When comparing payroll processing companies for small businesses, three of the best software options are ADP vs Paychex vs Gusto. They all help employers pay their employees and comply with applicable labor and tax laws. ADP and Paychex, however, have more reporting and customization options and are priced significantly higher than Gusto.
When to Use Gusto For Payroll Processing
We recommend Gusto as the best payroll provider for small businesses with under 100 employees because it delivers services comparable to big-name competitors at a significantly lower price—as low as $45 monthly for one employee (with a free 30-day trial). It’ll manage payroll taxes on your behalf, issue payments via direct deposit, generate year-end W-2s and 1099s, help you find workers’ compensation insurance, provide employee benefits, and more.
When to Use ADP For Payroll Processing
ADP is a great payroll option for businesses that grow past 100 employees, those who have used ADP in the past, or businesses that want to customize their payroll process, reporting, and interfaces. With over 60 years of payroll expertise, ADP has experience building custom tools and features to solve the most complex employee payroll setup.
When to Use Paychex For Payroll Processing
Businesses that seek large employer payroll experiences and excellent customer service may prefer Paychex over ADP. Both ADP and Paychex are two of the most well-known payroll providers in the U.S.; when looking at ADP versus Paychex, there is little difference between them. They’re both built to support big employers with levels of complexity and customization options that many small businesses don’t need.
Gusto vs ADP vs Paychex at a Glance
|Pricing as Reviewed*|
|Ease of Setup|
|Issue W2 and 1099s|
Direct Deposit & Employee Self-service Portal
Can I Add Employee Benefits?
Benefits insurance broker
Benefits & HR solutions available
Benefits available through a third party
*Pricing estimates are for 10 employees with bi-weekly payroll. However, Gusto charges monthly based on the number of active employees you have, whereas ADP and Paychex price by payroll run. Therefore, your actual price with ADP and Paychex may change from month to month.
Quiz: Is Gusto, ADP, or Paychex Best for You?
How We Evaluated Payroll Processing Companies
When looking at the best payroll processing companies for small businesses, we wanted to ensure the software is easy to use for a typical business owner, provides proper calculations and deductions for overtime and taxes, and offers payroll for both W-2 and 1099 workers. It was also essential that each provider has the option to add employee benefits.
The criteria we used to evaluate ADP versus Paychex versus Gusto includes:
- Payment options: Multiple ways to pay employees, like direct deposit or pay cards.
- Labor law and tax compliance: Receives automatic updates on labor and tax laws so payroll is always legally compliant (like tax payment deadlines; minimum wage laws, and so on).
- Employee self-service: A way for employees to view their paychecks and data.
- Benefits: The option to add employee healthcare and other benefits.
- Timekeeping interface: Import time clock data to minimize errors.
- General ledger interface: Share data with accounting software.
- Garnishments: A way to manage employee garnishments.
- Customer reviews: The best payroll software reviews are usually 4 to 5 stars and indicate that overall, users have had a good customer experience with the provider.
What makes Gusto our top recommendation in our best payroll software reviews is that it does all of these things without additional costs, as compared to ADP and Paychex, which charge extra for timekeeping, garnishments, posters, and extra payroll runs. In addition, Gusto’s pricing is transparent and there are no setup fees.
Gusto vs ADP vs Paychex: Pricing
Comparing prices among Gusto, ADP, and Paychex can be a little tricky, as neither ADP nor Paychex post pricing on their websites. They may or may not offer discounts once you get on the phone with a sales rep.
For example, when we contacted them for quotes, ADP’s sales team offered a 20% discount and waived the setup fee, while Paychex’s sales rep offered a 40% discount and was willing to waive the setup fee as well. Discounts are usually time-limited though, and there’s no guarantee that they’ll offer one when you call.
The prices shown below reflect a business with 10 employees running bi-weekly payroll. Note that Gusto does not offer discounts and yet beats both of them on price. In addition, with Gusto, your first month is always free.
Gusto vs ADP vs Paychex: Sample Pricing
|Price for 10 employees for one year (without discounts)|
|Price for 10 employees for one year (with potential discounts)|
In addition, ADP and Paychex charge per pay period, while Gusto charges per month, regardless of your payroll schedule. This is important if you pay people more than twice a month because you will pay extra each separate payroll run, such as a year-end bonus run, or weekly payroll if you use ADP or Paychex. With Gusto, your price does not go up if you run payroll more often, such as weekly.
Let’s look at how each payroll processing company does its pricing:
Gusto’s pricing is simple: it’s $39 per month plus $6 per employee. For 10 employees, this comes out to $99 per month. There are no additional fees for setup or for year-end W-2 or 1099 processing as there are with ADP and Paychex. With Gusto, your monthly rates are fixed regardless of how many payroll cycles you run, and your first month is free. Unlike ADP and Paychex, year-end tax documents are included at no extra charge.
For a company with 10 employees that runs payroll bi-weekly, we were initially quoted $101.65 per pay period plus a one-time setup fee of $25. ADP then offered to discount the rate to $81.32 and waived the setup fee. Because payroll is run bi-weekly, this comes out to about $162.64 per month (or $81.32 x 2), which is cheaper than Paychex.
ADP also charges extra ($45 plus $5.75 per employee, or $102.50 for 10 employees) to process W-2s and 1099s at year-end. Tax filings, garnishments, labor law posters, and other add-ons cost extra, which almost guarantee your actual price will be higher.
Paychex quoted $77 per pay period plus a $200 setup fee, although they offered to waive the setup fee. This makes Paychex the most expensive service, despite the fact that the $77 per pay period is a significant discount from their regular rate (it was a time-sensitive offer). Like ADP, Paychex also charges an additional fee to process year-end W-2s and 1099s. This charge was $60 plus $6.25 per employee (or $122.50 for 10 employees).
Gusto vs ADP vs Paychex: Features
When it comes to payroll providers, Gusto, ADP, and Paychex payroll software programs provide similar services: they all manage payroll processing and payroll taxes. They can onboard new hires, set up employee benefits, and pay employees via direct deposit.
Here’s what all three of these payroll processing companies offer:
- Run payroll online for multiple payroll cycles such as weekly, bi-weekly, or semi-monthly
- Pay employees via direct deposit as well as by paper check or payroll card
- Automatically submit new hire reports to the state
- Pay FICA, FUTA, and SUTA taxes automatically
- Process employees’ pre-tax and post-tax deductions, including garnishments
- Set up workers’ compensation insurance
- Provide an employee self-service login to access information via an HR portal
- Print payroll reports and export data to third-party applications
In general, all three payroll processing companies have similar features. However, ADP and Paychex offer a labor law compliance service (they’ll send you mandatory federal and state posters) for an upcharge, whereas Gusto provides links where you can download posters yourself at no cost. In addition, ADP and Paychex have a Professional Employer Organization (PEO) option. Gusto doesn’t.
Additionally, all three companies can help you set up employee benefits, such as retirement funds or health insurance. However, with Gusto serving as an insurance broker in 24 states, you can manage employee benefits within the same software—from open enrollment to checking HSA and FSA balances. Employees can access their benefits information online with the employee benefits dashboard.
Here are the primary and unique features offered by each payroll service:
Payroll processing is usually every HR person’s most disliked responsibility, but Gusto makes it easy. It offers all the features listed above, and its payroll runs in just minutes. In addition, you can make adjustments (such as adding a bonus or processing retroactive pay) on the fly. Also, Gusto doesn’t charge you to enroll in a poster compliance program. Instead, they provide downloadable posters via online links to government websites, where they can be obtained for free.
Here’s what you get with Gusto for one low all-inclusive price:
Gusto also offers free W-2 and 1099 processing. Gusto provides direct deposit and pay cards, but does not offer to send your employees physical checks because you can print them yourself from the software. If you have employees with wage garnishments or other mandated deductions like child support, Gusto requires you to process these manually, whereas ADP and Paychex manage the deductions and payments for you. Of course, it’s an extra charge.
Gusto provides an employee self-service portal that does more than provide employees with pay stubs. It is a full employee document vault that includes e-signature, downloadable policies, forms, and an employee handbook. Employees can also make their own changes to benefits, 401(k) elections, and tax withholdings.
Gusto’s pricing includes providing year-end tax documents for your employees and the IRS, regardless of how many U.S. states your employees work in. ADP and Paychex will do this as well, but for an additional fee that costs extra if you have employees working in more than one state. That’s because they charge for each state they have to file taxes in.
Because Gusto is a licensed benefits insurance broker in nearly half of the U.S. states, it can help you find affordable insurance, from workers’ comp to healthcare for your employees. Even better, your employees can enroll, view plan documents, and make benefits changes online. Life insurance, 401(k), and even commuter benefits are available to your staff with Gusto.
Gusto’s reporting options are limited to the basic reports that a small business may need. They can be run with date ranges and other variables with output to a PDF or a CSV file for further analysis. However, Gusto doesn’t have as many standard reports as Paychex and ADP have.
Along with the standard payroll features mentioned above, ADP offers check printing and poster compliance. If you prefer to send employees physical paychecks rather than direct deposit, ADP can print, sign, and mail paychecks on your behalf for an additional fee. They’ll also send you any workplace posters you need to stay compliant with labor laws if you order their poster compliance package.
It’s not that ADP is missing any functionality; it’s just a huge company. The customer service sometimes takes time, as do changes. And they charge extra for many of their services. ADP processes wage garnishments and other withholdings automatically, which is a nice perk. The biggest downside is that they charge for each and every payroll run, which means anytime you need to make a correction, you’ll be charged for it.
ADP offers your employees a self-service portal called MyADP. Employees can view pay stubs, W-2s, update their direct deposit account, and make many changes online themselves, saving you time.
ADP will deduct federal, state, and local taxes and provide payments to the various state and federal agencies. However, ADP charges $102.50 for issuing W-2 and 1099 forms, while Gusto provides them for free.
Similar to Gusto, ADP has its own insurance company, ADP Insurance Agency (ADPIA), but it doesn’t offer insurance in as many states as Gusto. Both ADP and Gusto can manage benefits through the same system as they run payroll, making it easy for you and your employees to keep track of benefits enrollments, changes, and costs. The insurance brokerage is one big difference between ADP versus Paychex.
ADP offers numerous reports covering payroll, taxes, employee benefits, and garnishment payments. It also has a custom reporting option that makes it valuable for larger firms wanting to do intense data analytics in Excel or export data to other software.
Like ADP, Paychex is a large company and not as responsive as Gusto to changes and requests for assistance. They charge extra for services Gusto provides for free, like issuing 1099s; both ADP and Paychex are more than twice the cost of Gusto for similar services. For example, Paychex processes wage garnishments and other withholdings on your behalf for an extra charge.
Running payroll with Paychex is nearly as easy as with Gusto, making it one of the best Gusto competitors. You start your payroll, input your data, and then verify your entries before running and submitting your payroll process. Like Gusto, you can manually update time worked or add on Paychex’s time and labor solution to streamline timekeeping data entry each pay period. Of course, that costs extra. Like ADP, Paychex offers check printing for an additional fee as well as poster compliance.
Paychex provides a mobile app for employee self-service, whereas with Gusto, it’s a mobile-optimized website. With Paychex, employees aren’t able to see benefits plans and other features—it’s for viewing pay stubs and tax forms—convenient, but not all-inclusive.
Similar to ADP, Paychex charges a fee for W-2 and 1099 processing. In our 10-person example, it would add $122.50 per year extra. Paychex does do federal, state, and local taxes for you, but it is the most expensive of the services we reviewed—both for W-2 and 1099 processing as well as the total cost overall.
Paychex, like most payroll software providers, can manage benefits deductions. And they can help you find a benefits provider. But they’re not a licensed insurance broker like Gusto and ADP are, so you’ll be dealing with a benefits interface and need to ensure enrollments are up to date and providers are paid. You’ll also need to manage open enrollment and employee questions yourself.
Paychex is more similar to ADP in terms of its reporting options. They offer 100 on-demand reports that allow you to choose parameters and customize data exports.
Gusto vs ADP vs Paychex: Ease of Use
We can’t emphasize enough how much easier Gusto is to set up and use than ADP or Paychex. First, you can create your own account and walk through it easily following a step-by-step process. You can also use the online chat function to ask questions as you go. ADP and Paychex have set up processes that require you to work with multiple team members to set up your system. That can take days or even weeks due to the complexity of their system options.
Gusto Ease of Use
After you create your account with Gusto, you’ll receive a welcome email and a message inviting you to discuss your setup with them. Our experience with ADP and Paychex was quite different—representatives would call every few hours, then, when we finally spoke with them, they proceeded to try to upsell us on other services.
Here is a screenshot showing Gusto’s intuitive dashboard with a menu on the left-hand side:
ADP Ease of Use
In comparison to Gusto, you actually have to talk to a sales rep from ADP to set up your account. We suspect this is an opportunity to try to upsell product features, but it could also be that its technology hasn’t caught up to Gusto’s system and ability to process your company’s information online through the web service. Once you access the system, you may find it less intuitive to use as well.
Paychex Ease of Use
Setting up payroll with Paychex, like ADP, takes more time due to their complex software. It involves sending files and data to a rep, waiting for them to create your account, and then double-checking the information. Again, this can take days. Once you’re in the system, it’s also more complex to use than Gusto.
Gusto vs ADP vs Paychex: Customer Service
ADP and Paychex offer 24/7 phone and email support while Gusto only offers phone and email support from 8 a.m. to 5 p.m. Pacific Time from Monday to Friday. However, users tend to speak much more highly of Gusto’s customer service than ADP’s or Paychex’s. In addition, Gusto also offers live chat support, whereas ADP doesn’t.
Gusto’s Customer Service
Gusto has a strong customer support team and a newer online software that’s very easy to use. Gusto provides phone, online chat, and email support from 8 a.m. to 5 p.m. Pacific Time, Monday to Friday. Gusto, ADP, and Paychex have similar user ratings, with Gusto’s user review ratings slightly higher, especially from small business owners.
ADP’s Customer Service
ADP provides 24/7 phone and email support but appears to have more issues with customer service than their competitors. They also have no online chat. However, this could be due to ADP being the largest of the three services we reviewed. ADP user reviews are more likely to have complaints about poor service than rave about positive service, so it could be the case that more users simply means more complaints. ADP also has no online chat.
Paychex’s Customer Service
Paychex provides phone and email support 24/7 and live chat from 8 a.m. to 8 p.m. Eastern Time. Paychex users tended to rate its customer service highly. However, like ADP, some third-party Paychex user review sites include numerous complaints.
Gusto vs ADP vs Paychex: Customer Reviews
In general, our small business users gave Gusto more and better online reviews. In fact, five times as many small business reviewers gave feedback on Gusto than the other top two payroll processing companies. We think that’s because Gusto is simply easier to set up and use than payroll software that’s been around for decades.
Here’s how Gusto compares with ADP versus Paychex on our reviews website:
Gusto vs ADP vs Paychex Software Reviews* on Fit Small Business
*Data at the time of publication
Gusto Customer Reviews
We found that Gusto has generally excellent reviews on third-party websites. Despite its shorter support hours, users were very positive about their customer support team. Most loved the clear instructions from Gusto and the option of live chat or call support during the setup process. The only complaint we came across was about the onboarding process, which employees are asked to handle themselves on the Gusto website—some new hires didn’t love that.
ADP Customer Reviews
Within many ADP users reviews, users note long wait times on the phone, billing issues, setup issues, and other problems with their account. Users generally like the payroll functions and tax compliance aspects of an established company like ADP, although some feel the user interface is antiquated. Others complained about how long it takes to get set up, and that they often have to wait to get issues resolved.
Paychex Customer Reviews
Despite the mention of dedicated customer service reps, several Paychex user reviews included complaints about disorganization, such as having to speak with different departments for help for each module (benefits, payroll, HR, and so on.) or just being forwarded from employee to employee. And users don’t like the upcharges. Some noted billing issues, tax issues, or website issues, with multiple users finding the interface to be slow and dated.
Payroll Software vs Payroll Service
Gusto, ADP, and Paychex offer a variety of payroll and HR services. At one end of the spectrum, they act as an outsourced HR department—managing all of your payroll, benefits, onboarding, and providing an HR advisor to contact. At the other end, they give you online software to run payroll yourself.
The majority of small businesses prefer the second option, payroll software, instead of the more expensive payroll service platforms, for a number of reasons:
- Cost: It’s usually much cheaper to use software. Outsourcing HR can cost as much as 3% to 6% of your total payroll, such as with a PEO, whereas payroll software costs $100 to $300 a month, depending on company size.
- Accuracy: Payroll software has advanced to a point where payroll compliance is taken care of for you. For example, new hire reports are automatically filed electronically with the state, and your payroll taxes are calculated and paid using tax tables.
- Errors: Tax penalties from payroll errors and misfilings alone cost nearly $5 billion a year due to errors like misclassifying employees or failing to pay overtime. Payroll software reduces the likelihood of these errors by automating calculations for you in compliance with federal, state, and local labor laws.
For these reasons, we focused on payroll software in this article instead of payroll services. While Gusto, ADP, and Paychex do have more comprehensive HR services available, their payroll software packages are what most small businesses will need and use.
ADP vs Paychex Payroll Processing Alternatives
These days, cloud-based software can do much more than process payroll. In addition, there are outsourced payroll software and services that cater to small business, providing HR compliance, payroll processing, and even co-employment.
If you’re looking for options to do more than just payroll, consider these alternatives:
HR software, often referred to as a Human Resource Information System (HRIS), is an option that provides much more than payroll processing. It’s a database of employee information that often includes payroll, and may add employee information such as performance reviews or talent profiles. Vendors like Zenefits offer compliance-heavy HR software that you can sign up for separately of (or in addition to) other payroll and other HR features.
A payroll service is a provider that you outsource your payroll processing to. The best payroll services manage all setup, tax filings, and accounting interfaces. Some even let you call in your data over the phone.
Professional Employer Organization (PEO)
A PEO partners with you to manage most of the workplace compliance needs of your business, including labor law and payroll. They typically have purchasing power that can save you on workers’ compensation costs while offering reduced benefits insurance rates. ADP TotalSource is a solid choice if you want your PEO to be a payroll expert as well.
Gusto offers almost as many features as ADP and Paychex but at a fraction of the price—almost $2,000 less annually for 10 employees. Gusto continues to come out on top because it’s easier to use, less expensive, and has better user reviews—both for the payroll software itself and customer support.
While Gusto does have a few drawbacks, such as no 24/7 support, no paycheck mailing service, and no poster compliance, its benefits far outweigh these inconveniences. Given all you get for the price, including an HR portal and online document storage with e-signature, Gusto remains our top recommendation for businesses with under 100 employees. Sign up for your free 30-day trial today.