Gusto vs. Paychex: Differences, pros and cons in 2024

Gusto and Paychex both offer online solutions that can help small and mid-sized businesses manage their payroll and HR administration from a single platform. Paychex provides a combined payroll and HR solution called Paychex Flex, which also offers a more extensive suite of services, including standalone HR services, employee benefits and business insurance platforms.

Both providers offer three bundled software options that vary by price and number of features. Gusto offers a more comprehensive list of standard features, while you’ll pay extra for some of the same services with Paychex Flex. But either option will allow you to complete the basics of running payroll for both employees and contractors.

While Gusto leans on automations to help businesses streamline their payroll processing, Paychex offers the opportunity to fully outsource payroll, HR and benefits administration for a more robust hands-off solution.

Gusto vs. Paychex side-by-side comparison

Pricing and plans

Winner: Gusto

Paychex’s most basic payroll bundle, Paychex Flex Essential, costs $39 a month plus $5 per employee. The company also offers two customizable plans, Paychex Flex Select and Paychex Flex Pro, with unpublished prices.

For its Simple plan, Gusto offers a starting price of $40 a month plus $6 per person. For a wider range of features, you can choose the Plus plan for $80 a month plus $12 per person, or the customizable Premium plan, with a price that varies depending on the size of your business.

All in all, Gusto provides far more pricing transparency than Paychex.

While Gusto and Paychex have similar prices for their most basic plans, Gusto’s lowest-price option is more comprehensive than Paychex Flex’s most affordable bundle. For instance, while Gusto includes benefits administration in its Simple plan, Paychex Flex only offers that service for an additional charge. Other services add-ons include paycheck preview and approval, time and attendance, recruiting and applicant tracking, retirement services, performance management and job costing and labor distribution.

With more pricing transparency and fewer add-on charges, Gusto comes out ahead for costs.

Payroll administration

Winner: Tie

Automation

Paychex and Gusto have their own strengths when it comes to payroll administration. Both companies offer time-saving automation features for running payroll. Gusto has a feature, AutoPilot, that lets you schedule your payroll runs to process automatically using the wage and salary information you provide in each worker’s profile.

Paychex stands out by offering professional employer organization (PEO) services. This means that a payroll specialist can take over all of your payroll processing, including managing garnishments and the production of W-2s for you. While Gusto’s payroll processing leans heavily on automations to take the work out of payroll processing, Paychex’s PEO services help to even the payroll processing playing field between the two providers.

Paychex also focuses on payday accuracy with its paycheck review feature, allowing employees to view their paychecks before payday to reduce payday discrepancies.

Payment options

All three Gusto plans offer two-day and four-day direct deposit, and with the Plus and Premium plans, you get an upgrade to next-day direct deposit if you choose. With Paychex Flex, you can pay workers through direct deposit or checks that print out automatically. To issue payments by check using Gusto, you must print your own.

International workers

Paychex Flex provides optional global payroll services through a partnership with IRIS FMP. Gusto offers international payroll services for contractors (but not for employees) as an add-on feature. With Gusto, you can pay contractors in the local currency of more than 120 countries. A small exchange fee applies to each payment. Before shelling out the fee, you can do a test drive using the company’s exchange rate tool. However, in Gusto’s regular plans, payroll processing is only available in the United States.

Contractors

Both Gusto and Paychex Flex allow you to easily pay employees and independent contractors through a single plan. However, Gusto also offers a contractor-only plan for businesses with no W-2 employees, starting at $0 per month plus $6 per contractor for the first six months, then $35 per month plus $6 per employee. On Gusto’s three employee payroll plans, you’ll pay the same per-person fee as you do for employees whenever you add a contractor. The options and affordability Gusto provides give it the lead over Paychex for businesses owners who hire contractors.

Wage garnishment

Gusto offers more affordable access to wage garnishment services than Paychex Flex. Each of Gusto’s payroll packages will automatically pay child support garnishments in all states except South Carolina. Paychex Flex includes automatic wage garnishment with its Essentials and Pro payroll plans, and you can get it as an add-on with Select.

Tax reporting and compliance

Winner: Paychex

In each set of plans, Gusto and Paychex payroll services both provide automated calculation, filing and payment of local, state and federal payroll taxes.

Paychex is one of only a few payroll providers that can check your eligibility and take care of the application process for the employee retention tax credit (ERTC) (on qualified wages paid during the pandemic). And there’s no fee if it turns out you don’t qualify. You can also get assistance from Paychex in applying for the following tax credits:

• The work opportunity tax credit (WOTC) for hiring from groups with barriers to employment.
• The research and development tax credit for companies working to improve their design and development processes.
• Location-based tax credits aimed at spurring economic development in select U.S. areas.
• Other tax credits such as cost segregation, training incentives and grant screening and writing tax credits.

Self-service employee portal

Winner: Tie

Both Gusto and Paychex offer employee self-service capabilities with all three of their payroll plans. With either solution, workers can view their pay stubs, W-2s and other personal payroll information at any time. Each company also offers some mobile access to these services.

The Gusto Wallet mobile app provides employees access to an interest-bearing checking account and a debit card. Through a partnership with April, Gusto Wallet offers a refund estimator to help workers predict the amount of their federal tax refund or payment. Employees can also use the app to track their work hours and paid time off, review past earnings patterns and details and view information about their benefit plans and tax-advantaged accounts like HSAs and FSAs. The app also provides access to Gusto’s paycheck splitter, which lets employees automatically place portions of their direct deposit paychecks into multiple bank accounts. Gusto Wallet is not currently accessible to contractors, employers or administrators.

Paychex Oasis Employee Connect is an employee mobile app with some notable features Gusto Wallet does not have. For instance, Oasis lets employees view and enroll in health benefits and view their retirement plan information from the app. Another bonus Oasis provides is mobile access to educational and training content.

But while both Gusto Wallet and Paychex Oasis allow employees to view and request their time off, only Wallet lets them track their hours. Also, the Paychex mobile app lacks the paycheck splitting and tax estimating features Gusto Wallet offers.

HR tools

Winner: Paychex

Gusto’s Premium customers get automatic access to expert information and advice in the company’s HR resource center, while Plus customers can acquire the feature with an add-on purchase. Gusto’s HR library is not available with its Simple plan. In contrast, Paychex’s library of human resource documents is included with all three of its bundled plans.

Paychex stands apart by offering professional employer organization (PEO) service, an all-in-one HR outsourcing solution that covers your entire HR operation, including hiring, employee retention, payroll, benefits and compliance management. It also offers Fortune-500-level benefits more affordably due to its group buying power. In addition, you gain access to HR advice and recruitment, payroll, safety, benefits and workers compensation experts.

Benefits administration

Winner: Paychex

Benefits administration is a standard feature in Gusto’s payroll plans. Each plan offers Gusto-brokered health insurance administration, including medical, dental and vision insurance. You’ll need to purchase an add-on to get Paychex Flex to manage your benefits program or to add college savings, commuter benefits, health savings, flexible spending accounts, life and disability insurance and 401(k) plans.

The option to use Paychex as a PEO service means you can outsource your benefits program and enjoy access to the types of benefits programs that major corporations provide their employees at an affordable price. Compared to Gusto, this fully outsourced benefits administration solution makes Paychex the winner.

Time tracking

Winner: Tie

Gusto’s time-tracking tool is fully integrated with its Plus and Premium payroll solutions. Beyond basic time tracking, it can also enhance project management with features allowing workers to track and tag their time on specific projects. This enables employers to track the overall progress of company projects so they can adjust work assignments, goals and other elements as needed.

Paychex time tracking tools are available as an add-on and let you integrate your payroll data with its cloud-based time and attendance platform. That system comes in two options: Paychex Flex Time and Paychex Flex Time Essential. Both versions allow you to collect time data via web punch, mobile app and kiosk app with facial recognition. Paychex Flex Time includes biometric iris and finger scan time clocks and an interactive voice response system. Paychex Flex Time Essentials also offers online timesheets as an additional time tracking method.

Gusto vs. Paychex alternatives

Rippling

Rippling stacks up well against both Gusto and Paychex. One notable advantage over Gusto is that Rippling includes multi-currency support for both international contractors and employees, while Gusto only offers global payroll support for contractors. Compared to Paychex, Rippling offers more advanced features for automating workflows and reporting, especially for a large workforce. However, Rippling may not be as affordable as Paychex or Gusto for small to mid-sized companies with budgets to match.

Read our full comparison to learn more about how Gusto and Rippling compare to one another.

OnPay

If you value simplicity over comprehensiveness in payroll software, you might consider OnPay. It offers a single plan for a moderate flat fee of $40 per month plus $6 per person and includes payroll processing, HR management and benefits administration solutions.

Compared to Gusto, the drawbacks of OnPay include its lack of automated payroll processing, time tracking and retirement benefits management capabilities. The OnPay plan is similarly priced to Paychex’s cheapest option, which costs $39 per month plus $5 per person. However, OnPay beats out Paychex by including most benefits administration in its package, while Paychex offers them only as add-ons.

Patriot

Some small business owners with very tight budgets, including solopreneurs who don’t need a lot of extra features, may not find either Gusto or Paychex Flex affordable. Patriot may be a good option for you if you’re in that category. Its plans start at $17 a month plus $4 per employee or contractor.

Both Patriot and Gusto provide third-party integrations, direct deposit and contractor payments. But unlike Gusto, Patriot does not include benefits administration or multi-currency support, and it only provides tax compliance with its full-service option at $37 per month and $4 per employee. Like Paychex, Patriot offers time tracking as an add-on for an extra $6 per month plus $2 per user, while Gusto includes time tracking in its core plans.

As such, Gusto and Paychex are best for mid-sized to large companies (or those that rapidly plan to reach this size). Patriot is a better option for startups or small businesses on a budget that need basic payroll processing features.

Gusto vs. Paychex customer feedback

Winner: Gusto

Overall, Gusto is well received by its users. On Capterra, Gusto received a 4.6 out of five star average user rating, with a  4.7 for ease of use and 4.4 for customer service. On both Trustpilot and G2, users praised Gusto for its user-friendly interface and easy-to-use software. However, other reviewers noted a decline in the quality of customer service from Gusto in recent years.

The highest mark for Paychex Flex comes from G2 reviewers, who gave it 4.2 out five stars, mainly noting its user-friendliness. However, the software not being user-friendly was also the top category of complaints, although notably, more than twice as many customers gave it positive ratings as did negative on this front. As for Paychex user ratings on other sites, Trustpilot reviewers rated it negatively for its customer service. Positive reviews are nearly non-existent, given an average Trustpilot user rating of 1.2 stars, but one commenter did grant it a lukewarm assessment of “not great but not horrible.”

Here are a few additional comments from Reddit about the pros and cons of Gusto and Paychex:

“I use Gusto for payroll. We just starting using it this year, so I haven’t used it for any 1099s yet. But it makes doing W2 payroll much easier.”

“Gusto claims to file all fed and state payroll forms on your behalf. The fed seems to work ok, but State – not so much. If for any reason Gusto’s submission is rejected (either through their own fault or the State’s fault), Gusto will refuse to attempt to correct the error and/or make a 2nd attempt to file.”

“I have used Paychex for more than 5 years and they have been great to me, and I also refer to my brother in law and I got a credit towards my payroll.”

“CPA recommended Paychex, said it was the only other payroll they liked. Interface looks cool. Everything looks nice but come to time and attendance? Well setting up a schedule is like playing a video game. I have to stretch out markers to set schedules! “

Final verdict 

Who is Gusto best for?

With its AutoPilot feature, Gusto is the best payroll software for automation, making it a good pick for small businesses looking to streamline payroll. Gusto is also ideal for companies with workforces that include both full-time employees and independent contractors across all 50 states.

Who is Paychex best for?

With so many optional add-on features, Paychex Flex is best for businesses that want the flexibility to customize their payroll service plans to fit their changing needs. Through its PEO options, Paychex also meets the needs of companies that would rather hand off their payroll, benefits administration and HR processes altogether.