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As a startup, you need an HR and payroll solution that not only meets your current needs but also grows with your business.
Startups that implement HR software solutions can enjoy a 20% to 25% reduction in HR administration time. This demonstrates the impact the right HR and payroll system can have on your startup's operational efficiency.
In this in-depth Gusto vs. Justworks article, we will examine the features and pricing of two leading HR and payroll platforms for startups so that you can make the right choice for your growing business.
What is Gusto?
Alt: what is gusto
Gusto is a cloud-based platform that provides HR services for small and medium-sized businesses. Founded in 2011 and originally known as ZenPayroll, the platform’s services have gone beyond payroll processing to include a wide range of HR tools and services.
These services are designed to streamline various administrative tasks and ensure compliance with federal, state, and local regulations.
Its main features include:
Payroll Processing
Gusto supports automated payroll runs, tax filings, and compliance with federal, state, and local regulations. It handles all payroll-related tasks, including deductions, direct deposits, and generating year-end forms like W-2s and 1099s.
Employee Benefits
Gusto offers employee benefits like health insurance, dental and vision plans, and retirement savings plans (401(k)). The platform simplifies the enrollment process and ensures compliance with benefits regulations.
HR Tools and Services
The platform provides tools for onboarding new employees, managing employee information, tracking time off, and maintaining compliance with labor laws. Gusto also includes features like employee self-service portals and document storage.
Time Tracking and PTO Management
The platform’s integrated time-tracking features allow businesses to monitor employee hours and manage paid time off (PTO). This information can be synced directly with payroll for accurate compensation.
Customer Support
Gusto offers extensive support options, including a comprehensive help center, live chat, email support, and phone support. Users frequently praise Gusto’s customer service for its responsiveness and helpfulness.
Pros
- Gusto offers an intuitive and easy-to-use interface, making it accessible for both employees and administrators.
- Gusto provides several payroll features, including automatic tax calculations, direct deposit, and year-end tax form preparation. These features streamline payroll processing and ensure compliance with tax regulations.
- The platform seamlessly integrates payroll with employee benefits administration, allowing businesses to manage health insurance, retirement plans, and other benefits within the same platform.
- Gusto offers customizable settings for payroll, benefits, and time tracking, allowing businesses to tailor the platform to their specific needs.
- It is known for its responsive customer support team, assisting via phone, email, and chat.
Cons
- While Gusto excels in payroll and benefits administration, its HR features are relatively basic compared to dedicated HR software.
- Some advanced features, such as time tracking and employee onboarding, may incur additional costs.
- Its reporting capabilities may be limited compared to standalone reporting software. Businesses that need advanced analytics and customization options may find Gusto's reporting features inadequate.
- Gusto is mainly designed for businesses operating in the United States. International businesses or those with operations in multiple countries may encounter limitations with Gusto's compliance and tax features.
- It requires a stable internet connection to access and use effectively. Businesses operating in areas with unreliable internet connectivity may experience disruptions or delays in payroll processing and employee management tasks.
What is Justworks?
Alt: what is justworks
Justworks was founded in 2012 by Isaac Oates to make it easier for businesses to manage their teams and access benefits.
The platform was designed to streamline HR, payroll, and compliance, allowing small businesses to focus on their core activities rather than getting distracted by administrative tasks. The platform serves thousands of businesses across various industries.
Justworks offers a comprehensive suite of HR and payroll services to meet the needs of startups. Its features include:
Payroll Management
Justworks automates payroll processing, ensuring employees are paid accurately and on time. The platform handles tax filings, W-2s, and 1099s, reducing compliance risks.
Employee Benefits
Justworks provides access to a wide range of employee benefits, including health insurance, dental and vision plans, wellness programs, and commuter benefits. This helps startups attract and retain top talent.
HR Tools
The platform includes tools for onboarding, time tracking, PTO management, and performance reviews. These tools simplify HR processes and boost employee engagement.
Compliance Support
Justworks helps businesses stay compliant with federal, state, and local regulations. The platform offers resources and support for labor law compliance, workplace policies, and employee classification.
24/7 Support
Justworks offers round-the-clock customer support through various channels, including phone, email, and live chat. This ensures that businesses can get help whenever they need it.
Pros
- Justworks offers an all-in-one platform that combines HR, payroll, benefits administration, compliance, and employee onboarding, streamlining administrative tasks for startups.
- The platform features a user-friendly interface that is intuitive and easy to navigate, making it accessible for both administrators and employees.
- Justworks provides guidance and ensures compliance with federal, state, and local employment laws and regulations, reducing the risk of legal penalties for startups.
- Justworks offers access to a wide range of employee benefits, including health insurance, retirement plans, and wellness programs, helping startups attract and retain top talent.
- The platform offers responsive customer support through different channels, including phone, email, and chat, assisting startups whenever needed.
Cons
- It may be more expensive for startups, especially those with limited budgets, compared to other HR and payroll solutions.
- Some startups may find that Justworks' pre-configured settings and templates limit their ability to customize HR processes and policies to suit their specific needs and company culture.
- Startups with complex tech stacks may encounter limitations in integrating Justworks with their existing tools and software.
- Justworks may not be as scalable for rapidly growing startups with expanding employees and evolving HR needs, as it may not have the flexibility to seamlessly adapt to changing requirements.
Gusto vs. Justworks: Feature Comparison
#1 Payroll Processing
Both Gusto and Justworks offer robust solutions that simplify and streamline payroll processing for startups. Here's a detailed look at how each platform handles this task:
Gusto
Ease of Use
Gusto has a user-friendly interface, which makes it easy for startups to navigate and manage payroll. The platform provides a step-by-step payroll setup guide. With this, even those with little experience can get payroll up and running quickly.
Automation Features
Gusto automatically calculates, files, and pays federal, state, and local payroll taxes. This reduces the risk of errors and saves time. The platform also offers automatic payroll runs, allowing businesses to set up recurring payrolls that run without manual intervention.
Tax Filing and Compliance
Gusto ensures compliance with all relevant laws and regulations. The platform handles W-2s and 1099s at year-end, making tax season less stressful.
Furthermore, Gusto offers compliance alerts to inform businesses about any changes in payroll tax laws that might affect them.
Justworks
Ease of Use
Justworks also has an intuitive interface that makes payroll processing straightforward and efficient. The platform’s dashboard provides a clear overview of payroll tasks and deadlines, helping users stay organized and on top of their payroll responsibilities.
Automation Features
Justworks automates many payroll processes, including salary calculations, tax withholdings, and direct deposits. The platform is effective for managing payroll for businesses with hourly workers and complex pay schedules, thanks to its flexible and customizable payroll options.
Tax Filing and Compliance
Justworks ensures full compliance with payroll tax requirements by handling all aspects of tax filings. This includes calculating, filing, and paying federal, state, and local taxes on behalf of the business.
The platform also manages end-of-year filings, thereby providing W-2s and 1099s to employees and contractors.
#2 Employee Benefits
Gusto and Justworks offer a range of benefits that can help attract and retain top talent, but they approach these offerings in different ways. Here’s what each platform provides in terms of employee benefits:
Gusto
Health Insurance Options
Gusto partners with different health insurance carriers to provide comprehensive health insurance plans, including medical, dental, and vision coverage. Their platform allows for easy comparison of plans, helping employers select the best options for their teams.
In addition, Gusto supports Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), thereby offering employees more ways to manage their healthcare expenses.
Retirement Plans
Gusto offers 401(k) plans through its integration with Guideline, which includes automated administration and compliance support. These plans are designed to be accessible and affordable for startups, with various investment options that can help employees save for their futures.
Justworks
Health Insurance Options
Justworks also provides robust health insurance options, partnering with major carriers to offer medical, dental, and vision plans.
They emphasize simplicity and choice, ensuring that employers can find suitable plans for their employees. Justworks also supports HSAs and FSAs, offering employees tax-advantaged ways to pay for medical expenses.
Retirement Plans
Justworks offers access to 401(k) retirement plans through their partnership with Slavic401k. These plans come with different investment options and are designed to be easy to set up and manage.
Justworks handles the administrative and compliance aspects, reducing the burden on employers.
#3 HR Tools and Services
Onboarding Processes
Gusto offers a streamlined onboarding process designed to make the first days of new hires smooth and efficient. The platform provides customizable onboarding checklists that help employers track all necessary steps, from filling out W-4 forms to setting up direct deposits.
New employees can complete their paperwork online before their start date, reducing the administrative burden on HR staff. Gusto also includes features for setting up benefits and sending welcome emails, which helps create a positive first impression and integrates new hires seamlessly into the company's workflow.
Justworks provides a comprehensive suite of tools to manage the onboarding process. The platform automates the collection of essential documents and ensures compliance with federal and state regulations.
Justworks allows new hires to e-sign forms, enroll in benefits, and get acquainted with company policies online. It also offers onboarding support through its customer service team, which can assist with any questions or issues that arise, ensuring a smooth transition for new employees.
Employee Self-Service
Gusto has a user-friendly employee self-service portal. Employees can access their pay stubs, tax documents, and benefits information all in one place. They can also update personal information, request time off, and view their PTO balances directly from the portal.
This level of accessibility allows employees to manage their information and reduces the workload for HR departments. Gusto also provides a mobile app, thereby allowing employees to handle HR tasks on the go.
Justworks offers a robust self-service platform that allows employees to control their HR needs. Just like Gusto, employees can access pay stubs, tax documents, and benefits information through the portal.
Justworks also allows employees to request time off, track PTO, and update personal information. The platform's design emphasizes ease of use, with a clean interface that makes navigation straightforward. It also provides a mobile app, ensuring employees can manage their HR tasks from anywhere.
Compliance Assistance
Gusto offers features that help startups stay in line with federal, state, and local regulations. The platform provides automatic updates on regulatory changes and assists with filing necessary forms and taxes.
Gusto's compliance support extends to hiring practices, employee classifications, and benefits administration, reducing the risk of costly compliance errors. It also offers resources and guidance to help businesses understand their obligations and maintain compliance.
Justworks is known for its comprehensive compliance support, making it a preferred choice for startups that want to ensure they meet all regulatory requirements. The platform automates compliance tasks, including tax filings and benefits administration, and keeps users informed about changes in employment laws.
It also offers access to compliance experts who can provide personalized advice and support. This proactive approach helps businesses navigate complex regulatory landscapes and avoid potential legal issues.
#4 Time Tracking and PTO Management
When it comes to managing employee hours and time off, both Gusto and Justworks offer comprehensive solutions that meet the needs of startups. However, they differ in terms of how easy it is to use them and how they work.
Here’s a glimpse into how each platform handles time tracking and PTO (Paid Time Off) management:
Gusto
Integration with Payroll
Gusto seamlessly integrates time tracking with its payroll system, ensuring that hours worked and PTO taken automatically reflect in payroll calculations. This integration reduces manual entry and errors, making payroll processing more efficient and accurate.
User Interface and Ease of Management
Employees can easily clock in and out using the mobile app or web portal. Managers have access to a centralized dashboard where they can approve timesheets, monitor hours, and manage PTO requests with a few clicks.
The simplicity and clarity of the interface are particularly beneficial for startups with limited administrative resources.
Customization Options
Gusto offers customizable settings for time tracking and PTO policies. Businesses can set up various types of PTO, including vacation, sick leave, and personal days, each with its accrual rates and caps.
This flexibility allows startups to tailor their policies to fit their specific needs and compliance requirements.
Justworks
Integration with Payroll
Justworks also provides seamless integration between time tracking and payroll, ensuring accuracy in paychecks and compliance with labor laws. This integration simplifies the payroll process by automatically updating it with approved hours and PTO.
User Interface and Ease of Management
Employees can log their hours and submit PTO requests through the web or mobile app. Managers receive notifications for approval requests and can review and approve timesheets and PTO within the same platform.
Customization Options
Justworks allows businesses to customize their time tracking and PTO settings to match their unique policies. Companies can define various PTO types, set accrual methods, and specify rules for carryover and usage.
This level of customization ensures that startups can maintain compliance while meeting their employees' needs.
#5 Pricing
Gusto
Gusto offers three payroll plans tailored to suit the needs of small, midsize, and even larger enterprises. Each plan contains a suite of HR and payroll tools. The pricing structure follows a monthly base fee in addition to a fee per employee:
Alt: gusto pricing
- Simple: This plan starts at $40 per month with an additional $6 per employee fee.
- Plus: At $80 per month, this plan offers more advanced features and incurs a $12 per employee fee.
- Premium: Tailored to specific needs, this plan offers custom pricing.
Gusto offers a specific plan for startups working exclusively with freelance contractors. It starts at $6 per contractor per month for the first six months, and afterward, it's $35 per month with an additional $6 per contractor fee.
Justworks
Justworks offers an extensive PEO solution that includes payroll software as just one component. This distinguishes it from standalone payroll systems like Gusto. Its robust features come at a higher cost compared to Gusto:
Alt: justworks pricing
- Payroll package: $8 per month per employee with an additional $50 per month base fee.
- PEO Basic package: Starts at $59 per month per employee.
- PEO Plus package: Starts at $109 per month per employee.
Justworks stands out for its transparent pricing, something that is rare among PEO providers who don't disclose rates online.
This approach suggests that Justworks might offer competitive pricing compared to its peers, depending on the company's needs and the services required.
Gusto vs. Justworks: Tabular Illustration of Key Differences
Here's a tabular comparison highlighting the key differences between Gusto and Justworks:
Wrapping Up
And that’s a wrap!
In this comprehensive Gusto vs. Justworks article, we've discussed the key features of each platform to help you make an informed decision for your startup.
Gusto excels with its user-friendly interface, seamless integration with payroll, and geolocation tracking feature, making it ideal for startups that are interested in simplicity and mobility in time tracking and PTO management.
On the other hand, Justworks excels in project-based tracking, compliance support, and detailed customization options, making it the go-to solution for startups interested in project management and regulatory adherence.
Your choice will be determined by your startup’s specific needs, workflows, and long-term goals.
Take the time to assess your company's requirements, consider factors like scalability, employee needs, and regulatory compliance, and use the insights from this comparison to make the right decision.
FAQs
What is the difference between Justworks and Gusto?
Justworks acts as a Professional Employer Organization (PEO), i.e., it becomes a co-employer with you for your staff.
On the other hand, Gusto is primarily a payroll software platform. In other words, you remain the employer of record for your staff, but Gusto automates many payroll, tax filing, and benefits administration tasks.
Which platform is more affordable for startups?
Gusto generally has a lower starting price point than Justworks, making it more attractive for startups on a budget.
How can I decide which platform is right for my startup?
Consider your specific needs and priorities to choose the right platform for your startup. Gusto might be a good fit if you prefer affordability and control to HR. Justworks might be a better option if you need more comprehensive HR support and are comfortable with a co-employment arrangement.
