Running payroll with Gusto is simple; you can finish the setup process in less than an hour, unlike some big name providers that require a few weeks lead time. If you’re considering using Gusto or recently signed up for service, knowing how to use the software will help you decide whether it’s worth it and help ensure you run payroll right the first time.
If you haven’t already signed up for Gusto’s payroll service, you can follow along with the steps below by signing up for a free 30-day trial.
Please note: Depending on where you are in the process and how you initially access Gusto’s software, some of the screenshots we provide to help guide you may differ from what you actually see. Overall, the process should be the same, and will ask for the same information.
If you want to set up your payroll account and run your first payroll with more than just screenshots as support, follow along with our video on how to set up and run payroll with Gusto.
How to Set Up Gusto to Run Payroll
1. Create Your Account
To run payroll with Gusto, you must first create an account. You’ll enter your company name and set a password to secure the account. You’ll also need to answer a few questions regarding how your company has handled payroll in prior months during the current year and what kind of workers you plan to pay.
Once you finish answering the questions, select “Create my account.” You’ll see a message telling you to check your email for a message from Gusto; it contains a link you’ll need to click to verify your email address.
2. Add Company Information
The first step to setting up Gusto is adding company information. You’ll be asked to add some basic data, including your name and business name, phone number, and address(es). This helps Gusto determine what specific forms you need for your state. If you have only one location, you’ll finish this step in no time. Select “Continue Setup.”
The next step is to add your accountant or bookkeeper. If you have one, you’ll select “Add your accountant,” and add their name, email address, and other information so Gusto can give them secure access to your account. If you don’t need to give a bookkeeper administrative rights to your account, select “Skip this step.”
3. Add Employees
Similar to adding your business information above, you’ll gather the employee’s information and add them to the system. You’ll start with some basic information:
- Employee name: Enter the name they provide on their W-4 form, if possible. Gusto will use this information for all of the employees’ records, including year-end tax forms.
- Work address: This should be the physical address of the business location the employee will be working at. If you only have one location, you’ll use the same address in this field for every employee you enter.
- Employee email address: Employees will use this email address to log in to their Gusto accounts; they’ll be able to retrieve check stubs, change their personal information, etc.
- Hire date: Their official hire date.
- Job title: Enter the employee’s job title. If the employee performs the same job as an existing employee that’s already in your Gusto payroll account, you’ll be able to select it from a drop-down list versus having to enter it.
- Employee type: You’ll specify whether the employee is paid hourly or salary, how much they’re paid, and how often (weekly, monthly, annually).
- Additional compensation types: Check this box if this employee may receive commission or other types of compensation aside from regular hourly or salary pay in the future.
- Default hours worked per pay period: This will populate during each pay run and save you from having to reenter hours each pay period, if the time worked is consistent).
- Time off: This isn’t a field you’ll need to enter data, but rather a link you’ll see at the bottom of the screen. If your employees will be accruing paid-time-off (PTO), you can set up the policy within Gusto, so it’s automatically tracked and up-to-date for each worker.
Employee Onboarding Documents
Gusto will notify that it will send your employee a W-4 form and a direct deposit authorization form to complete, both very common documents for new employees. Select “Save and Continue.”
If the employee is truly new, meaning they were just hired, Gusto will email them welcome documents to express excitement about them joining the team. However, if the employee you add has been with your company for a while, Gusto will skip this step. This is why it’s important to enter the correct hire date for all employees when you set them up.
If you’ve entered all the employees you have on staff, select “Save and Continue.” If not, go back to the Gusto setup screen and select Step 3, Add employees. You should see a list of all the employees you’ve added to the system thus far, their status, and a button you can select to “add a new employee.” When you’re done, select “Continue Gusto Setup.”
4. Add Federal Tax Details
The next step is to add tax information Gusto will need to file your payroll taxes. If you’re unsure about any information Gusto requests, look to the right side of the page for more guidance. You’ll need to know your Employer Identification Number (EIN), entity type (sole proprietorship, partnership, LLC), and official business name. If you don’t yet have an EIN, Gusto will give you a link to the IRS page you can visit to apply online. When you’re ready to enter the information Gusto needs, select “Add Federal Tax Details.”
There will also be a question about which federal filing form the IRS assigned you, Form 941 or Form 944. Form 941 is used to file quarterly tax returns, and Form 944 is used to file them annually.
5. Add State Tax Details
Even if you live in a state that doesn’t collect income tax, i.e., Florida, you’ll still need to enter state tax information. Select “Add (Your State Name) Tax Details.” Gusto will need your state unemployment insurance (SUI) rate and State Employer ID number. Some states, like Louisiana, also require you to have a revenue account number. This page layout can vary depending on where your business is located.
As in the previous steps, Gusto will give you suggestions on what to enter and provide links to agencies where needed. Here’s what one of the tax setup pages looks like.
Select “Continue Gusto Setup” to move to the next step.
6. Add Your Bank Account
Next, you’ll link your business bank account with Gusto. This is required so that Gusto can pay employees from your business payroll checking account along with state and federal tax agencies on your behalf. You’ll need the bank routing and account number you plan to use for payroll. Select “Add bank account.”
Enter your bank account and routing number. Gusto will make two small bank deposits (that will appear in a day or so) that you’ll enter into the system later on to verify your account. Please note, you won’t be able to run payroll for up to two business days until the bank verification is complete. “Select verify bank account.”
Gusto will need to link to your online banking account for this process to work. You’ll enter or select your bank name, and you’ll be prompted to log in. Once you login, the connection will be complete, and the transactions will show. This is the quickest way to verify your account. You can also opt to do this manually. All you’ll need to do is wait a day or two for the transactions to show up. When they do, you will need to enter the amounts on this page. Select “Continue Gusto Setup.”
7. Add Pay Schedule
Select “Add Pay Schedule.” Now it’s time to enter some specific information on how often you’ll be running payroll.
- Pay period: Will employees be paid every week, every other week, twice a month, or monthly?
- Pay day: What day of the week or month will your business payday be (if weekly) or days if twice monthly?
- First pay date: When will you run the first payroll? It must be after the current day (at least one or two days after if your bank account is being verified manually).
- For work done during what time period: For what pay period will that first payroll cover? Some employers pay for the current week while others pay a week or two behind (called paying in arrears).
Example: Weekly Payroll Paid One-Week in Arrears
If your pay period runs from Sunday night at midnight to the next Sunday, you may want to pay one week in arrears starting each Friday. You’ll collect hours for the prior week and pay employees Friday for the prior workweek.
Select “Continue Gusto Setup” to proceed.
8. Sign Documents
Select “Sign Documents.” With federal and state tax information entered and your pay schedule set up, you’re just about ready to do payroll. Before you can do so, however, you’ll need to provide your electronic signature giving Gusto permission to run payroll on your behalf (which includes submitting payroll money and documents).
You’ll enter your full name, Social Security number, title, birthdate, phone number, and home address. Select “Save and Continue.”
Officially Sign Company Documents
To sign the forms, add yourself as the company signatory. The signatory is the person at your business who has the authority to approve these forms, as well as future documents sent to the government (like payroll tax forms). Once entered, you can sign the forms electronically.
Gusto will notify you via email of any forms that need signing. Likewise, you can add your e-signature with a single click.
At this point, you’ll need to electronically sign three documents:
- Direct deposit authorization: This gives Gusto permission to debit your bank account for payroll and tax payments. We recommend requiring direct deposit for all employees in order to avoid the hassles of paper checks and reliance on snail mail, when possible.
- Authorization Agreement for ACH Debit and Credit Tax: This form gives Gusto permission to specifically debit your account for state taxes. You may or may not see this during your setup.
- Form 8655: Reporting Agent Authorization: This form authorizes Gusto to pay your federal taxes.
Select “Sign Form” for each of these documents, enter your name (which will show in cursive font to mimic a signature), check the box that states you agree to electronically sign this form, and select “Sign.” When you’re done, select “Continue Gusto Setup.”
Note: If you haven’t verified your bank account yet, Gusto will remind you at this point. You’re almost finished with setup.
9. Select Industry
Gusto has to stay compliant with finance regulations and thus requests that you share your industry. Once you enter the first few letters of your industry, you’ll see a drop-down menu that will hopefully include the one you need. If so, select it; if not, check the box beside “I can’t find my industry.” And enter a description of your industry below it. Then, select “Continue Gusto Setup.”
10. Add Workers’ Compensation Insurance
Select “Add Workers’ Compensation,” and tell Gusto whether or not you’re already covered. Most states require it, but Gusto will let you know for sure so you can comply.
If you have an existing workers’ comp policy, you can enter the details in this section, insurance carrier name and renewal date. If you don’t have it but need it to comply, you can sign up for workers comp insurance directly through Gusto. Its partner, AP Intego, can find you several different offers in your area. There’s no additional cost (besides the cost of insurance), and premiums will automatically be calculated and deducted each month from your business bank account.
You can also opt to do this step later. Select “Continue Gusto Setup” to proceed.
11. Choose a Plan
If you’re using a trial to try out Gusto, you’ll be asked to choose a plan at this time. This won’t stop your trial or require you to make any early payments. It’ll just make the transition smoother if you opt to sign up for regular service. Select “Choose the right plan for you.”
Gusto has three full-service payroll options you can choose from, Concierge, Core, and Complete. Check out our Gusto review page for more information on each plan and the services Gusto offers. Click “Select a Plan,” and make your selection. Then, choose your direct deposit schedule, two-day or four-day. This is the amount of time between when you submit payroll and your employees receive their paychecks.
Select “Save and Continue” when you’re done.
How to Run Payroll With Gusto
Running payroll with Gusto is pretty quick if you already know how to do payroll without it; for instance, if you’ve been running payroll manually up until this point and have a solid process in place, this will be a breeze..
12. Input the Hours the Employee Worked
You will have two options to enter the hours the employee worked. You can manually enter the hours each pay period based on the employee’s time card, or you can use a timekeeping system, like Homebase. If you’re using Homebase, you’ll need to sync the two systems so you can import the hours worked into Gusto.
Tip: Enter a default work hour total per pay period in each hourly employee’s profile. Then, Gusto will automatically pull this into your payroll, giving you the option to change it if necessary. This will save you from having to enter the hours each pay period if they remain consistent.
Enter Time Off
If you created a time off policy, you will have the option to enter any paid time off (PTO) employees took during the pay period. This will ensure their PTO balance is always up-to-date and they get paid accordingly.
13. Review Payroll & Submit
At this point, you’ll be able to do a final review of your payroll transactions. Double-check that your tax and net pay amounts look reasonable. Confirm that you haven’t forgotten anything (like bonuses, tips, or uniform cost deductions) and haven’t made any major mistakes (such as keying in an extra zero). The more payrolls you process, the easier this will become. You can still make adjustments as needed. This also gives you time to see exactly how much money you’ll need in your payroll bank account to pay employees, giving you time to deposit money into that account.
When you’re sure payroll is accurate, select “Submit Payroll.” At this point, you can’t reverse the transaction. All employees who are set up for direct deposit will receive their paycheck in two to four business days, depending on how your business account is set up. If you’re paying any employees by check, Gusto will prompt you to print them now. Be sure you have MICR toner in your printer and blank check stock. This will ensure your employees don’t have any trouble at the bank.
Congratulations! You just ran your first payroll with one of the best payroll services in the market!