Gusto vs ADP vs Rippling: the best payroll for a small business

Choosing a payroll provider is less about features than fit. Every serious provider calculates pay, withholds and deposits taxes, files your returns and issues W-2s. What differs is price, how they handle employees in several states, how much HR comes with it, and how much help you get when something goes wrong.

Gusto, ADP and Rippling are the three names most small businesses consider. They suit different businesses, and the right one depends mostly on how many people you employ, where they work, and how fast you're growing.

Prices side by side

Because ADP and Rippling quote individually, the only fair comparison is a written quote from each for your exact headcount, states and features.

What Gusto costs as you grow

At Gusto's published prices, a month of payroll costs:

• 1 employee: $55 on Simple, $92 on Plus.
• 5 employees: $79 on Simple, $140 on Plus.
• 10 employees: $109 on Simple, $200 on Plus, $400 on Premium.

Rippling's own payroll review gives a starting point of $8 per employee a month billed annually plus a base fee, which would put a 10-person payroll near the same range as Gusto Simple, before modules. Treat that as a starting point and get a quote.

Gusto

Gusto is built for small businesses, and its pricing is the easiest of the three to understand. Every plan includes unlimited payroll runs and federal, state and local tax filing.

• Simple, at $49 a month plus $6 per person, covers full-service payroll for businesses that run payroll in one state, with basic paid time off and holiday pay.
• Plus, at $80 a month plus $12 per person, adds multi-state payroll, time tracking and scheduling, faster pay timing and contractor invoice management.
• Premium, at $180 a month plus $22 per person, adds premium support, HR guidance and compliance tools, and same-day pay.

A contractor-only plan costs $35 a month plus $6 per contractor, and Gusto is free until you run your first payroll.

Best for: small businesses from one to a few dozen employees, especially first-time employers. Watch for: the single-state limit on Simple. A remote hire in another state means upgrading to Plus.

ADP

ADP is one of the largest payroll companies in the US, and its small business product, RUN Powered by ADP, is aimed at businesses with 1 to 49 employees. It's sold in four packages:

• Essential Payroll for payroll, taxes and compliance help.
• Enhanced Payroll, adding hiring tools, state unemployment insurance management and garnishment payments.
• Complete Payroll & HR Plus, adding basic HR support.
• HR Pro Payroll & HR, adding enhanced HR support and employee perks.

ADP prices these by quote, often with introductory offers, so the price you're quoted can differ from a colleague's. Its strengths are scale, phone support, and a path to larger ADP products as you grow past 50 employees.

Best for: businesses that want an established provider with phone support, or expect to grow into more HR services. Watch for: quote-based pricing and introductory discounts that end. Ask what you'll pay in year two.

Rippling

Rippling is built as a single employee system. Payroll is one module among many, alongside HR, benefits, time tracking, device management and app access. When you hire someone, Rippling can set up their payroll, their laptop and their software accounts together, and remove them all when they leave.

Pricing is by module. Rippling's own payroll review gives a starting point of $8 per employee a month billed annually, or $10 billed monthly, plus a base fee, with other modules on top.

Best for: fast-growing companies, especially in tech, that want HR, payroll and IT connected. Watch for: the cost of the modules you'll actually want, which can add up quickly.

Multi-state payroll matters more than you think

The single most common surprise for small businesses is a remote employee in another state. Payroll taxes generally follow where the employee works, so a California business hiring someone in Texas has to register and run payroll for Texas too.

All three providers handle multi-state payroll, but not on every plan. On Gusto, it's Plus and above. With ADP and Rippling, confirm it's included in your quote. Registering for withholding and unemployment insurance in the new state is still your job in most cases, though some providers help.

What all three do for you

Any full-service payroll provider worth considering:

• calculates pay and withholding,
• deposits federal, state and local payroll taxes on schedule,
• files Forms 941 and 940 and the state returns,
• issues W-2s to employees and 1099s to contractors,
• handles direct deposit, and
• usually files new hire reports.

That covers most of the compliance work in our guide to payroll taxes for small businesses. What you're choosing between is price, support and how much HR comes attached.

How much HR do you need?

Payroll is the core, but each provider sells HR on top, and that's where prices diverge.

• At one to five employees, most businesses need payroll, tax filing, simple paid time off tracking and a place to store offer letters. Gusto Simple or ADP's Essential package covers that.
• At five to twenty, time tracking, onboarding checklists, benefits administration and an employee handbook start to matter. Gusto Plus, ADP's Complete package or a Rippling bundle are the usual steps.
• Beyond twenty, or with managers who approve time off and expenses, more structured HR and compliance support earns its cost.

Buy for the size you'll be in the next twelve months, not in five years. Every provider makes it easy to upgrade.

Benefits

Health insurance, retirement plans and workers' compensation can be arranged through each provider or connected to it. If offering health insurance is part of your hiring plan, ask how each provider handles benefits in your state, whether they act as a broker, and how premiums flow through payroll. Benefits often cost more than the payroll software itself, so they deserve as much attention.

Support when payroll goes wrong

Sooner or later a paycheck is wrong, a tax notice arrives or a state rejects a filing. How quickly someone fixes it matters more than any feature. Before you choose, ask each provider how to reach support, during which hours, and whether they'll deal with a tax agency on your behalf when a notice arrives. Premium plans usually include faster or dedicated support.

When a PEO beats payroll software

A professional employer organization, or PEO, goes further than payroll software. It becomes a co-employer of your staff, handling payroll, tax filing, compliance and, often, access to large-group health insurance. Small businesses sometimes get better benefits that way. The trade-off is cost and less control. Our guide to PEO vs EOR explains how a PEO compares with an employer of record for hiring abroad.

Questions to ask on the sales call

1. What's the total monthly cost for my headcount, in year one and year two?
2. Is multi-state payroll included, and at what price?
3. Which tax filings and new hire reports do you file for me?
4. What happens if you make an error that leads to a penalty?
5. How do I reach support, and during which hours?
6. What does it cost to add benefits, time tracking or HR tools later?

Setting up your first payroll

Whichever you choose, setup follows the same steps, and it's worth allowing a week or two before the first payday. You'll enter your EIN and state tax account numbers, connect a business bank account for payroll and tax withdrawals, add each employee's details, pay rate and tax forms, choose a pay schedule, and approve a test run. Have your state withholding and unemployment registrations done first, since the provider needs those account numbers to file for you.

Switching providers

Switching payroll mid-year is possible but adds work, because year-to-date totals have to move across so W-2s are right. The cleanest time to switch is January 1. If you must switch mid-year, do it at the start of a quarter, and confirm the new provider will import your year-to-date wages and taxes.

How to choose

1. One to a few dozen employees, all in one state, and you want it simple? Gusto Simple.
2. Anyone working in another state? Gusto Plus, or quotes from ADP and Rippling.
3. Want phone support and a large provider to grow with? ADP.
4. Scaling fast, with HR, devices and apps to manage? Rippling.

If you're hiring for the first time, our guide to hiring your first employee covers the registrations and forms to do before your payroll provider can run the first paycheck.