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

After much research and analysis of online payroll services, we recommend Gusto (formerly known as ZenPayroll) as the best online payroll service for both sole proprietors and S corporations that have only one full-time employee and several outside contractors.

Gusto combines excellent customer support with an all-encompassing payroll service at an extremely low cost. Here is a breakdown of why it's our best pick.

Gusto's low cost is what makes it such an attractive option for small businesses. Out of all of the services we reviewed, Gusto's cost per month was one of the cheapest. The company charges a $29 base price, plus $6 per employee per month. An employee is considered anyone who receives a paycheck, such as a freelancer or independent contractor. So, if you were a sole proprietor, working with three outside contractors, your monthly cost would be $47 per month. Should you need to add more contractors or hire anyone full time, you're charged only an additional $6 for every new worker.

Unlike other companies that charge more for added features, Gusto's monthly price includes everything the service offers. That means direct deposit, unlimited payroll runs, year-end W-2s and 1099s, new-hire reporting, and compliance management.

Gusto's two-month free trial was a nice bonus that many of the other services we looked into didn't offer. This gives you the ability to test out the system for several months to see how you like it. If it isn't meeting your needs, you can cancel at any time for no cost.

Editor’s Note: Looking for a payroll service for your business? If you’re looking for information to help you choose the one that’s right for you, use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of vendors for free:

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Gusto has everything a small business needs to run payroll. The service handles all of the payroll processing, as well as all of the tax filings and payments.

One big benefit for businesses working with outside contractors is that you can run as many payrolls as you want each month. Some of the services we examined charged businesses by the number of pay periods, which meant higher prices for those that wanted to run payroll on a weekly basis. Having unlimited pay runs is valuable for businesses working with outside contractors, because often those contractors want to be paid at different times. This gives you the freedom of paying everyone when you want and not worrying about syncig each contractor onto the same pay cycle.

Among the features we found helpful is the "AutoPilot" setting, which automatically processes your company's payroll each pay period and lets you know when the payroll has been completed. The ability to set it and forget it is valuable for small business owners with a lot on their plates.

One of the biggest benefits Gusto offers is in its tax-related services. Gusto automatically calculates, pays and files your local, state and federal payroll taxes. In addition, at the end of the year, the service generates and sends all of your employees and contractors their W-2 or 1099 forms. Most of the other services we looked at charged extra for generating the year-end forms and sending them out.

Some of the other valuable features include free direct deposit, paid-time-off management, automated new-hire reporting, detailed payroll reports and integration with a variety of accounting software, including Xero, FreshBooks and QuickBooks.

What makes Gusto such a great option is its ease of  use. After you sign up, the system walks you through the entire setup process. This includes:

  • Adding a company address
  • Adding employees
  • Setting up federal and state taxes
  • Setting up and verifying your bank account
  • Configuring payroll schedule

Adding employees into the system is very simple. Besides entering in their names, job titles and emails, you also fill in their hire dates, employee type (hourly, salary, etc.) and how much they earn each pay period. For contractors, you simply add in their names and addresses, and designate whether they are paid hourly or at a fixed rate.

Gusto makes the process of adding contractors into the system a simple one. All you need to do is designate whether the contractor is an individual or business, how much their wages are and their address.

Each time you log in to the system after the initial setup, you are taken to the Gusto dashboard, which has your "to-do" list, important updates and upcoming activities.

When you are ready to run a payroll, the system has you to enter the number of hours worked, note any vacation or sick days taken, add a bonus or commission, and process expense reimbursements. Once all of the information is entered, you click "submit payroll," and you receive conformation that the money is being sent to your employees or contractors. Additionally, you get an overview of how much your employees and contractors were paid, how much payroll tax you paid, and your total reimbursement amount.

You can find more information on how to use the company's interface and what the experience is like on the Gusto website and in this YouTube video.

The system can also be accessed through any Web-enabled device, such as a smartphone or tablet. This gives you the freedom of running your payroll from anywhere, at any time.

When we reviewed Gusto last year, one of its drawbacks was that it was available to businesses in only 26 states. Since then, the service has become available to businesses nationwide.

A new addition to Gusto this year is its wide selection of health plans designed specifically for small businesses. The health care plans are currently available only for businesses in California; however, the company plans to add more states in the near future.

We were extremely pleased with Gusto's level of customer service. To test the type of support we would receive, we called the company posing as a new business owner interested in payroll services. 

When we called during our initial investigation last year, a customer service representative answered our call right away and seemed eager to speak with us. The representative had detailed answers to each of our questions and gave us a very clear understanding of how the service operated and how much it cost.

In addition, the representative did not push us as into signing up for the service. Many of the other payroll providers we examined quickly tried to get all of the specifics on our potential company and quote us prices. Gusto, however, seemed more focused on making sure our needs were met first.

We were just as pleased with the level of service when we made a similar call this year. While we were placed on hold for several minutes, our call was eventually transferred to one of the more pleasant and helpful customer service representatives we spoke with during this review process. He was very friendly and accommodating. He walked us through exactly how the service worked, the features it included, how easy the platform was to use and how much it would all cost. Never once did he give an incomplete answer or try to pressure us into signing up for the service.

Gusto also offers a complete library of online resources. The company's website has a full list of articles, videos and webinars, with tips on not only using the company's system, but also running a small business.

Gusto customer service representatives are available by phone between 8 a.m. and 6 p.m. (PST) Monday through Friday and via an online form.

One potential drawback is that the company's tax services aren't guaranteed, like they are with many other services. However, the customer service representative 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 the responsibility of correcting it.

The company doesn't offer many of the added human-resources services that some of the other providers we examined do. If you want those extra services, we would encourage you to consider another payroll service provider.

We chose Gusto from a pool of the dozens of payroll services we considered. To read our full methodology, and for a more comprehensive list of payroll services, visit our best picks page here.

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



Editor’s Note: Looking for a payroll service for your business? If you’re looking for information to help you choose the one that’s right for you, use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of vendors for free:

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Chad  Brooks
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.