ADP vs Paychex: Which Should You Choose in 2021?

When it comes to payroll, most business owners have heard about ADP and Paychex; they’re both established payroll providers that offer comprehensive payroll and HR services.

ADP has flexible plan options that support growing companies and especially shines with businesses in multiple states and those with more than 1,000 employees. Paychex provides a dedicated customer service representative and best supports companies with less than 300 employees. Alternatively, small businesses should consider Gusto; it’s cheaper than ADP and Paychex and lets you run payroll as many times you need to without charging extra.

• ADP: Best for startups and businesses expanding to multiple states
• Paychex: Best for small to mid-sized companies in highly regulated industries (construction, trucking)
• Gusto: Best for small businesses (with less than 100 employees or contractors only) looking for the most affordable payroll and HR software

An In-Depth Look at ADP vs Paychex Payroll Features + Gusto

Let’s see how ADP and Paychex’s features compare. And if you’re a small business, keep in mind that Gusto is half the cost of both (you’ll pay $720 or $1,188 annually for 10 contractors or employees, respectively, vs $3k for Paychex or ADP).

*Pricing estimates are for 10 employees with biweekly payroll. ADP and Paychex both charge by pay run, so your actual price with ADP and Paychex may be different depending on your circumstances and can change from month-to-month. Gusto has unlimited pay runs, so this quote is for any pay cycle, even weekly.

If you’re still conflicted about which payroll provider is best for your business, answer a few questions in our ADP vs Paychex vs Gusto quiz, and we will help you decide.

ADP and Paychex: Why They Tie for Pricing

• The quotes we received for both ADP and Paychex were within a few hundred dollars of one another
• Both offered to waive the $200-$250 setup fees.
• Neither offer transparent pricing on their websites. You’ll have to call a sales representative to get a quote.
• Both services charge for extra pay runs; they don’t offer unlimited payroll runs like some payroll providers.
• Year-end tax forms (W2 and 1099 forms) are also an additional cost aside from regular payroll processing charges.

Gusto: Best for Pricing

Gusto is cheaper than both ADP and Paychex, hands-down ($1k vs $3k for 10 workers). This is in part due to Gusto not charging extra for services like year-end reporting and setup. Pay runs are also unlimited, so you’ll pay the same rate to pay employees weekly and semi-monthly. Also, pricing is transparent; you can check the website to determine your cost before you even sign up for its free trial.

For more information on Gusto’s payroll and HR features in addition to plan options, see our Gusto review.

ADP: Best for Large Variety of Plan Options

ADP has twice as many payroll and HR product plans as Paychex. It has eight in total. Four for businesses with 1-49 employees and four for larger businesses. It even has a self-service tool in some states for companies with 1-10 employees.

For more information on ADP and the payroll and HR products it offers, check out our ADP review.

When Paychex’s Plan Options Are Enough

• If you’re not expecting to grow to a 500+ employee business, Paychex’s payroll and HR plans may have enough flexibility for you. You’ll still have access to many of the same features as you would from ADP, like automated payroll and HR compliance support;
• You don’t anticipate having the constant growth changes that often accompany many startups.

When Gusto’s Plan Options Make More Sense

• Your business has less than 100 employees; you get three plans to choose from, and they all include full-service payroll.
• You only need to pay independent contractors; there’s one plan for this type of setup, but it’s flexible (you only pay $6 per contractor and only in the months they actually work; no base fee).

Paychex: Best for Customer Support

Paychex gives its customers a dedicated customer service rep, regardless of their size; ADP on the other hand only offers it with its premium plans. Having one rep that solely handles your company’s payroll and HR function makes it easier to resolve payroll issues, since you’re not always being transferred from one representative to the next. Also, customer support is 24/7.

For more information on Paychex and the payroll and HR products it offers, check out our Paychex review.

When ADP’s Customer Support Is Enough

• If you just need 24/7 customer support, regardless of which representative you have to speak with
• You’re not in a high-risk industry. ADP can sometimes take a while to resolve issues, in some part due to the size of the company.

When Gusto’s Customer Support Makes Make More Sense

• You’re not in a high-risk industry and can wait over the weekend to have customer service resolve issues.
• You’re okay with speaking to any member of the customer service team and don’t need a dedicated rep.
• Customer service quality is the most important aspect of support you need in a payroll provider.

Paychex: Best for Employee Benefits

Paychex offers insurance and retirement benefits in all 50 states, just like ADP. However, it also offers financial wellness tools for employees. You can offer:

• Short-term emergency loans
• Financial health assessments
• An app to help with budgeting and financial education

When ADP’s Employee Benefits is Enough

If all you need to offer is insurance and retirement benefits, ADP may work for you.

When Gusto’s Employee Benefits Make More Sense

• You want to offer more than just insurance and retirement benefits.
• You don’t need a Professional Employment Organization.
• You’re in one of the 27 states that Gusto offers health insurance:

Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington DC, Washington, and Wisconsin

Features ADP and Paychex Have in Common

Just to reiterate, ADP and Paychex have a lot in common, so let’s take a look to make sure you’re aware of everything they offer.

Even if you know how to do payroll, ADP Run and Paychex are both great payroll services that:

• Run payroll and pay employees on a pay cycle you choose
• Pay employees using direct deposit at no additional cost
• Process and file federal, state, and local payroll taxes
• Handle year-end tax reporting (W2s and 1099s) if you pay extra
• Have plenty of add-on features you can use to customize your plan
• Offer separate HR products you can purchase as needed, i.e., insurance, performance management, talent acquisition, and compensation management
• Provide onboarding and compliance support
• Offer a professional employer organization (PEO) option
• Have a mobile app you can use to process payroll

When to Use ADP as a Payroll Processing Company

ADP Run is a great payroll option for small businesses that have growth plans in place or are already in the 500+ employee range. It performs all of the basic payroll functions and offers a robust set of HR and compliance features. If you find yourself expanding into different states, its multi-state compliance tools will be gold.

Visit ADP

When to Use Paychex as a Payroll Processing Company

If you have a small business and want both professional payroll services and excellent customer service catered to you, you’ll prefer Paychex over ADP. Unlike with ADP, you don’t need to have a large employee base to get access to a dedicated service rep, and customer service is available to help 24/7. Payroll plans are customizable and can support employers with less than 20 employees as well as those with over 100.

Visit Paychex

When to Use Gusto as a Payroll Processing Company

If you’re a new employer with a handful of employees and/or don’t anticipate passing 100 employees, Gusto is a good option. It’s built for small businesses, has highly rated customer service, and includes HR tools in addition to its full-service feature in all three of its plans. It’s also super affordable compared to the more robust providers, like ADP and Paychex, so there’s no reason to pay extra if your business doesn’t need the extra features.

Visit Gusto

 Bottom Line

Comparing ADP vs Paychex is challenging, because they offer most of the same products. We recommend you choose the best payroll solution based on both your current and expected future needs. ADP supports large growth plans, for instance, if you own a startup and are planning to expand into multiple states. Although, if you’re planning to stay under 300 employees, Paychex will give you a more personalized experience. And don’t forget Gusto if your business structure is simple with less than 100 employees.