Let’s be real: payroll is one of those things in your business that you’ve got to deal with, but gawd, is it boring! Like, so boring that it makes reading Moby Dick sound like a night out in Ibiza.
You’ve got two choices when it comes to payroll: run away to Spain with Melville and pretend like it doesn’t exist OR start using a payroll company that makes payroll tolerable or, dare I say it, even exciting.
And while I’m sure reading about whales in Spain sounds like your dream vacay, finding a payroll service that takes the edge off payroll is a much better decision for your business.
Enter Gusto, our all-time favorite payroll company that not only makes payroll super easy, but also makes it super fast.
With Gusto, you can run payroll in less than a minute, and all the hardest parts of payroll (like the math) are taken care of for you. You might not be able to make payroll disappear, but, with Gusto, at least it’s quick, painless, and colorful.
But first: Why do you need a payroll service?
Well, you don’t NEED a payroll service. Technically, you can run payroll all on your own. BUT, without a payroll service, you’ll be taking the DeLorean back to the dark ages of business finances fast.
You see, payroll services take care of the most time-consuming and tedious aspects of running payroll. Writing yourself a paycheck is the easy part. Dealing with federal and state taxes…not so much.
Here’s what it would look like to run payroll all on your own:
Every time you run payroll, you’d calculate the amount of federal and states taxes that are withheld from your employees’ paychecks. This involves math. Serious math.
Then, you’d calculate how much you, the employer, will need to pay in taxes. THEN, you need to put this money aside so it’s available when it’s time for you to pay your payroll taxes.
THEN, you’ll pay your federal and state payroll taxes either monthly or semiweekly, and
THEN you’ll fill out a form every quarter reporting your federal (and possibly state) tax withholdings.
Oh…and then at the end of the year, you’ll generate a W-2 for every employee and deliver it by January 31st.
Sound like a lot of work? It is. And keep in mind that this is the CliffsNotes version of all the forms and calculations you need to do. There’s more…so much more.
Which is why you probably just want to skip the hellish number crunching and go straight to a payroll service.
Payroll services take care of all the math, tax deposits, and reporting for you, on both the state and federal levels. There’s not much you need to do besides entering your employees’ hours and making sure you have enough money to cover payroll.
And while payroll services aren’t free, they’re totally worth the small monthly fee.
First, because payroll mistakes cost money. Miss a zero or forget to add a decimal? You could pay some serious penalties for your mistake. And secondly, because it’s way more cost-effective to pay a provider to do your payroll the right way.
Which is a better use of your time and money: spending three hours every month figuring out your payroll, or paying $50/month and spending five minutes running your payroll, with the peace of mind that everything will be done correctly?
I think you know the answer.
Why Gusto is our absolute fave
Our favorite payroll service is Gusto, which makes running payroll an absolute dream.
Gusto handles all the federal and state payroll tax and reporting requirements, and provides support for employee time tracking, vacation and sick time, and paid holidays.
Unlike other payroll providers, Gusto really shines when it comes to navigation and ease of use. Here are our favorite Gusto features:
Getting started with payroll involves some setup. You have to register with the appropriate state agencies, obtain account numbers, and set up pay schedules. It can be daunting to get started, especially if you’ve never navigated payroll before.
Luckily, Gusto walks you through the payroll setup process. Not only is the setup broken down into small, doable steps, but Gusto provides plenty of information (and links to outside resources) in case you get stuck.
With Gusto, you can legit run your payroll in less than a minute. This is because running payroll is SUPER straightforward. Once your employee is set up in the system, you literally type in the number of hours worked and that’s it.
You can easily add additional earnings, like bonuses, commissions, tips, and reimbursements, with a single click because everything is laid out for you in the payroll window.
Whether you have a simple payroll with just one employee or a more complicated payroll with multiple employees, vacation time, and benefits, it’s easy to find what you need through the Gusto dashboard.
Unlike other payroll services, where you have to search high and low for that one thing, Gusto’s menu is intuitive and uses language you actually understand.
Looking to set up employee sick time? Click on Time Off. Want to update your company’s information? Click Company Details. Nothing is hiding behind nested menus, confusing icons, or vague descriptions.
While running payroll in Gusto is gloriously simple, make no mistake that Gusto is a robust payroll provider, especially when it comes to employee benefits.
Through Gusto, you can set up standard employee benefits, like health and retirement, along with more unique benefits like charity matching and commuter benefits.
Fun colors and icons
Running payroll is probably not something you’re dying to do every month. And if you have to log in to a payroll dashboard that looks like MS DOS, you’re probably going to put off running your payroll. C:\Nope. But if the dashboard looks inviting, and even fun, you’re less likely to skip out on your payroll at happy hour.
Integrates with QuickBooks Online
Every time you run payroll, Gusto calculates your employee’s salary, how much tax is withheld from your employee’s paycheck, and how much tax your company pays. And while it’s great that you don’t have to figure this stuff out yourself, this information still needs to end up in your accounting program.
I’m betting you don’t want to be the one to enter it.
Lucky for you, Gusto integrates with QuickBooks Online (and other popular accounting programs) seamlessly.
Every time you run payroll, Gusto automatically enters the details of your payroll into QuickBooks, including how much of your payroll went to salaries, reimbursements, and taxes.
Gusto for S corps
Besides Gusto’s basic payroll features, Gusto offers a few additional features that make it a total JTT-level dreamboat for S corp owners:
Additional tax withholdings
Technically, any employee can set up additional tax withholdings when they fill out their W-4 information in Gusto. But many S corp owners like to include additional tax withholdings to help cover the income tax they will pay on their taxable profits at the end of the year.
If you’re really bad at saving for taxes and want to ensure that you’re stashing away enough, you can automate your tax savings through your payroll runs.
Benefits tracking for S corp owners
If you’re an S corp owner and paying for your health insurance (or other fringe benefits) through your company, you must include the cost of your fringe benefits in your W-2 wages.
Wait, what? How am I supposed to keep track of that?
It’s confusing, I know. Which is why it’s super awesome that Gusto keeps track of which employees are more than a 2% owner of the company, and it takes care of reporting your health insurance (and other fringe benefits) for you on your W-2.
Setting up an employee as a more than 2% owner is SUPER easy (Gusto will even remind you to do it). Then, all you do is let Gusto know how much the benefits cost every month, and they take care of the rest.
Competitive pricing for one employee payroll
Gusto is one of the most competitively priced payroll services out there.
Unlike other payroll companies that charge you every time you run payroll, Gusto charges you a monthly fee. Regardless of how many payrolls you do in a month, your monthly fee won’t change.
Also, Gusto’s fee structure is based on a monthly base fee and an additional charge per employee. If you’re only running payroll for yourself, Gusto’s fee structure is very reasonable because the base fee is lower than many other payroll companies.
Plus, Gusto doesn’t have any extra hidden fees for things like filing W-2s and adding health benefits to your payroll.
How much should you expect to pay?
Gusto’s base fee is a reasonable $39/month. Then, you just pay $6 per person. So, if you’re just running payroll for yourself, you’ll pay $45/month.
Getting started with Gusto
To give Gusto a whirl, sign up for a free trial. Then check out this video, which walks you through how to set up Gusto as an employer.
Payroll Comparison Table
|Gusto- Core||Sure Payroll||Intuit Payroll (Full Service)||ADP Run (essentials)|
|Cost structure||Monthly fee||Monthly fee||Monthly fee||Per payroll|
|Price||$39/month + $6 per person||$29.99/month + $4 per employee||$80/month + $4 per employee||Price varies|
|Automated federal and state tax filing||x||x||x||x|
|File W2s||x||Extra fee||x||Extra fee|
|File 1099s||x||Extra fee||Extra fee||Extra fee|
|Multiple states||x||x||Extra fee||Extra fee|
|PTO tracking||x||Extra fee||x||x|
|Health benefits||x (pay premiums only)||Premiums + fees||Premiums + fees|
|Worker’s Comp||x (pay premiums only)||Premiums + fees||Premiums + fees||Premiums + fees|
|QuickBooks Online Integration||x||x||x|
Andi Smiles is a small business financial consultant and coach. She’s helped hundreds of small business owners take control of their business finances while uncovering their emotional relationship with money.