As you started your software research, Gusto and Paychex are two providers that might have come up. Though they both offer payroll processing and human resources (HR) services to small and mid-sized businesses, they differ in some crucial areas.
We at the MarketWatch Guides team are here to go over these differences in pricing, functionality, scalability and ease of use. By the end of our comparison, you should be able to pick the right software for your business needs.
What Is Gusto?
Gusto, previously known as ZenPayroll, has been around since the early 2010s as a full-service HR and payroll solution. Here’s a breakdown of some of its core capabilities:
- Direct deposit payments for W-2 employees and 1099 contractors
- Calculating and filing of federal, state and local taxes
- An employee self-service app and portal to track pay stubs and request time off
- Time tracking for submitting time-off requests and clocking in and out
- Benefits administration for health, dental, vision, life, disability and more
What Is Paychex Flex?
Paychex is a publicly traded provider of HR and payroll software. Like Gusto, its solutions are cloud-based. Here is some of what you get:
- Direct deposit, pay card and check payments for employees
- Calculating and filing of federal, state and local taxes
- Recruiting for new roles and onboarding for new hires
- An employee self-service app to track earnings and leave
- Benefits administration for health insurance and retirement planning
Price Comparison
Both Gusto and Paychex provide transparent pricing for their base plans. Here is how these plans compare:
Base Plan | Gusto | Paychex Flex |
Plan name | Simple | Essentials |
Base monthly price | $40 | $39 |
Price per employee | $6 | $5 |
Employees supported | Unlimited | 1-19 |
Key features included | Direct deposit, employee self-service, hiring and onboarding, health and finance benefits | Direct deposit, employee self-service, hiring and onboarding |
As you can see, Paychex Flex’s base plan is slightly cheaper. That being said, it supports fewer employees and offers fewer features. If you were to outgrow it and wanted to upgrade to a new plan, you would have to contact Paychex for a quote because the base plan is the only plan with public pricing.
Key Features Comparison
There is a strong crossover in the capabilities between Gusto and Paychex:
Function | Gusto | Paychex Flex |
Payroll | Direct deposits, employee and contractor payments, domestic payroll | Direct deposits, employee and contractor payments, international payroll |
Accounting | Tax calculation and filing, third-party integrations | Tax calculation and filing, third-party integrations |
Reporting | Report templates, custom reports | Report templates, custom reports |
General HR | Hiring and onboarding, employee self-service, time tracking | Hiring and onboarding, employee self-service, time tracking |
Benefits Administration | Health, dental, vision, 401k, workers’ compensation, life, disability | Health, 401k |
Gusto and Paychex offer almost all of the same tools. The difference lies in how they offer them. Paychex is a professional employer organization (PEO). This means that you outsource all of your payroll and HR needs to Paychex for its team to do for you. On the other hand, Gusto is a platform to handle all of your HR and payroll tasks yourself.
Integrations and Add-Ons Comparison
Integrations and add-ons expand a platform’s capabilities. Integrations usually come with the selected pricing plan, while add-ons come at an additional cost. The cost varies by plan and add-on. Here’s a summary of the key integrations and add-ons for Gusto and Paychex Flex:
Gusto | Paychex Flex | |
Key Integrations | Zoom, Google Workspace, Slack, Breezy HR, Jazz HR, Greenhouse, Sage, FreshBooks, Xero, QuickBooks | Bamboo HR, JazzHR, Greenhouse, Sage, Xero, QuickBooks |
Key Add-Ons | State taxes, International contractor payroll, Workers’ compensation, Health savings accounts (HSAs) and flexible spending accounts (FSAs), Life and disability insurance, 401ks, Commuter reimbursement | Applicant tracking, Performance management, Document management, Job costing, Time and attendance, Employee benefits, Business insurance |
Both Gusto and Paychex integrate with the same or similar general HR, hiring and accounting tools. However, Gusto also integrates with team collaboration tools to create an all-in-one business platform.
In terms of add-ons, Gusto mainly focuses on specific employee benefits. Paychex Flex, on the other hand, has add-ons for every facet of employee management, including hiring, performance and attendance.
Scalability
Gusto and Paychex work for businesses on the opposite sides of the size spectrum.
Gusto is better for smaller companies. Its plans cover basic HR needs at an affordable price. Paychex, on the other hand, can help businesses that grow to thousands of employees across several countries.
In sum, Gusto is the better software solution until you reach a certain threshold. However, switching providers can be time-consuming and frustrating. If you want to stick with one provider, ask yourself the following questions:
- Do I expect to stay below 100 employees? If yes, you might prefer Gusto.
- Do I expect to grow beyond 100 employees OR into international markets? If yes, Paychex might be better.
Ease of Use
Neither Gusto nor Paychex is difficult to work with. However, Gusto stands out as being easier to use. The dashboard is carefully designed for easy navigation between each tool. The automated tools require a bit more attention on the front end, but once they’re set up, you don’t have to worry about them again.
Seeing as Paychex is an older company, its interface can feel a bit dated by comparison. However, the learning curve isn’t impossible. Plus, you will be spending less time in it anyway because Paychex is a PEO and will be handling most of it for you.
Both companies have a team of experts to guide you through the onboarding process if you need help. As with other software providers, you get priority customer service if you pay for a premium plan.
The Bottom Line
After comparing Gusto and Paychex, they seem to fit the needs of different types of businesses. Gusto helps small companies with HR basics, while Paychex helps growing and/or international businesses. Which category of business you fall into should be able to help you make your software decision.
Frequently Asked Questions About Gusto vs. Paychex Flex
Yes, Gusto has an employee self-service app. Employees can use it to track pay stubs, clock in and out and submit time-off requests.
Yes, Paychex is a payroll company that can report payroll and income taxes, send direct deposits, print checks, handle wage garnishments and more.
Yes, Paychex is a PEO. You can outsource payroll, accounting, hiring and benefits administration if you do not want to handle anything yourself.
Methodology
Choosing human resources (HR) software for your organization is an important decision. To help you with it, we at the MarketWatch Guides team have researched and reviewed 50 leading HR software companies, including Paycor, ADP, Workday, Gusto, ZipRecruiter and Clockify. These providers help with some or all of the following HR disciplines:
- Payroll
- Time tracking and workforce management
- Recruiting and job posting
We conducted a survey in 2024 of 200 professionals who were currently using HR software or had used HR software within the past year. We analyzed the results of this survey to determine the following rating criteria:
- Features (25%)
- Value and Pricing (25%)
- User Experience (20%)
- Customer Support (15%)
- Reputation and Reviews (15%)
Visit the full HR methodology page for more details on our rating system.
If you have feedback or questions about this article, please email the MarketWatch Guides team at editors@marketwatchguides.com.