Gusto vs Justworks: What Our Payroll and HR Expert Recommends and Why

Cody Cromwell
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The Quick Why Behind Our Recommendations for Gusto vs Justworks

Justworks and Gusto are both HR and payroll service providers. They handle the repetitive and tedious tasks that go into running a business, which allows you to focus on building your business. Justworks is a Chicago-based company with a strong presence in the Midwest, while Gusto is a Seattle-based company that is extremely popular with startups in the Northwest.

These two companies do have some differences in terms of their perks and pricing options, but the differences are not significant enough that we would recommend one over the other. Both services are good enough that it really comes down to personal preference. If you have never used HR or payroll services before, we would recommend that you try one of the services for free. Pick the simpler of the two, Gusto, since they are more affordable. If you’re already using a service and like it, you can then make the decision to stick with one of them.

There are three factors you should consider when working with a payroll and HR service:

Price: It used to be that you were forced to choose between pricy options at Justworks or cheaper options at Gusto. But now both companies have free (or at least low-price) options that allow you to see if the service is right for you.

Gusto Pros and Cons

Gusto is a simple, intuitive platform you can use to manage your employees. It is popular with entrepreneurs because of its ease of use and affordable price. The platform does not require a monthly fee, only its services are paid per single employer sign-up.

However, this ease of use comes at a cost. While Gusto has a large user base, its design is limiting. If you’re constantly trying to modify your operation, you may be better off going with a more fully-featured platform. But if you are looking for an easy-to-use, affordable option for managing your employees, Gusto may be just the ticket.

Ease of Use

Gusto is streamlined, intuitive, and easy to use. Its mobile app makes it easy to sign in and start adding employees. It’s incredibly easy to add employees to the system and they will start seeing your employees payroll immediately. All they have to do is enter their hours and get a paycheck.

Affordability

Gusto takes its cut from the companies it works with, not their employees. Once you’ve signed up, everything is free. There are zero setup costs and no up-front upgrades required to get off the ground. You’ll pay for only what you use.

Justworks Pros and Cons

Technology has evolved to the point where companies can now offer their employees the option to receive paychecks on their smartphones. For businesses, it means a shorter payroll cycle, improved accuracy, convenient receipt of tax statements, and reduced administrative costs.

Companies such as Gusto, Intuit have made this option possible for both businesses and employees through no-fee payroll service Justworks. It’s easy to understand why companies are turning to these services as they allow them to automate and streamline their payroll processes, but what about their workers?

Pros The best thing about Justworks is that there are no fees for employee data, no setup fees, and no monthly payments. In addition, since it’s a web-based solution, You don’t even need a computer or printer, you can access it anywhere with Internet.

Cons Justworks works with Intuit’s suite of products to automate the payroll and tax processes. But since this is not a full-service provider, there are no benefits plans to offer such as health insurance, retirement savings or 401K matching.

How We Evaluated Gusto vs Justworks

Each of these companies is a "full service payroll provider" including processing payroll, tax preparation, direct deposit, and HR administration. We understand that small business owners care most about payroll tax filing and payroll processing. So, we selected two companies – Gusto and Justworks – to review based on their different payroll services.

Gusto is a direct hire company which means they pay and withhold tax for the employees. They are the only payroll provider that's been certified as meeting the highest standards for tax compliance and transparency from the IRS.

On the other hand, Justworks is a broker-based company which means they are the middleman between you and the government. When you hire Justworks, they, not you, handle all your Payroll tax filings with the IRS.

This is very important to note because there are people that will tell you that their particular payroll company they are using is the "best". This is typically not the case and it is very important to do your own research on the different payroll companies. That is precisely what we set out to do. We conducted a thorough review on each of these companies, analyzed their features and benefits, tested their online system and manual processes, and conducted a personal phone interview with a representative from each payroll company.

Based on the information you've just read, please select which of these companies would you recommend for payroll services.

Gusto vs Justworks Feature Comparison

At Gusto, we hear a lot of questions around payroll and HR software. Here’s a comparison of the two most popular options available.

Common Features of Gusto Payroll and Justworks PEO

Both Gusto and Justworks PEO solutions offer basic features such as broad-based reporting, online paychecks, mobile access to employees and more. The differences between Gusto paychecks and Justworks become apparent when you dig into the employee experience and some of the additional features.

From the HR perspective, this means a potentially better employee experience as the first-class benefits of Justworks all begin with the actual application experience. It also helps HR teams be granted broader access to data because Justworks has built-in payroll integration that helps them better understand their employees, which is something Gusto doesn’t have. This is a critical benefit for companies that already have a good understanding of their employee data and want to take the next step.

At the end of the day, the choice between Gusto and Justworks is largely irrelevant when it comes to comparing payroll and HR functionality. The likely players to make the difference are analysis and reporting, and HR’s ability to work more closely with their teams through the mobile app.

Gusto vs Justworks Pricing

Gusto and Justworks both offer payroll and HR services. A few have compared the two companies side by side so we can determine what Gusto’s advantage is over Justworks.

Most of the platforms are similar, but there are a few pricing differences and when comparing the two, Justworks has a pricing advantage. You can find the cost of Justworks and Gusto, as well as the plans they offer, on their respective websites.

Both companies offer online payroll and HR.

Gusto charges slightly more for their online payroll service than Justworks, but the services are exactly the same.

Justworks also offers an HR service which would be the same as Gusto’s HR service. Justworks’s HR service is slightly more expensive than Gusto’s but you have the option of using one provider or the other.

Justworks also offers Payroll-by-the-Hour. You can pay by the hour, on the hour, for as long as you need. With Justworks, you get a fresh payroll every time.

Gusto vs Justworks HR and Employee Benefits

Gusto vs Justworks Payroll Features

There are many payroll features with a variety of different variations. No matter what you're looking for, it's likely that both Gusto and Justworks have what you need.

» Automatic Tax Withholding.

The first difference you'll notice between Gusto and Justworks is your ability to automatically withhold taxes. In Gusto, payroll is handled inside the application. The employer uses the application to automatically calculate the taxes being deducted from an employee's paycheck each pay period. With Justworks, you can set up the payroll and taxes system separately.

» Payroll Uploading Times.

To find out how fast your uploads will be to Justworks, we compared two companies that use both Gusto and Justworks. Gusto and Justworks both use FTP to upload payroll and taxes to the cloud. Gusto was able to complete the upload in 45 seconds, but Justworks took four minutes. That means Justworks is doing significantly more processing than the transfer time of the file.

» Unemployment Insurance.

Although both Justworks and Gusto offer the same unemployment reporting, Justworks gives you the ability to receive payment directly from the state. Gusto has a built-in unemployment processing that will process the claim, but you will have to contact your state agency directly to receive payment.

Gusto vs Justworks Compliance Support

One major difference between the two systems is the way both use 3rd party payroll and HR services to give businesses an alternative solution without sacrificing employee benefits. The companies’ payroll and HR department will not be necessary after the last of their workers leave.

Below we take a closer look at their respective strengths and offer one more compelling reason to choose one over the other:

Gusto: Built on a Not-for-Profit Model

Both Justworks and Gusto operate under a nonprofit model that essentially allows all of their staff a fair wage and fair compensation. Justworks basically takes care of the HR aspects of the company, while Gusto takes care of the payroll and financial aspects of the business.

Gusto provides a private sector alternative to your existing PEO/P&C insurance coverage. Their business model is geared around providing its users with the most comprehensive HR services in the industry with all employees’ compliance matters taken care of 100%. This gives their clients a lot of flexibilities to choose from, and no workers’ comp, 401K or other benefits to worry about.

Compared to Gusto, our research shows that Justworks has more investment options for their clients. Justworks’ investment capabilities go beyond just the traditional “CD” and “stock” options.

Gusto vs Justworks Reporting

Gusto or Justworks, what’s a better option?

We’re pretty much all familiar with Gusto, if you’re a young entrepreneur or a small business owner getting started, there’s a decent chance you’ve heard of them. Like many businesses, options software developers, chefs, and financial services, based in San Francisco, they have one primary task, not just to offer their services to small business owners, but to make sure they are offering the best service possible.

Enter Gusto. Gusto is about, essentially, replacing your accountant, bookkeeper, human resources manager, and other HR related tasks with software. Their software is available on top of that, of course, so that you can do things like organize your payroll, categorize paid time off, track employee time and uncompensated work time.

Since 1987, Gusto has been offering HR software. They are based in San Francisco, but their software is available for purchase or subscription for anyone to use anywhere in the US.

Justworks is also a pretty well known employer, with a strong reputation for providing employers a payroll service. Their software is also available either as a subscription or as a software you can purchase.

They also offer payroll services, and their service offerings are pretty similar to Gusto.

Gusto vs Justworks Licensing

The long and the short of it? Gusto and Justworks both automate payroll and HR. So why do we recommend Gusto?

The Gusto platform automates payroll, taxes, commissions, HR, benefits, and compliance. But unlike Justworks (formerly ZenPayroll), Gusto offer the added flexibility of offering an accounting and financial solution. That being said, Justworks offers an Employee Time Clock.

Gusto is also more intuitive, while Justworks is a bit more complex and requires additional training.

<!–[if !supportLineBreakNewLine]–><br />This article was produced or contributed in cooperation with Gusto. The views and opinions expressed are solely those of the author and do not reflect those of Gusto. Justworks does not offer any architectural or financial advice or any information on its website that will assist a business owner in determining the appropriateness of its products for a particular business need. Justworks is not an accounting firm, nor has Justworks retained, nor does it have any plans to retain, any accounting firm or any other third party firm to provide advice or information to its clients. The author or contributors to this blog post have no association with Justworks or any affiliates, including FBN Capital Markets LLC. The information provided in this article do not constitute investment advice, shall not be relied upon as such, and are for illustrative purposes and do not constitute a recommendation of the financial products identified above.

Gusto vs Justworks Ease of Use

Gusto was built from the ground up to answer a real world need for a payroll solution. A young company with no HR or accounting staff, Gusto’s founders leveraged their expertise and worked their way past all resistance to create the platform they wanted. They did it by getting in front of users, figuring out what features they wanted, and then gathering feedback on what they had. They iterated and fine-tuned every feature to create a high quality payroll solution, while also offering a low cost of entry. Many competitors have just released their product; in some cases without having ever marketed to their users, much less developed a solution. Gusto has been in the market for 7 years, and is used by thousands of companies. Justworks, on the other hand, is a newcomer to the payroll space. Justworks spent 5 years in the beta testing pool before releasing their product to the public. Justworks is significantly more expensive than Gusto. They lack industry experience and start-up drive. It will require more training, more effort, and more resources to know how to use it. Our Payroll and HR expert, Carl Gahan, has years of experience managing payroll for small and growing companies. He is passionate about helping small businesses avoid costly payroll headaches and has developed an award-winning team to help small online companies with payroll and human resources. Gusto is affordable and easy to use, and much better than an ad hoc process using Microsoft Excel.

Gusto and JustWorks User Reviews

Gusto is a online payroll and HR professional. We started the site as a place to find other accounting firms to compare benefits, savings, and reviews on their services. In the process, we started using our services as well to get a feel for the practices and culture at firms in the industry. Unlike many of the other companies out there, Gusto is transparent right from the start about what you’re getting. There’s no hidden costs, no company-owned accounts, and no new clients’ pitch. We think that makes for a much more enjoyable experience for you.

While the sites have different approaches to business, it’s the same people behind the scenes who operate it – and the same people who think about our users every day. As such, we understand that the –why” of the services is critical to make a decision. So, we asked some of our users to share their –why” for choosing one service over the other and have included their responses below.

Bottom Line

If you’re looking for a simple online payroll solution we highly recommend Gusto and Justworks. Whichever you choose, you’ll get great job functions for your company and be paid more quickly.

If you’re looking to start a business and would like a free template, Gusto and Justworks both have great walk-throughs to help you get started quickly.

With these solutions you should have no problems getting set up and earning your first paycheck.