Square Payroll vs Gusto Payroll vs ADP: Choosing The Best Payroll Software

In 2023 alone, the IRS collected approximately $8.6 billion in penalties on incorrectly filed employment taxes. The US Bureau of Labor Statistics estimates that an SMB with roughly 100 employees could lose up to $56,700 a year owing to payroll mistakes.

Business owners realize fairly early on that, contrary to their initial assumption, payroll is far from being a simple matter of adding up work hours and writing checks. 

Instead, there are complex calculations – normal work hours and overtime, paid time off (PTO) including sick leave and holidays, bonuses and raises, besides numerous withholdings – federal and state tax, health insurance, unemployment insurance, employee stock options and so on. 

To top it all, there are multiple forms to generate, issue and submit – W-2, W-3, Form 941, Form 1099 – with stiff penalties for missed deadlines and incorrect reporting.  

Finding a software that can help your business deal efficiently with the complexities of payroll processing is the only way to stay ahead of the game.

The rest of this article is dedicated to helping you do just that.

By giving you in-depth reviews of three software platforms (with multiple variants) that are not only well-reputed and widely used, but optimized for the payroll processing needs of small businesses—Square Payroll, Gusto Payroll and ADP, this article takes the guesswork out of finding the perfect payroll solution for your business.

Let’s dive in.     

Software for Basic Payroll Functions

Highlighted below are three of the best options available to small business owners in 2024 for automating their basic payroll processing:

1. Square Payroll (only one plan available)
2. Gusto Payroll, Simple Plan
3. ADP Roll

While individual plan features differ, it is important to remember that the plans in this section have a few things in common:

• They fit into the tight budget constraints that small businesses often contend with.
• On the flip side, their low cost comes with constraints in processing time and flexibility.
• Adding advanced features on a basic plan can bump up the monthly cost significantly. 

Square Payroll 

Square is one of the best payroll solutions out there for small businesses that fit at least one of the profiles below:

• Brick and mortar store for physical products (e.g., retail outlet) that uses Square POS
• Hospitality business (fast food outlet, small restaurant, bar, café)
• Commonly used services (gym, salon, auto repair)

On the flip side, its basic features and limited scope for extension make Square unsuitable for businesses that have the following needs and/or profiles:

• Need instant or same-day payroll processing
• Larger staff, that is, 20 or more employees
• Varied overtime and PTO calculations
• Varied or changing clock-in times and/or locations
• Need reports (e.g., payroll history for single employees or departments)
• Rapidly growing (likely to exceed 20 employees within a year) 

For a detailed comparison of the features and limitations of Square as against Gusto and the fully chat-based ADP Roll, refer to the table at the bottom of this section.

Square Payroll Pricing 

In 2024, Square Payroll’s pricing is reasonably competitive, with a base price of $35 and a per employee per month pricing of $6.

The ready reckoner at the end of the article provides a quick estimate of the minimum monthly cost of Square Payroll for businesses with different employee headcounts.

Gusto Payroll: Simple Plan 

Gusto’s Simple Plan is arguably the best payroll software for small businesses that fit the following profile:

• Small businesses, startups with less than 20 employees
• Operations within a single state
• Uniform employee hours or a few, fixed shifts
• Need built-in HR functionality but only basic features (onboarding, employee pay-stubs)

On the other hand, Gusto’s Simple Plan is likely to be inadequate for organizations whose needs include one or more of the following:

• Instant or same-day payroll processing
• Need reports (e.g., payroll history for single employees or departments)
• Multi-state operations
• Flexibility to make last-minute changes
• Integration with HCM platforms (e.g., Sage People, Workday, HiBob)

Refer to the table at the end of this section for a detailed comparison of the features and limitations of Gusto’s Simple Plan against Square Payroll and ADP Roll, a fully mobile-based payroll app.

If you already have a Gusto Simple plan subscription activated, check out this helpful video that walks you through setting up Gusto for a payroll run. 

Gusto Simple Plan Pricing 

Gusto Simple Plan’s monthly base cost is $40, with a per-head cost of $6 for every employee on the plan. This makes the payroll software a viable option for smaller outfits with anywhere from 1 to 20 employees, but costs spiral beyond this.

Keep in mind that the additional cost of add-ons such as report generation, HR functions and benefits administration (such as health or unemployment insurance) can push up the total cost of this software, even for a small business with modest needs.

(See the ready reckoner at the bottom of the article for an estimate of the minimum monthly cost of Gusto’s Simple plan for your organization.)

ADP Roll 

Already a big name in the payroll software segment, ADP’s latest offering, Roll, is a one-of-a-kind app that lets business owners do their entire payroll through chat commands.

This app (which can also be accessed on a desktop computer), is ideally suited to organizations with the following profiles:

• Service-oriented businesses (salons, fitness clubs, cleaning services)
• Small, one- or two-person run operations, startups 
• Mobile businesses (food trucks, catering, event management, pop-up shops)

It must be noted that ADP Roll’s chat interface may take some getting used to (although the AI assistant is there to help you at each step). Also, its basic set of features mean that ADP Roll may not be a good choice for businesses with the following requirements:

• Complex payroll processing (varying shifts, PTO calculations)
• Larger employee headcount (10 ‒ 12 is likely the comfort limit of the human operator)
• Benefits administration (health insurance, retirement fund) and SUI

To compare ADP Roll against Square Payroll and Gusto’s Simple Plan, use the table at the end of this section.

ADP Roll Pricing 

ADP Roll is one of the most competitive options currently on the market, owing to a low base price ($29) and a reasonable per-employee-per-month cost ($5). An added attraction is its 3-month free trial period.

Go to the ready reckoner (end of article) for a quick estimate of minimum monthly costs for businesses with different staff sizes.

Software with Advanced Payroll Features

In this section, we walk you through what to expect from higher tiers of Gusto payroll software (Plus and Premium plans) as well as providing a brief overview of the Gusto Contractor Plan, and help you compare these against the features of ADP payroll processing software called RUN (Essential and Enhanced plans). 

You already know to expect higher monthly costs, but the descriptions below highlight the value you’ll be getting for your $$. The ready reckoner table at the article end lists the minimum monthly cost of each software for businesses with different staff sizes.

Gusto Payroll: Plus Plan (formerly ‘Complete’) 

The Plus Plan offered by Gusto is in many ways the ideal solution for small businesses that are scaling either upwards or laterally. Such profiles include:

• Businesses with operations across 3 or more US states
• Outfits with between 10 and 50 employees needing complex wage calculations (healthcare, retail, transportation and so on) 
• Growing organizations (< 50 employees) that need low-budget HR functionality  
• Small businesses (< 50 employees) needing integration of payroll with other components (time tracking, accounting, project management) 

However, Gusto’s Plus Plan is unlikely to be a good match for operations with more complex needs, such as:

• Organizations with over 50 employees, particularly with complicated wage calculations
• Businesses with international operations involving either employees or contractors
• Larger operations (> 50 employees) needing on-the-go payroll app access for employees
• Outfits wishing to try out multiple payroll software options 

Gusto Plus Plan Pricing 

With a monthly base price of $80, Gusto’s Plus Plan carries a per-head cost of $12 for every employee added. Thus, this tier of the software is best suited to small businesses with mid-sized operations (that is, between 10 and 50 employees), in order to get the best return for their money.

Gusto Payroll: Premium Plan (formerly ‘Concierge’) 

Gusto’s Premium Plan caters to the unique needs of small businesses in certain sectors. Organizational profiles most likely to benefit from Gusto’s Premium tier include:

• Industries with time-critical payroll runs (services, gig-based businesses, small retail chains) 
• Businesses that need extended but economical HR functionality (tech firms, startups)  
• Organizations with complex payroll structure needing hands-on customer support

On the other hand, the Premium Plan is not well-suited to outfits whose need profiles are as follows:

• Businesses with constant hires needing automation of HR features and database updates
• Organizations with international operations involving either employees or contractors
• Larger operations (> 50 employees) needing on-the-go payroll app access for employees
• Outfits wishing to try out multiple payroll software options 

For a comparison of Gusto’s Plus and Premium plans against RUN powered by ADP’s Essential and Enhanced plans, see the table at the end of this section.

Gusto Premium Plan Pricing 

As is the case with many higher tier payroll packages, the monthly cost of a Gusto Premium plan depends fully on customized client requirements. However, a safe estimate of the minimum monthly cost of this plan is $200.

Gusto Payroll: Contractor Plan 

Gusto Payroll additionally caters to the segment of small businesses that deal exclusively with freelancers or contractors, such as live entertainment, delivery services and so on.

Gusto Contractor Plan Pricing 

This plan carries a competitive base monthly price of $35, along with a per-contractor monthly charge of $5.

Use Table 3 at the bottom of the article to look up the minimum monthly cost of the Gusto Plus and Contractor Plans for businesses with varied employee headcounts. 

RUN Powered by ADP: Essential Plan 

The RUN powered by ADP payroll packages are suited to a range of organizational needs. Here we review the first of the four tiers of the RUN range – the Essential plan. 

ADP RUN’s Essential plan is most likely to suit the needs of organizations with the following need profiles:

• Employee headcount between 20 and 49
• Operations across three or more US states
• Uniform employee hours/ paid time-tracking (add-on)
• Simple payroll reports (e.g., employee- or department-wise payroll history)
• Basic built-in HR features/ paid HR functionality (add-on)

In contrast, the ADP RUN Essential plan is not suited to organizational needs such as:

• Instant or same-day payroll processing
• Payroll for international employees
• Built-in benefits administration (insurance, retirement, ESOs)
• Flexibility to make last-minute changes

ADP RUN Essential Plan Pricing 

ADP RUN Essential plan’s base monthly cost of $79 makes it more suitable for organizations with a headcount of at least 10 or more employees. Likewise, its lower per-head cost of $4 for every employee added represents real savings for businesses with a staff of over 20.

RUN Powered by ADP: Enhanced Plan 

ADP RUN’s next tier, the Enhanced Plan, comes with a suite of built-in features for complex payroll processing as well as HR functions. (The table at the end of this section compares ADP RUN’s Essential and Enhanced plans against Gusto’s Plus and Premium plans.)   

The ADP RUN Enhanced plan is best suited to organizations whose needs fit the following profiles:

• Multiple payroll profiles (employees, freelancers, contractors)
• Operations across multiple US states
• Industries prone to frequent compliance updates (construction, healthcare, legal services)
• Businesses in constant hiring mode (healthcare, hospitality)

The RUN Enhanced tier is likely to be unsuitable to businesses whose needs include the following:

• Instant or same-day payroll processing
• Payroll for international employees

ADP RUN Enhanced Plan Pricing 

The monthly cost of ADP RUN’s Enhanced plan depends fully on the client’s customized needs. However, it is safe to estimate that the monthly minimum cost of this plan is likely to be at least $180. 

Considerations in Choosing a Payroll Software

• A low base price may sound attractive, but the per-employee cost will quickly cancel any base price savings as your staff size increases; even $1 saved per employee per month adds up over the course of a year
• Time-tracking vs. integration with separate tracking app – although integrations can work well, there are higher odds of features refusing to work and data imports/ exports being error-prone across softwares… this could result in costly mistakes such as missed deadlines & even IRS penalties!
• PTO, health insurance, 401k – going in for a basic plan on most softwares will make dealing with all these calculations laborious, complicated & error-prone… though costlier, premium-grade plans will save your business time & money in navigating these intricacies
• Also consider the value of HR features such as onboarding and employee handbooks to your business
• Finally, do an RoI analysis on providing access to payroll information to your employees – with a larger number of employees, it will definitely save man-hours to have them enter their own information & verify it (personal details, ID documents, updating personal info, etc.)

Next Steps

Knowing what you now know about the best payroll processing software options for small businesses with various needs and profiles, you are in a position to make a well thought-out decision that balances your business’ financial forecast against payroll priorities. 

If you’d like to know more about how best you can leverage both business and personal finances as a small business owner, drop us a line at info@playlouder.com for a free, no-obligations consult.