Pros and Cons of Gusto: Analysis of a Top Payroll Management Software

Picking the ideal payroll management software can be a daunting task, as there are many interdependent factors to keep in mind. In the best scenario, the user will opt for an automated and fully compliant system that handles HR and benefits administration, but only as long as he has experience and knows the perils of running an inconsistent paycheck.

In an even better scenario, he won’t pay a fortune to get that system.

Truth is, it is difficult to speak of a tool that shines in both payroll and HR accuracy and yet doesn’t break the bank. But it is not impossible.

The software we are about to discuss in this article comes quite close to the definition of an ideal automated payroll system, and even offers several new-generation widgets to make it more attractive. The name of this product is Gusto.

How will this system enhance your productivity? Gusto combines in a single package detailed payroll automation, enterprise-grade benefits administration, HR management, and compliance features, and delivers it on a moderate price even startup businesses can afford (base price is $39/month). Features are coupled with a well-designed and user-oriented interface where all operations can be completed within minutes, and operates with a role-based methodology that allows each logged user to pull off and adjust his data. At the same time, Gusto prides itself with open connectivity for a variety of HR, CRM, and accounting platforms, including names such as Xero, QuickBooks, Nimble, BambooHR, and many others.


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Try out Gusto with their free trial

The vendor offers a great free trial plan that you can use to try out all the key features first.

In short, Gusto will allow you to:

  • Automate your payroll management operations
  • Eliminate manual payment processing and timesheets
  • Enable paperless and direct transactions
  • Prepare year-end forms and automate submission of local, state, and federal taxes
  • Administer benefits including healthcare, 401 (k) retirement plans and 529 college saving
  • Provide HR management capabilities
  • Help you comply with HIPAA, ACA, and ERISA standards
  • Connect easily to popular accounting, HR, and CRM systems
  • Deliver all these services at a moderate and affordable price

Of course, investing in corporate software leaves enough room for users to be nit picky, and that’s exactly how they should be when processing sensitive data online. Gusto is for sure an adequate, result-ready, and secure processing system, but flipping the coin may reveal downsides certain users won’t be comfortable with. In this article, we will analyze the benefits of Gusto in different corporate scenarios, but also try to pinpoint areas for improvement.

Gusto’s Automated Payroll Management

Automated and transparent payroll management is not only the highlight, but also the core mission of this system. The company specializes in hands-free payment processing, which means that the user will only be required to schedule remuneration data at the beginning of this process. Since Gusto Payroll also supports the idea of paperless transactions, it will require minimal human intervention, and thus eliminate critical errors that would delay or obstruct employees’ payments. At the end of the process, all transactions will be transformed into digital paystubs, and delivered to concerned parties by email.

What exactly does Gusto automate? You can rely on this system to take care of your payments, calculation, and submission of local, state, and federal taxes and year-end forms. For the first time, your bookkeepers will be able to extract data from a unified and cloud-hosted location, and prepare single financial statements to use for all purposes. Another way in which Gusto saves your time is its flexible modus operandi, as it will adopt all specific calculations and processes as complex as they may be.

Keep in mind, however, that specific entries and compliance modifications must be confirmed and verified in the system (The Paychex Flex feature usually takes 15 minutes to do so), as in all other cases you may face inconsistencies. The reason for this is that Gusto allows full flexibility for the user to decide how employees are going to be paid, and how their paystubs, tax filings, and W-2s ought to be handled. The system does offer onboarding support and training materials, but can’t be held responsible for inaccurate data input. Another thing to remember is that direct deposits make take some time to process, again because of the verification process.

Gusto’s Benefits Administration

Gusto’s benefits administration can be described with a single word – simple! The intuitive dashboard and access to licensed advisers (many of them with years of healthcare experience) makes it really easy to process and manage benefits, both in cases where you import your existent benefits plan, or create a new one in line with the system’s templates. For the purpose, Gusto consolidates content with employment tax reports, payment stats, corp insurance and hire/leave reports, and detailed budget plans.

Gusto covers health benefits, 401 (k) retirement plans, and 529 college savings, where contributions are automatically synced with the payroll, and there is nothing the user should adjust manually. In such way, it eliminate sthe fees and problems small businesses face when preparing a retirement saving plan for their employees. The system is equipped with multiple schemes targeting popular professions, while there is also the possibility to modify fields and details until they meet your specific needs.

For the purpose of college saving, Gusto will even integrate with Gradvisor, and ensure the most popular benefits for employees in small companies. Investment advice and contributor matching will also be available, and plans will be downloadable for users even after they’ve left the company.

Note that Gusto may not do for statewide and international teams, as, for the moment, benefits are available only in California, Colorado, Florida, Georgia, Illinois, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, Texas and Washington (with more states coming soon).

Gusto’s HR Management Features

As a benefits-focused system, Gusto acknowledges the need to synchronize payroll management with other HR-related activities, and thus offers a compact HR management suite. It will allow you to become an onboarding professional and prepare hires with digital collection of I-9s, W-4s, and direct deposit info.

What is really unique about Gusto is that it tracks time off – your employees will submit their request, and you as the admin will approve it, while Gusto will automatically track the balances and accruals for you, and make sure the change affects the payroll in the right way. What can be considered a potential downside in the case is that the employee possesses the permission to adjust those hours, so you have to think of additional mechanisms such as leave lists to prevent this from happening. Also, the process tends to be more cumbersome with part-time and on-project employees.

Employee permissions, however, make sense from a different point of view. For instance, using his personal credentials, each employee can enter the system, fill in his data, and modify it at any moment of time. The profile info will be available to download, and accessible to the employee even in case he’s no longer part of the team. In this way, Gusto saves time for both admins and employees, and lets them focus on more important activities.

Gusto’s Compliance Guarantees

All Gusto operations were designed to meet in detail HIPAA, ACA, and ERISA standards, which means that the system will check data automatically, prepare compliance reviews of your benefits and send automated notices, and guarantee employee privacy unlike any similar system. A potential drawback is that Gusto won’t comply with the OT laws of a particular state unless the FEIN account was created specifically for that state. Therefore, make sure you maintain constant contact with your advisers when filling the fields and while creating new accounts.

Gusto’s Connectivity Considerations

Gusto is an extremely-well integrated system, offering a large list of available connections, covering in between the biggest names in the accounting and HR software industry. For a concerned business owner, this means being able to import all of his payroll data into a preferred accounting and invoicing system, be that Xero, QuickBooks Desktop/Online, or FreshBooks.

Gusto will also operate in synergy with prominent scheduling and HR applications, time and expense tracking systems and CRM products, among which Bamboo HR, Nimble Schedule, Deputy, When I Work, TSheets, Receipt bank, and many more.

What certain users perceive to be a downside to choosing Gusto is the lack of integration with leading sales applications. For the needs of retail operators and service providers, the vendor recommends a different solution: Gusto POS, a cloud-hosted point-of-sale system designed for the needs of restaurants and bars.

Gusto’s Pricing

The bottom line advantage of this system is definitely its moderate pricing scheme, as Gusto was designed to give small and developing companies enterprise-grade accounting features. According to our experts, it is one of the very few compliant systems that combine benefits administration and HR management on such an affordable price.

For the first time, users will be able to document their activity, administer employees benefits and keep in line with standards and legal provisions at prices starting as low as $39/month. Note, however, that this is is the base price of the system, and the company using it should pay $6 for each additional person involved in it. A fully-featured 30 days trial is also available for free, so that novice users can explore the system’s functionality and confirm it is the perfect fit for their needs.

Daniel Epstein

By Daniel Epstein

Daniel Epstein is a senior financial research analyst at FinancesOnline and the architect behind our Fintech and ERP content division. His main areas of expertise are blockchain technologies, cryptocurrencies, and the use of biometrics in fintech solutions. His work has been frequently quoted by such publications as Forbes, USA Today, Entrepreneur, and LA Times. With more than 1,800 solutions scrutinized in the last 5 years spent on our team he always prioritized offering readers an unbiased perspective on modern financial technologies.

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