In today’s fast-paced world of business, managing the various aspects of human resources (HR) can be a complex and time-consuming task. From payroll and employee benefits to compliance with labor laws, managing HR is often a challenge for small to medium-sized businesses.
As businesses grow, the administrative burden becomes heavier, requiring owners and managers to spend countless hours ensuring everything runs smoothly. This is where platforms like Gusto come in.
Gusto is an all-in-one HR platform designed to simplify payroll, benefits, compliance, and more. It aims to provide a user-friendly, streamlined solution for small and medium businesses (SMBs), helping them automate HR tasks, reduce human error, and stay compliant with federal and state regulations.
The platform is cloud-based, meaning business owners and HR teams can access and manage everything from anywhere, at any time. Gusto offers a range of features, from payroll processing and tax filing to employee benefits administration and performance management.
In this article, we’ll take an in-depth look at the pros and cons of Gusto. While Gusto offers many benefits, it’s essential to consider both the positives and negatives to determine whether it’s the right choice for your business.
Whether you’re a small business owner just starting out or an established company looking for better HR management tools, this review will help you decide if Gusto is a good fit for your needs.
What Is Gusto?
Gusto is a comprehensive cloud-based HR platform primarily known for its payroll processing capabilities. However, the platform goes beyond payroll and offers a variety of HR functions, including managing employee benefits, tracking time and attendance, handling compliance requirements, and assisting with hiring and onboarding new employees. Gusto’s mission is to simplify the way small and medium-sized businesses handle HR tasks by offering a simple, centralized solution.
What sets Gusto apart is its ease of use and automation. Business owners and HR professionals can manage all aspects of their workforce with just a few clicks. Whether you need to run payroll, administer employee benefits, or stay compliant with tax laws, Gusto automates many of the steps that would otherwise be manual, saving both time and effort. The platform is also scalable, allowing businesses to grow without needing to switch to another system.
In addition to being an all-in-one platform, Gusto integrates with a range of other software, such as accounting tools and applicant tracking systems (ATS), ensuring that businesses can streamline their entire workflow. Whether you’re a company with just a handful of employees or a growing team, Gusto offers customizable plans designed to meet the unique needs of each business.
How Does Gusto Work?
Gusto operates through a cloud-based software-as-a-service (SaaS) model, meaning businesses can access it from any device with an internet connection. Once you sign up, Gusto guides you through the setup process, which typically involves entering your business details, employee information, tax information, and benefit offerings.
Payroll is one of the main features of Gusto. The platform automatically calculates wages, withholds the correct amount of taxes, and even files the taxes with federal and state agencies. Additionally, Gusto generates tax forms such as W-2s and 1099s for year-end reporting, taking the stress out of tax season.
Gusto also allows businesses to manage employee benefits, including health insurance, retirement plans, and paid time off (PTO). Employees can log in to the platform to manage their benefits, view pay stubs, and track PTO, providing them with a self-service portal that reduces the need for HR intervention.
The platform offers various pricing plans based on the number of employees and the features your business needs. These plans range from basic payroll services to comprehensive HR solutions, allowing businesses to select the level of service they require.
Now, let’s dive deeper into the pros and cons of Gusto.
The Pros of Gusto
1. User-Friendly Interface
One of the primary reasons small businesses opt for Gusto is its incredibly user-friendly interface. For small business owners and HR managers who may not have specialized HR experience, Gusto provides a simple and intuitive platform to manage HR tasks. The design of the dashboard is clean and well-organized, offering a clear view of all the important functions such as payroll, employee records, and benefits.
The platform’s ease of use significantly reduces the learning curve, even for first-time users. With minimal effort, users can process payroll, set up employee benefits, and track employee hours, making it especially appealing for those who are new to managing HR tasks. Gusto walks users through each step of the process with helpful prompts and easy-to-understand instructions. This ensures that business owners can manage HR functions without being overwhelmed by the complexity of traditional HR management systems.
Moreover, the cloud-based nature of Gusto means that users can access the platform from anywhere, whether at the office, at home, or on the go, using a computer or mobile device. This accessibility enhances the user experience, making HR management flexible and convenient for businesses of all sizes.
2. Comprehensive Payroll Management
Gusto is best known for its robust payroll processing capabilities. One of the biggest advantages of using Gusto is the platform’s ability to fully automate payroll, including calculating wages, withholding taxes, and generating tax filings. This automation ensures that payroll is processed quickly and accurately, reducing the risk of errors that can lead to compliance issues.
Gusto also makes it easy for businesses to manage employee compensation and deductions, including bonuses, commissions, and other forms of payment. The platform allows for custom payroll schedules, so whether your employees are paid weekly, bi-weekly, or on another schedule, Gusto can accommodate your preferences.
Another significant feature is Gusto’s automatic tax filing. The platform automatically files federal, state, and local taxes for businesses, helping to ensure compliance with tax laws. Year-end forms, such as W-2s and 1099s, are also automatically generated, so business owners don’t need to worry about filing them manually. This hands-off approach makes payroll processing incredibly efficient and minimizes the risk of late payments or tax penalties.
3. Time Tracking and PTO Management
Gusto makes it easy for businesses to track employee hours and manage paid time off (PTO). The time tracking feature is simple yet powerful, allowing employees to log their hours manually or using an integrated time clock. The system automatically tracks overtime and integrates seamlessly with the payroll system, ensuring that employee hours are accurately reflected in their paychecks.
The PTO management feature also streamlines the process of managing time off. Employees can request time off through the platform, and managers can approve or deny requests directly from the dashboard. This reduces administrative work for HR teams and makes it easier for employees to manage their own time off. Employees can also view their remaining PTO balances, ensuring transparency and reducing misunderstandings about available leave.
By automating time tracking and PTO management, Gusto reduces the administrative burden of manual record-keeping and ensures that businesses can track employee attendance and absences accurately.
4. Benefits Administration
Managing employee benefits can be a complex and time-consuming task, particularly for small businesses that do not have a dedicated HR team. Gusto simplifies benefits administration by offering a variety of options, including health insurance, retirement plans, and flexible spending accounts (FSAs). The platform also provides tools to help businesses stay compliant with regulations such as the Affordable Care Act (ACA).
Gusto allows employees to view and manage their benefits directly through the platform, which reduces the need for HR teams to answer questions or make updates manually. Open enrollment is straightforward, and employees can easily make changes to their benefits during enrollment periods.
The platform also helps businesses track contributions to retirement plans and other benefit programs, making it easier for employers to stay organized. With everything managed in one place, Gusto makes benefits administration efficient and hassle-free, which is essential for small businesses that may not have the resources to manage this function manually.
5. Compliance Assistance
Staying compliant with federal, state, and local labor laws can be a challenge for businesses, especially small ones that lack in-house legal expertise. Gusto offers valuable compliance assistance to help businesses stay on top of their obligations. The platform is continuously updated to reflect changes in tax laws, employee benefits regulations, and other labor-related requirements.
For instance, Gusto automatically calculates payroll taxes based on current tax rates and generates the necessary tax forms at year-end, ensuring that businesses meet their filing obligations. The platform also helps employers stay compliant with the Affordable Care Act (ACA) by tracking employee eligibility for health insurance and providing tools to manage reporting requirements.
By automating compliance tasks, Gusto reduces the risk of costly fines and penalties. The platform also provides educational resources and customer support to assist businesses in understanding and navigating the complexities of labor laws, making it an invaluable tool for small and growing businesses.
6. Automated Tax Filing and Payments
One of Gusto’s standout features is its automated tax filing and payment system. The platform automatically calculates payroll taxes, files them with the appropriate federal and state agencies, and even makes the necessary tax payments on behalf of the business. This feature ensures that taxes are filed accurately and on time, reducing the administrative burden for business owners.
By handling tax payments automatically, Gusto minimizes the risk of late payments and penalties that can result from human error or oversight. This is particularly valuable for businesses that lack an in-house accountant or payroll specialist. The platform also generates detailed reports that provide a clear view of tax liabilities, making it easier for businesses to track and manage their tax obligations.
At year-end, Gusto generates W-2 and 1099 forms for employees and contractors, respectively, and files them with the IRS. This feature eliminates the need for manual tax filing, ensuring that all necessary tax documentation is completed accurately and on time.
7. Excellent Customer Support
Gusto provides excellent customer support to help businesses navigate the platform and resolve any issues that arise. Whether you’re new to HR management or have years of experience, Gusto’s support team is available through email, phone, and live chat to assist with any questions or problems.
The support team is knowledgeable and responsive, offering personalized assistance to resolve payroll, benefits, and compliance issues. Gusto also offers a comprehensive knowledge base and FAQ section, which can be helpful for finding quick answers to common questions. For businesses that require immediate assistance, the live chat feature is a convenient option for getting help in real time.
With Gusto’s excellent customer support, businesses can feel confident knowing that help is just a phone call or click away. This level of support is particularly important for businesses that rely on the platform for critical functions like payroll and tax filing.
8. Scalable for Growing Businesses
Gusto is an ideal solution for businesses that anticipate growth. The platform offers flexible pricing plans, allowing businesses to scale their HR needs as they grow. Whether you have just a few employees or a growing workforce, Gusto can accommodate your needs by providing access to additional features as required.
For example, businesses can start with the basic payroll and tax filing services and then gradually add features like benefits administration, time tracking, and performance management as their team expands. This scalability means that businesses don’t need to worry about switching to another platform as they grow.
Gusto’s flexibility makes it a great choice for startups and small businesses that are looking to streamline HR processes without worrying about outgrowing the platform.
9. Integration with Other Software
Another benefit of Gusto is its ability to integrate with a wide range of other business software. Whether you need to sync data with your accounting platform, time-tracking system, or applicant tracking software (ATS), Gusto offers seamless integration with many popular tools.
By integrating Gusto with your existing software stack, you can reduce manual data entry and improve overall efficiency. For example, Gusto integrates with accounting platforms like QuickBooks and Xero, allowing for automatic synchronization of payroll data with your accounting system. This integration helps ensure accuracy and reduces the risk of errors when transferring information between systems.
These integrations make Gusto a versatile solution for businesses that want to streamline their workflow and ensure that all of their systems are connected.
The Cons of Gusto
1. High Cost for Small Businesses
While Gusto offers a range of features that can save time and improve efficiency, it does come at a cost. For small businesses with fewer employees, the pricing structure can seem expensive compared to other HR platforms or basic payroll services. Gusto’s pricing is tiered based on the number of employees, so as your business grows, the cost increases.
Additionally, while the platform offers a lot of features, not all of them are included in the basic plan. Businesses that need access to advanced features, such as performance management or benefits administration, may need to upgrade to a more expensive plan, which can add to the overall cost. For small businesses operating on a tight budget, the price may be a significant barrier to adopting the platform.
2. Limited Features on Lower-Tier Plans
Gusto offers several pricing plans, but the lower-tier plans only include basic payroll processing and tax filing. Businesses that need more advanced features—such as performance management, compliance assistance, or detailed reporting—will need to upgrade to a higher-tier plan. These additional features come at a higher price point, which may not be affordable for all small businesses.
This pricing model means that businesses have to pay for features they may not necessarily need, making Gusto less cost-effective for companies that only require basic payroll and tax services. The lack of certain features on the lower-tier plans may also require businesses to seek additional software solutions to meet their full HR needs.
3. Complex Pricing Structure
Gusto’s pricing structure can be difficult to understand, especially for businesses that are just starting out. The platform charges both a base fee and an additional fee per employee, which can make it challenging to predict the total cost, particularly if your workforce fluctuates throughout the year.
This complexity is further compounded by the fact that Gusto offers a range of add-on services, such as benefits management or performance reviews, which are not included in the base price. This means businesses must carefully evaluate the features they need and budget accordingly. The inability to accurately predict costs may be a drawback for businesses that prefer straightforward, transparent pricing.
4. Limited Support for International Businesses
While Gusto is an excellent platform for U.S.-based businesses, it does not provide support for international payroll or HR management. This means that companies with employees outside the United States will need to find a different solution for managing international payroll, taxes, and benefits.
For businesses that operate globally or have employees in multiple countries, Gusto’s lack of international support can be a significant limitation. Businesses that need to manage payroll for employees in different countries may need to look for a more specialized platform that offers global payroll capabilities.
5. Limited Customization Options
While Gusto offers a wide range of features, it may not meet the needs of businesses that require highly customized HR processes. The platform is designed to be easy to use, but it lacks some of the advanced customization options found in more robust HR platforms.
For example, businesses with unique payroll structures, complex tax calculations, or specific reporting requirements may find Gusto’s features too rigid. The platform also offers limited options for customizing the look and feel of employee portals and reports. Businesses that require a higher level of customization may find Gusto’s pre-set templates and features insufficient.
6. Employee Benefits Administration Can Be Complex
Although Gusto offers a range of benefits administration tools, some users find the process of setting up and managing employee benefits to be complicated. Navigating the various options, selecting plans, and ensuring employees are properly enrolled in the right benefits programs can be a challenge.
Additionally, some users have reported difficulties in making changes to employee benefits or integrating new plans, particularly when dealing with regulatory changes. This can create extra work for HR teams and increase the complexity of managing benefits programs.
7. Inadequate Mobile App Functionality
While Gusto does offer a mobile app, it’s not as feature-rich as the desktop version of the platform. Many users have found that the mobile app lacks full functionality, making it difficult to manage all aspects of HR from a smartphone or tablet. Tasks like processing payroll or updating employee records are often easier to complete on the desktop platform.
For businesses that rely on remote work or need to manage HR tasks while on the go, this limitation can be frustrating. The mobile app’s lack of features may limit its usefulness for businesses that need to access HR tools and data at all times.
8. Issues with Customer Support Response Times
While Gusto offers strong customer support through live chat, phone, and email, some users report slow response times during peak periods. This can be particularly frustrating for businesses that rely on timely support for payroll or compliance issues. In some cases, customers have reported waiting for extended periods before receiving a response, which can delay important HR processes.
For businesses that need quick resolutions to payroll or legal compliance questions, slow support response times can be a significant drawback. While the knowledge base and FAQ sections are helpful, having to wait for assistance can create delays that impact your operations.
9. Lack of Advanced Reporting Tools
Although Gusto offers basic reporting capabilities, it lacks the advanced analytics and custom reporting options offered by more specialized HR platforms. Businesses that require detailed, customizable reports, such as in-depth payroll summaries or tax reports, may find Gusto’s reporting tools lacking.
For companies with complex reporting needs, the absence of advanced reporting features can be frustrating. Businesses may need to rely on third-party software or manual data manipulation to generate the reports they require.
Conclusion
Gusto provides a comprehensive, user-friendly solution for small to medium-sized businesses looking to streamline their HR, payroll, and benefits management. Its ease of use, automated features, and excellent customer support make it an appealing choice for businesses seeking to reduce the complexity of HR tasks. However, its cost, limited customization options, and pricing structure may not make it the best fit for every business.
Ultimately, Gusto’s value proposition lies in its ability to simplify time-consuming administrative tasks, especially payroll and compliance management. For small businesses that require an all-in-one solution, Gusto is an excellent choice. However, larger businesses or those with more complex HR needs might need to weigh its pros and cons carefully before committing. By understanding its strengths and limitations, you can make an informed decision about whether Gusto is the right fit for your business.