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Gusto Review: The Best Payroll Service for Sole Proprietors or S Corp

After conducting extensive research and analysis, we recommend Gusto as our 2017 pick for the best online payroll service for sole proprietors and S corporations that have only one full-time employee or work with outside contractors. We chose Gusto from a pool of the dozens of payroll services we considered. To understand how we selected our best picks, see our methodology and a comprehensive list of online payroll services on our best picks page.

Gusto combines excellent customer service with an all-encompassing payroll service that's easy to use. Gusto charges a base fee of $39 per month, plus $6 per employee or contractor. Here is a more detailed breakdown of why Gusto is our best pick.

Gusto offers everything a small business needs from a payroll provider. The service runs payroll and handles all payroll-tax obligations. What makes Gusto appealing to sole proprietors and S corporations is that its services are available for both W-2 employees and 1099 contractors.

With Gusto you can run as many payrolls as you want each month for no extra costs. This is especially valuable for businesses working with contractors who aren't all on the same pay schedule. Some of the services we examined based their pricing on how often businesses ran payroll each month. Having unlimited payrolls gives you the freedom of paying everyone when you want and not worrying about syncing each contractor onto the same pay cycle. With this service, employees and contractors can be paid by direct deposit or check.

With Gusto, you can pay contractors just as easily as W-2 employees.

Gusto also takes care all payroll tax responsibilities. The company automatically calculates, pays and files your local, state and federal payroll taxes. At the end of the year, the service generates and sends all of your employees and contractors their W-2 and 1099 forms. Many of the other services we looked at charged extra for their year-end tax services.

Gusto also manages paid time off, has automated new-hire reporting, provides detailed payroll reports and offers the ability to run payroll on autopilot. Some of the system's other unique features include the ability to add personal notes to employee pay stubs, the option to let employees make charitable contributions directly from their paychecks, and automatic reminders that are sent to those in charge alerting them of employee birthdays and work anniversaries.

Editor's Note: Looking for information on payroll systems? Use the questionnaire below. Our vendor partners will contact you with the information you need:

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Gusto integrates with a wide selection of accounting, time and attendance, expense management, and human resources programs, including:

  1. Capital One Spark Business (banking)
  2. QuickBooks Online (accounting)
  3. QuickBooks (accounting)
  4. FreshBooks (accounting)
  5. Xero (accounting)
  6. TSheets (time tracking)
  7. When I Work (time tracking)
  8. Deputy (time tracking)
  9. Ximble(time tracking)
  10. Boomr mobile time tracking (time tracking)
  11. Time Tracker (time tracking)
  12. Receipt Bank (expense management)

Gusto also offers several additional services, including 401(k) retirement and workers' compensation plans. In addition, the company provides health care plans designed specifically for small businesses. However, those benefits are not available in all states. Health care benefits through Gusto are currently only available in California, Colorado, Florida, Illinois, Massachusetts, New Jersey, New York, Ohio, Texas and Washington.

Gusto has also partnered with Gradvisor to offer 529 college savings plans that integrate with the payroll service. 529 contributions automatically sync with the Gusto system, so there's nothing to update. In addition, employers have the option to offer company contributions.

Gusto charges a $39 base price each month, plus $6 per employee or contractor. When paying contractors, however, you are only charged the $6 for the months they are paid. So, if you only pay a contractor once a year, you only pay the $6 for the month they are paid in.

Unlike other companies that charge more for added features, Gusto's monthly price includes all of its payroll and payroll-tax services. There are no extra charges for multiple payroll runs, direct deposit, paying employees in multiple states, year-end tax services or for setting up the system. Many of the other providers we considered charged extra for some of these services.

It is important to note that Gusto has significantly raised its costs in recent years. Originally, the company charged $25 per month plus $4 per employee for the first 10 employees, and $2 per employee after that. In 2015, those rates increased to $29 per month, plus $6 per employee. Last year, the prices increased again to the current $39 monthly base fee. We did reach out to Gusto during our latest round of research and were told that pricing isn't expected to be raised again anytime soon.

If those prices are too high for you, we would encourage you to consider our second-place winner in this category: Wagepoint. This service has a $20 base fee, plus $2 per employee per pay run. So, if you are running payroll only once a month, you can cut your costs by more than half. You can read more about Wagepoint below.

With Gusto, there are no long-term contracts, and you can cancel at any time for no cost. Additionally, the company offers a one-month free trial.

Gusto is a cloud-based system doesn't require you to install or maintain any software. The system's online portal, which is mobile friendly and can be accessed from any smartphone or tablet, has an interface that's easy to navigate.

When logging in, each time you are taken to the Gusto dashboard, which shows a "to-do" list, important updates and upcoming activities. The homepage also walks you through the entire process of setting up the system, which includes:

  1. Adding a company address
  2. Adding employees
  3. Setting up federal and state taxes
  4. Setting up and verifying your bank account
  5. Configuring the payroll schedule
The Gusto dashboard makes it simple to see what tasks you need to complete.

To add employees or contractors into the system, all you need are workers' names, email addresses and pay rates. You then have the option of filling in additional details, such as Social Security numbers, home addresses, and tax withholding and bank information. Or you can use the employee self-onboarding feature, which gives employees and contractors the ability to enter all of that information on their own.

The process of running payroll with Gusto was among the easiest we experienced during our research. You click the Run Payroll tab on the Gusto home page and enter the number of hours each employee worked, vacation or sick days taken, bonuses or commissions earned, and expense reimbursements. You then click Submit Payroll, and you'll receive conformation that the money is being sent to your employees or contractors via direct deposit, and that you can print out any necessary checks.

To run payroll, all you need to do is add in the number of hours employees worked and any bonuses or commissions they earned.

All employees – full-time, part-time and contract workers – can log in to the system to review their digital pay stubs and get their year-end tax forms. These are lifetime accounts, which give employees access to their information even if they move on to new employers.

You can learn more about using the system by watching videos on Gusto's YouTube channel.

We were extremely pleased with Gusto's customer service. To get a feel for the type of support provided, we called and emailed the company multiple times posing as a new business owner.

Each time we called, we spoke to friendly and helpful customer service representatives. While we did have to wait on hold to speak with someone during one of our calls, all of the other times we reached out to Gusto, our calls were answered immediately.

During our conversations, the representatives gave clear and detailed answers to all of our questions. At the end of each call, we had a strong understanding of how the system worked, the services provided and how much it all cost.

At no time did any of the representatives try to push us as into signing up for the service. Many of the other payroll providers we spoke to quickly tried to get all of the specifics on our company and quote us prices. Gusto, however, seemed more focused on first making sure our needs were met.

We were also happy with the prompt response we received when we contacted the company via email. Our emails were all returned within a couple of hours and included detailed and helpful answers to our questions.

Gusto representatives are available for support by phone and email between 6 a.m. and 6 p.m. (MST), Monday through Friday. Gusto also has a complete library of resources on its website, including a full list of articles, videos and webinars, with tips on not only using the payroll system, but also running a small business.

The biggest drawback with Gusto is its regular price increases. Over the past three years, prices have risen by more than 50 percent. Although Gusto is far from being one of the most expensive payroll services, it is no longer among the cheapest.

If you are looking for a payroll service for a more affordable cost, we would encourage you to consider Wagepoint, our second-place winner in this category. It is important to note, however, that Wagepoint charges on a per-pay-run basis. So, if you run multiple payrolls each month, the costs of Gusto and Wagepoint will likely be pretty similar. You can read more about Wagepoint below.

Another potential downside is that Gusto's tax services aren't guaranteed. However, one of the customer service representatives we spoke with said if there is a problem with an incorrect or late payment that is made to the government on your behalf, Gusto will investigate the situation. If the company, and not you, made the error, Gusto will take responsibility for correcting it.

We were also disappointed that Gusto isn't an accredited member of the Better Business Bureau (BBB) and has a C- rating. Despite that, the company, as of March 2017, has had only four complaints filed against it within the past three years. Three of those complaints were resolved to the satisfaction of the complainants. One has yet to be resolved.

While it might not offer all of the bells and whistles of Gusto, Wagepoint provides all of the critical services needed from a payroll provider. Wagepoint's cloud-based system handles all of a business's payroll and payroll-tax obligations. It can be used to pay hourly and salaried employees, as well as contract workers, by direct deposit or check.

The system allows you to easily add in bonuses, commissions, expenses, holiday pay and overtime to any employee paycheck. In addition, you can make any deduction you want, such as those for 401(k) plans or health care benefits.

Wagepoint also takes care of all of payroll-tax responsibilities. That includes calculating, filing and paying all federal, state and local taxes on your behalf. At the end of the year, Wagepoint automatically fills out all W-2 and 1099 forms and submits them to the IRS on your behalf.

The system offers employee self-service. This allows all workers and contractors to access the system to view current and past pay stubs as well as to view and print year-end tax forms.

Wagepoint integrates with several time-and-attendance systems and accounting programs, including SwipeClock, Deputy, QuickBooks Online, LessAccounting and Xero.

We were pleased with how simple Wagepoint is to use. It has an easy-to-understand interface that allows you to quickly navigate the system. To run payroll, you first select the pay period, then add in the hours worked for hourly employees, as well as any additional payments that those workers should receive, such as bonuses, commissions or reimbursements. The next step is to review payroll data for salaried employees and add in any extra payments those individuals might be receiving.

Once all of the information is entered in, the system automatically calculates payroll totals for you to review. If everything is correct, you can approve the payroll, and your payroll is complete.

Wagepoint makes adding employees into the system an easy process.

For those who pay their workers just once a month, Wagepoint was among the cheapest payroll providers we found during our research. The company charges a base fee of $20 per payroll, plus $2 per employee. However, charging by pay run might be a negative for employers who want to run payroll multiple times a month. Still, this could be an advantage for businesses that have larger 1099 workforces and make payments only once a month.

The per-payroll costs are the only fees Wagepoint charges. Many of the other solutions we looked into charged fees for year-end tax services and for setting up the system.

We were happy with the level of support we received from Wagepoint when we called posing as a business owner interested in payroll services. A friendly representative fielded our call immediately and answered all of our questions clearly and in enough detail that we gained a solid understanding of how the system worked.

WagePoint is an accredited member of the Better Business Bureau and has an A+ rating. In addition, the company has only had one complaint filed it against it within the past three years.

The biggest drawback to Wagepoint is that it doesn't offer unlimited payroll runs each month. Another negative is that the service requires you to run your payroll four days prior to your actual pay date in order for direct deposits to be made on time. Many of the other services we examined required you to run payroll only two days before your payday.

Small Businesses Overall
Intuit Payroll
Read Review
  • Base Fee
    $20-$99 per month
  • Per Employee Cost
    $2 per employee
  • Tax Guarantee
    Full Service Only
  • Customer Service
    Phone, Email, Live Chat
Very Small Businesses
OnPay
Read Review
  • Base Fee
    $36 per month
  • Per Employee Cost
    $4
  • Tax Guarantee
    Yes
  • Customer Service
    Phone, Email and Live Chat
Sole Proprietor or S Corp.
Gusto
Read Review
  • Base Fee
    $39 per month
  • Per Employee Cost
    $6
  • Tax Guarantee
    No
  • Customer Service
    Phone and Email
Household Employer
SurePayroll
Read Review
  • Base Fee
    $49.99 per month
  • Per Employee Cost
    One included, $4 for all others
  • Tax Guarantee
    Yes
  • Customer Service
    Phone and Email

Ready to choose a payroll service? Here's a breakdown of our complete coverage:

Editor's Note: Looking for information on payroll systems? Use the questionnaire below, and our vendor partners will contact you with the information you need: 

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Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.