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The right payroll software for your startup will ensure that employees get paid correctly and on time. It also helps you adhere to tax laws, manage benefits, and make HR tasks easier.
There are many options, so choosing the right one can be confusing. Two popular choices are Gusto and Paycom.
Gusto and Paycom offer payroll and HR tools for businesses of all sizes. Gusto is easier to use and has features designed for small and medium businesses. Paycom is more powerful and can handle the needs of larger companies as well.
This Gusto vs. Paycom article will compare both payroll software and help you decide the right one for your startup.
Overview of Gusto
Gusto, originally known as ZenPayroll, was founded in 2011 by Josh Reeves, Tomer London, and Edward Kim. The company rebranded to Gusto in 2015 to better reflect its wide range of services beyond payroll.
Gusto has grown to become a leading provider of cloud-based payroll, benefits, and human resources management software for small and medium-sized businesses.
Features
Some of the features of Gusto include:
Payroll Processing
Gusto automates payroll calculations, tax withholdings, and direct deposits. It ensures compliance with federal, state, and local tax laws, and automatically files payroll taxes.
Benefits Administration
Gusto provides benefits management, including health insurance, dental and vision insurance, retirement plans, and other employee benefits. It integrates with various insurance carriers to streamline benefits enrollment and administration.
Employee Self-Service
Employees can access their payroll information, benefits, and tax documents through Gusto's user-friendly portal. The mobile app allows employees to view pay stubs, request time off, and update personal information.
Time Tracking and Attendance
Gusto includes time-tracking features that allow employees to clock in and out, track hours worked, and manage paid time off (PTO). This feature integrates seamlessly with payroll processing.
Onboarding and Compliance
Gusto simplifies onboarding with digital offer letters, employee self-onboarding, and automated compliance tasks. It ensures new hires complete necessary forms and receives important information.
Target Market and Customer Base
Gusto targets small to medium-sized businesses (SMBs) that need an easy-to-use, all-in-one payroll and HR solution. Its intuitive design and affordability make it an attractive option for startups, especially those without dedicated HR departments.
Gusto serves different industries, including technology, retail, healthcare, and professional services. With over 200,000 businesses using its platform, Gusto has established itself as a reliable partner for payroll and HR needs.
Pros
- Gusto’s intuitive design makes it easy for startups to navigate and use without extensive training.
- It offers a wide range of payroll services including automatic tax calculations, direct deposits, and compliance with federal and state regulations.
- Gusto streamlines benefits management with options for health insurance, retirement plans, and other perks, simplifying employee management.
- The platform provides employees with easy access to pay stubs, W-2 forms, and the ability to update personal information through a mobile-friendly interface.
- It is known for responsive customer service, offering phone and chat support, as well as extensive online resources.
Cons
- It lacks some advanced HR features that larger enterprises might require, like performance management or extensive analytics.
- Integration capabilities with other software and tools may be more limited compared to other payroll solutions.
- Some users find Gusto's contractor payment features less robust compared to its payroll services for regular employees.
- Availability and depth of service can vary depending on the location of the startup.
Overview of Paycom
Founded in 1998, Paycom started as one of the first fully online payroll providers. Headquartered in Oklahoma City, Oklahoma, Paycom has grown to become a major player in the HR technology market.
Paycom offers a cloud-based payroll software solution targeted at businesses of all sizes. Over the years, the platform has expanded its services beyond payroll to include a wide range of human capital management (HCM) solutions.
Features
The key features of Paycom include:
Streamlined Payroll Processing
Paycom's software automates many payroll tasks, thereby reducing errors and saving time for businesses. They have a feature called Beti® which helps identify and fix errors before submission.
Integrated HR Management
The software goes beyond just payroll. It also offers functionalities for expense management, onboarding, time-off tracking, and more. This can potentially simplify HR tasks for businesses.
Time and Labor Management
Paycom's time and attendance system helps businesses track employee hours, manage schedules, and ensure compliance with labor laws. It integrates seamlessly with payroll to simplify time tracking and reduce errors.
Talent Acquisition
Paycom offers a comprehensive recruitment solution that includes applicant tracking, candidate screening, and onboarding. This helps businesses streamline their hiring process and bring new employees on board efficiently.
Employee Self-Service
Employees can access their payroll information, request time off, view benefits, and more through the Paycom app. This self-service functionality empowers employees and reduces the administrative burden on HR staff.
Benefits Administration
Paycom's benefits administration module simplifies the process of managing employee benefits. It supports open enrollment, benefits elections, and integrates with payroll for accurate deductions.
Reporting and Analytics
Paycom’s reporting tools offer insights into various HR metrics. Businesses can create customized reports to analyze trends, monitor compliance, and make informed decisions.
Target Market and Customer Base
Paycom targets medium to large-sized businesses across different industries, including healthcare, manufacturing, retail, and professional services.
Its comprehensive HCM solutions are designed to meet the needs of companies with complex HR requirements and large workforces. Paycom's customer base includes businesses that seek an all-in-one solution to manage their payroll and HR functions efficiently.
With a strong focus on customer service and a commitment to innovation, Paycom has established itself as a trusted partner for businesses that want to streamline their HR processes.
Pros
- Automation and features like Beti® can significantly reduce errors and save time on payroll processing for businesses.
- Paycom offers a wide range of HR functionalities beyond payroll, including talent management, recruiting, and learning management systems.
- It is designed to scale with businesses as they grow, making it suitable for startups planning rapid expansion.
- The platform provides robust reporting and analytics tools, offering detailed insights into payroll, benefits, and workforce data.
- Paycom allows customization of dashboards and workflows to meet specific business needs and preferences.
- It offers strong integration capabilities with other HR systems, accounting software, and third-party applications.
Cons
- Some users find Paycom's interface and functionalities confusing and difficult to learn, requiring significant training for HR and admin staff.
- There have been reports of inconsistent customer support experiences, with some users encountering representatives who lack expertise in HR and payroll.
- Paycom focuses mainly on domestic (US) payroll and HR needs. It might not be ideal for businesses with a global workforce due to limited features for international regulations and languages.
- Due to the complexity, there's a learning curve for both HR/admin and employees. This can slow down initial implementation and require additional resources for training.
Gusto vs. Paycom: Features Comparison
#1 Payroll Processing
Gusto: Suitable for Straightforward, User-Friendly Payroll Processing with Strong Tax Compliance
Gusto simplifies payroll with automated tax calculations and filings, suited for startups that require ease of use. The platform supports various payment schedules and direct deposits, ensuring flexibility for payroll distribution.
It also handles payroll taxes and year-end filings like W-2s and 1099s, minimizing manual tax-related tasks.
Paycom: Suitable for Advanced Automation, Comprehensive Tax Management, and Extensive Employee Self-Service
Paycom provides advanced payroll automation, including tax management and filings, ideal for businesses needing comprehensive payroll solutions. It offers direct deposits and multiple payment methods (checks, prepaid cards), accommodating diverse employee preferences.
The platform also has a robust self-service portal for employees to manage their payroll information and tax settings independently.
#2 Benefits Administration
Gusto: Ideal for Startups that Prioritize Integration with HR Functions
Health Insurance
Gusto partners with top-tier insurance carriers to offer a wide range of health insurance options, including medical, dental, and vision plans. This allows startups to provide competitive benefits packages to attract and retain talent.
Retirement Plans
Gusto offers 401(k) retirement plans with easy setup and management. Employers can choose from various plans, and employees can manage their contributions through the self-service portal.
Flexible Spending Accounts (FSAs)
Gusto allows startups to offer FSAs, thereby allowing employees to set aside pre-tax dollars for medical expenses, thus reducing their taxable income.
Workers’ Compensation
Gusto integrates workers’ compensation insurance with payroll, ensuring accurate premium calculations and easy compliance with state regulations.
Compliance and Support
Gusto provides compliance support for federal and state regulations related to benefits administration. They offer educational resources and a dedicated support team to assist with any issues that arise.
Paycom: Suitable for Startups that Want Comprehensive Benefits Statements
Benefits Enrollment
Paycom offers a user-friendly benefits enrollment process, allowing employees to easily select and manage their benefits online. This self-service approach reduces administrative burden and increases employee satisfaction.
Health and Wellness Programs
Paycom’s benefits administration includes access to a variety of health and wellness programs. These programs can be customized to meet the specific needs of the startup and its employees.
Retirement Plans
Similar to Gusto, Paycom offers 401(k) retirement plans with flexible options for both employers and employees. The platform supports automated contributions and provides employees with tools to manage their retirement savings.
Affordable Care Act (ACA) Compliance
Paycom offers comprehensive tools to ensure ACA compliance. This includes tracking employee eligibility, managing reporting requirements, and calculating potential penalties.
Benefit Analytics and Reporting
Paycom provides advanced analytics and reporting tools to help employers understand benefit use and costs. This data-driven approach allows startups to make the right decisions about their benefits offerings.
#3 Time Tracking and Attendance
Gusto: Ideal for Startups that Require Straightforward Time Tracking and Payroll Integration
Gusto offers easy-to-use time tracking, allowing employees to clock in/out via computer or mobile. It supports manual hour entries and time-off requests for vacation, sick leave, and personal days.
Gusto seamlessly integrates time tracking capabilities with payroll, thereby automatically syncing approved hours to ensure accurate, timely payments, reducing manual entry and errors.
The software also includes basic scheduling tools for creating and sharing employee schedules, though it may be limited for complex scheduling needs.
Paycom: Suitable for Startups that Require Advanced Time Tracking and Scheduling Features
Paycom provides robust time tracking with options like biometric devices, web clock-ins, and mobile apps. It includes advanced features like geofencing and facial recognition for added security.
Paycom’s time tracking integrates deeply with payroll, automatically calculating all recorded hours, including overtime, ensuring compliance and accuracy.
The software excels in scheduling, offering customizable schedules, shift swapping, and automated notifications. It allows managers to set rules to avoid conflicts and ensure coverage.
#4 Reporting and Analytics
Gusto: Ideal for Startups Looking for Straightforward Reporting Solutions
Gusto offers standard reports, like payroll summaries, employee earnings, and tax filings. These reports are important for basic payroll management and compliance.
Users can create customized reports tailored to their specific business needs. This flexibility allows startups to analyze data in ways that are most relevant to their operations. Gusto's reporting includes visual elements like charts and graphs, making it easier to interpret complex data trends at a glance.
Furthermore, reports can be exported in different formats (e.g., PDF, CSV) for further analysis or sharing with stakeholders. Gusto stores historical payroll data securely, allowing startups to track trends and make projections for future planning.
Paycom: Ideal for Startups that Require Sophisticated Data Analysis and Integration Across Multiple HR Functions
Paycom provides advanced analytics tools that go beyond basic reporting. These tools help startups to perform deeper analysis, like forecasting labor costs and identifying cost-saving opportunities.
Paycom’s reporting features provide real-time access to payroll and HR data, allowing startups to stay updated with the latest information. Users can create personalized dashboards with widgets that display key metrics and trends relevant to their business. This feature enhances visibility and facilitates quick decision-making.
Also, Paycom includes compliance tracking within its reporting capabilities, helping startups ensure adherence to labor laws and regulations. Reporting within Paycom integrates seamlessly with other HR modules, like benefits administration and time tracking, providing a unified view of workforce data.
#5 Pricing
Gusto
Gusto offers transparent pricing with several plans tailored to different needs:
- Simple Plan: Costs $40 monthly plus $6 per person monthly.
- Plus Plan: Costs $80 per month plus $12 per person per month, with an option to add HR and priority support for an additional $8 per person per month.
- Premium Plan: Requires a custom quote.
- Gusto Global: Their new Employer of Record (EOR) service requires a custom quote upon request.
You can sign up for a free Gusto account to explore its features without any charges. Payment is only required when you run your first payroll, allowing you time to evaluate the service.
Paycom
Paycom provides customized pricing for its plans, which requires interested parties to request a demo. During the demo, the sales team explains how the software works and discusses pricing tailored to the specific requirements of your business.
While user reviews indicate that Paycom previously charged approximately $500 for initial setup fees for around 15 employees, with an additional estimated cost of $4 to $6 per employee per paycheck, the current pricing structure may vary.
This provides a rough estimate to give you a general idea of potential service costs.
Gusto vs. Paycom: Tabular Comparison
Wrapping Up
Choosing between Gusto vs. Paycom for your payroll and HR software depends on the nature of your business.
Gusto stands out as an ideal choice for small businesses looking for user-friendly payroll solutions at a competitive price. On the other hand, Paycom is suitable for growing businesses that require more advanced technological capabilities.
FAQs
What are the biggest differences between Gusto and Paycom?
Gusto is known for its user-friendly interface and transparent pricing, making it ideal for startups with limited HR resources. Paycom offers a more comprehensive feature set, which might be better suited for startups with complex payroll needs or anticipating rapid growth.
What payment options do Gusto and Paycom offer?
Gusto provides direct deposit, checks, and Gusto Cashout (early access to wages). Paycom offers direct deposit, checks, and paycard options.
What features does Gusto offer for payroll and benefits management?
Gusto provides automatic tax calculations, direct deposits, benefits administration (including health insurance and retirement plans), employee self-service tools, and compliance with federal and state regulations.
Which payroll software has better integration capabilities with other business tools?
Paycom generally has stronger integration capabilities compared to Gusto, offering seamless connections with various HR systems, accounting software, and third-party applications.
However, Gusto integrates well with popular accounting and time-tracking software.
