a contractor-focused option that handles payments and year-end 1099s without full payroll fees. Businesses paying several contractors often find it easier than tracking payments and collecting W-9s by hand.
Written by
Ankit Sagatani, MBA, B.Com
Ankit works with business owners across the US on industry-specific bookkeeping, from real estate to construction and retail. He writes about what each trade's books actually need. Connect on LinkedIn Connect on LinkedIn
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