Payroll is a pain. According to survey data, payroll takes small business owners an excess of 5 hours per pay period. Fortunately, if you choose the right payroll solution, you can cut this down significantly. This is why we are going to be looking at Square Payroll vs Gusto vs ADP—some of the biggest players in the payroll solutions game.
Statistics state that 40% of businesses incur IRS payroll-related penalties, with the average penalty landing at $845. Ouch. What’s more, payroll errors are twice as likely to occur in homegrown payroll systems as they are with third-party solutions.
Human error is a big reason why people choose to use payroll software. Most software will provide automatic calculation of deductions for withholdings, such as taxes, insurance and retirement contributions. The software also tracks all payments, maintains records, and automatically runs payroll. In a nutshell, it cuts out the guesswork and the likelihood that you’ll make a costly mistake.
Ok, so let’s assume that we want to avoid all of the headaches, get professional and use some payroll software. Great! Now which one?
Well, that brings us to our comparisons. In order to ensure you get the capabilities you need, for a price that you like, we are gonna dig into the nitty-gritty details of what different payroll solutions are offering.
First up, let’s get our teeth into the primary features of these three payroll powerhouses. All three of these solutions offer the fundamental payroll core service. However, their capabilities differ in some of their add-on offerings and extended capabilities.
Square Payroll* was released in 2015 as an addition to Square’s wide range of payment processing solutions.
Square is mainly a solid core payroll service that will allow you to set up—and even automate—all of your employee’s salaries, as well as administer employee benefits, cater to hourly and salaried employees, and track sick leave and time off. In the background, Square Payroll automatically pays your employees once you approve the payroll, and files all federal and state taxes that you owe.
Square Payroll is completely cloud-based, and they also have an app from which you can manage the payroll process. Employees are able to login to Square Payroll and do tasks such as track their leave, update their details, or modify their withholding tax.
When comparing Square Payroll to other solutions such as Gusto and ADP, one thing that stands out is that the platform and reports are simpler and more basic. This can be advantageous, especially for smaller businesses. However, if your organization is large, then the simplicity of Square Payroll might make it inadequate, especially if you need complex analytics or HR assistance.
Best For: Businesses Already Using Square Payments
One of the handiest features of Square Payroll is its integration with other Square products.
For example, if your employees already clock in and out with your Square POS system, this data will automatically sync with Square Payroll. If you employ a number of contractors, this feature can potentially save you hours of wasted labor come payroll day.
Aren’t a user of a Square POS system product? Even so, Square Payroll might still have you covered with their integrations with other time tracking applications such as T-Sheets, Deputy, Homebase, or TimeTrack24.
In addition to time tracking integration, Square Payroll also integrates with QuickBooks, Xero, Wave, and Zoho Books.
Gusto* payroll is very similar to Square Payroll in that it is cloud-based and offers a full feature core payroll process to its users. As with Square Payroll, Gusto streamlines and automates your payroll process, handles the tax side of things (both state and federal), and allows you to administer employee benefits.
Depending on the plan you choose, employees will also be able to log in and onboard themselves by entering in their personal details and filling out their W-4.
Gusto also features a powerful range of reporting features and can integrate with various accounting applications such as QuickBooks, Xero, and Freshbooks. (It also happens to be MY payroll software of choice, and I find it works really well with QuickBooks.)
With Gusto, you can also pay hourly, salaried and contract workers.
One of the areas where Gusto’s services really shine is their HR functions. Depending on what package you sign up for, you can have access to premium HR tools and professionals, such as the employee handbook wizard, HR forms, and company culture assistance.
Additionally, some of the nicest aspects of Gusto’s HR services is that they can be turned on and off. If your business needs help with HR, you can take out the Concierge Plan, utilize it to get your HR policies and systems in place, and then downgrade in a subsequent month if you feel that you don’t need it anymore.
Best For: Small Businesses
I use Gusto for all my small business clients. Gusto’s capabilities, pricing, and HR tools and functions make it an ideal solution for small (1-50 employees) or medium-sized (50-100 employees) businesses. Although HR is a crucial function, hiring an HR specialist is often not an option for a smaller business, which is why Gusto’s HR offerings can be so valuable.
Just like Square Payroll and Gusto payroll, ADP is cloud-based—and similar to Square Pay, it also has an app.
Its core payroll functions of salaries, benefits, and payroll taxes are just as good as both Square Payroll and Gusto payroll. The basic plan gives you access to over 15 report types, as well as new-hire reporting. The interface allows for exporting to other applications such as QuickBooks, Xero, and Wave.
Unlike Square and Gusto, it has a wider variety of more complex payroll options. These are available with certain plans for larger and international companies in the ADP Vantage HCM software.
Similar to Gusto, ADP also has a range of HR-related tools and services, such as an employee handbook wizard, up to 5 free background checks, HR forms, and more.
Finally, as an additional benefit, ADP also has a nice time and attendance (clock in/out, hours worked) feature that syncs to payroll, as well as scheduling, performance, and productivity tools.
Best For: Larger businesses with more complex payroll
If you have a larger business (100 employees or more), you may prefer ADP’s additional functions. ADP offers enhanced analytics that cover payroll, taxes, employee benefits, and garnishment payments. It also has a custom reporting option that may be useful for companies that want to do data analytics in Excel or export data to other software.
The main drawback to ADP in its pricing structure…it’s expensive! My experience is that it’s more than double the cost of Gusto, and more than many of the other competing available options. I have also found that the web interface is not as user friendly as Gusto or Square.
Pricing is an important criterion to compare. When it comes to Square Payroll vs Gusto vs ADP—the prices can vary widely depending on what packages you select.
Square Payroll Pricing
Square Payroll’s pricing is one of the most competitive in the market, with a base rate of $29 dollars per month, and $5 dollars extra for each employee in your Payroll. Plus, if you’re only paying 1099 contractors then they will waive the base rate and you only pay the $5 per employee!
One of the great benefits of Square Payroll is that you can run payroll as many times as you like per month, and you won’t get charged extra.
Gusto Payroll Pricing
Gusto payroll’s Core Plan price is $39 per month and $6 per employee for full-service payroll. The Complete Plan is $39 and $12 per employee. If you wish to enroll in the top tier Concierge Plan, this will cost you $149 and $12 per employee.
Lastly, if you haven’t hired any W-2 employees yet, you can enroll in their Contractor plan which costs $6 per contractor, with no monthly base cost.
ADP does not advertise prices on its website, as it charges a customized rate depending on your needs. But in my experience its much more expensive than both Gusto and Square.
Square Payroll vs Gusto vs ADP: Which to Choose?
When it comes to Square Payroll vs Gusto vs ADP and which to choose, the best solution will be the one that fits your business needs, size and finances.
As mentioned above, I personally use Gusto* for all my clients.