Managing payroll is one of the most important yet most time-consuming aspects of your business. You need to make sure you’re staying compliant with all local, state and federal tax laws, and you also need to be sure you’re accounting for any other deductions your employees may want (or be required) to take. Most businesses use a payroll provider or payroll software to help them manage this all-important business function, but with so many options out there, it’s hard to know which one is the best payroll provider for you.
Three of the top options on the market: Gusto, ADP and Paychex, are popular for good reason. They all offer a wide range of services at a competitive price. But they are not interchangeable. Each one offers something a little different and is designed for businesses of different sizes and different goals.
In general, we like Gusto the most. It has all the features you’ll need, it’s an integrated, easy-to-use platform and it’s considerably cheaper than either Paychex or ADP. But both ADP and Paychex have a lot to offer, so you shouldn’t immediately count them out. To make your choice a bit easier, we’ve done a full comparison of the all three so that you can decide for yourself which one you think is best for your company.
What Do They All Do?
We mentioned that all three offer a relatively similar set of services, so whether you choose Gusto, ADP or Paychex, you can:
- Manage your payroll online
- Pay employees with direct deposit
- Submit new hire reports automatically
- Pay FICA, FUTA and SUTA taxes directly and automatically
- Calculate and process employees’ pre- and post-tax deductions
- Configure workers compensation insurance
- Create employee profiles and login capabilities so that they can manage account information on their own
- Print payroll reports
As you can see, no matter which one of these three options you choose, you’ll end up with a comprehensive payroll service that will allow you to manage all core payroll functions easily and automatically, saving you both time and money.
How Are They Different?
While all three services offer you the same basic set of features, each one has something a little bit different, and it’s these specific characteristics that will influence you most when it comes time to make decisions about each one.
Here are the unique characteristics of each payroll provider:
In addition to these core services, Gusto offers some additional functionality that will prove rather useful when it comes time to process payroll. For example, Gusto will create free W-2s, and it will also process 1099 forms for you at no extra charge, something neither of the other two services do.
However, the two things that really set Gusto apart are its ease of setup and its pricing. The other two options on this list require a significant learning curve at install and may require several phone calls to their customer service department throughout the break-in period. With Gusto, the user experience is such that someone without any real background with the service could easily get things up in running in not much more than an afternoon.
Furthermore, Gusto is significantly less expensive than the other two options. There is no setup fee, and the yearly cost, which works out to be a little less than $2,000, is about half of what you would spend with ADP and Paychex. Yet this price reduction does mean Gusto will do a little less than the other two, but for a service that easily manages all the basics, it’s hard to beat the functionality and affordability of Gusto. Because of all this, Gusto is a great option for small businesses.
For companies larger than 100 employees, or for those already familiar with ADP software, ADP payroll is a great option. It is significantly more expensive than Gusto, both upon setup and throughout the year, although it’s difficult to hammer down by exactly how much, as it’s common for sales reps to offer discounts when you get them on the phone.
Yet this higher price tag does come with some exciting features, such as the ability to print checks automatically for a nominal fee. With Gusto, you would need to do this manually. They will also send you any workplace posters you need to keep you compliant, also at an extra charge. ADP will issue W-2 and 10999 forms, but they will tack on an extra $102.50 to your bill. Customer service is available 24/7, but it can at times be slow.
While ADP offers many more features, and it allows for more complexity than Gusto, all of this additional functionality comes at a cost. For larger companies requiring this degree of sophistication, this is often worth it. But if you’re business is smaller than 100 employees, and you have no ambitions of growing beyond this point, then going with ADP may end up as overkill. But it’s still one of the best options on the market, and it’s one you should consider when it comes time to choose a payroll provider.
Generally speaking, Paychex and ADP are very similar services. Paychex, like ADP, will process W-2 and 1099 forms, and it can also help you manage wage garnishments and any other extraneous deductions your employees may have. You can also have posters made up and mailed to you, but for an additional charge.
As a result, the only real reason to choose Paychex over ADP and vice versa is if you, or the employee who will be responsible for payroll, are already familiar with one of these platforms. Paychex charges a higher setup fee than ADP, but its yearly cost is slightly lower. Yet this all depends on how well you can negotiate once you get on the phone with their sales department.
Overall, Paychex is a high-performing payroll provider that is very effective for large companies, but for smaller ones, it’s still hard to justify going this route.
And the Verdict Is…
In general, and especially if you’re a small company, Gusto is the best option of the three. It offers all of the same core features as both ADP and Gusto, but for a lot less money. And many of these extra features, such as the ability to print checks, will likely not be needed in a small company. However, there are limits to Gusto in terms of its complexity, making it less than ideal for larger companies. ADP and Paychex are more expensive, but they offer the features needed by larger enterprises.
Overall, all three software packages are great choices. Take a moment to determine which one best suits your needs and then turn your payroll over to the experts so that you can focus on the rest of your business.