Gusto Vs Xero

Perhaps one of the most critical responsibilities for HR professionals and businesses is to manage payroll properly. If done right, it can lead to greater employee satisfaction and compliance with tax regulations. Therefore, selecting the appropriate payroll software is essential to streamline this process and minimize administrative burdens.

Xero Payroll and Gusto are two prominent solutions in this domain. Xero Payroll integrates seamlessly with Xero's accounting software, offering features such as automated tax calculations, direct deposit payments, and employee self-service portals. Gusto provides comprehensive payroll services, including automated deductions, tax filings, and additional HR tools like time tracking and employee benefits management.

In this article, we’re going to compare Xero Payroll and Gusto, examining their features, benefits, and suitability for your business needs. This analysis aims to assist you in making an informed decision when choosing the optimal payroll solution for your organization.

Xero Payroll Vs Gusto: At A Glance

Features

Xero Payroll

Gusto

Tax Management

Offers powerful tools for managing sales tax

Specializes in payroll tax management

Dashboard

Provides users with an overview of the business’s financial status

Offers a modern accounting dashboard designed to streamline various HR activities

Reporting

Offers a range of financial reporting tools such as profit/loss statements, balance sheets, etc.

Provides a wide variety of HR reporting features, including workforce cost analysis, custom reports, etc.

Mobile App

Allows business owners to manage and monitor their finances on the go

Allows employees to clock in and out and view their paychecks

Pricing

Starts at $29 per month

Starts at $40 per month + $6 per month per person

Integrations

Integrates with other payroll apps such as Deputy, Deel, Rippling, etc.

Integrates with a variety of third-party platforms such as Asana, Dropbox, GitHub, etc.

What Is Xero Payroll?

Xero Payroll

Xero Payroll is an online payroll solution designed to integrate seamlessly with Xero's accounting software, providing a unified platform for managing both accounting and payroll processes. It automates the calculation of taxes, deductions, and filings, ensuring compliance with federal and local regulations. Employees can access their pay stubs and W-2s online, enhancing transparency and reducing administrative tasks.

Xero has partnered with Gusto to offer comprehensive payroll services across all 50 states in the U. S. This collaboration gives businesses an overview of their finances, as well as additional features such as automated payroll filing, direct deposit payments, etc.

This integrated approach simplifies payroll management, making it a suitable choice for accountants in small to mid-sized businesses seeking to streamline their payroll and accounting operations.

Unique Xero Features

  • Advanced Accounting Capabilities: Xero provides robust accounting features, including invoicing, expense tracking, bank reconciliation, and multi-currency support.
  • Inventory Management: Xero offers built-in inventory tracking to help businesses manage stock levels.

Xero Payroll Pros And Cons

Pros:

  • Cloud-based access allows work from anywhere
  • Integrates with banking and statutory services
  • Real-time financial overview with dashboards

Cons:

  • Customer support response times can be slow
  • Occasional issues with bank feed synchronization

What is Gusto?

Gusto

Gusto HR is an extensive, cloud-based platform that provides human resource management solutions. Designed to simplify complex administrative tasks, Gusto automates payroll processing, including tax calculations, filings, and direct deposits, ensuring compliance with federal, state, and local regulations.

Beyond payroll, Gusto provides a suite of HR tools such as time and attendance tracking, employee onboarding, and performance management . The platform also facilitates benefits administration, allowing businesses to offer health insurance, retirement plans, and other employee perks seamlessly.

Gusto serves over 400,000 businesses nationwide, catering to various industries, including real estate, professional services, healthcare, retail, manufacturing, and construction. Its user-friendly interface and integrated approach make it a preferred choice for companies seeking to streamline their payroll and HR processes.

Unique Gusto Features

  • Benefits Administration: Gusto offers built-in health insurance, retirement plans (401k), and workers' compensation management.
  • Time Tracking: Gusto has native time-tracking tools that integrate seamlessly with payroll, helping businesses track employee hours directly within the platform.

Gusto Pros And Cons

Pros:

  • Automated tax filings ensure compliance with regulations
  • The setup process is straightforward, saving initial onboarding time
  • Employee self-service portal enhances accessibility to information

Cons:

  • Occasional lags in updating tax regulation changes
  • Some integration functions require manual setup

Xero Payroll Vs Gusto – Features Comparison

Tax Management

Xero provides powerful tools for managing sales tax, enabling businesses to automatically calculate taxes on transactions and generate detailed reports for tax return preparation. Users can customize VAT rates, set up multiple tax rates and components, and apply specific rates to individual line items within invoices, quotes, purchase orders, and bills.

The platform also offers comprehensive sales tax reports, including summaries by rate, component, or account type and audit reports detailing individual transactions. These features facilitate accurate and efficient tax management, ensuring compliance with relevant tax regulations.

Meanwhile, Gusto specializes in payroll tax management, automating the calculation, filing, and payment of federal, state, and local payroll taxes. The platform supports businesses operating across multiple states, handling tax requirements for both in-house and remote employees. Gusto also assists with compliance by managing new hire reporting and providing digital copies of filed tax forms.

Additionally, Gusto identifies applicable tax credits, such as the Federal R and D Tax Credit, helping businesses save money they might not have known they qualified for. Finally, all taxes are paid on time and within accordance with the rules, ensuring that businesses are not penalized for late payments or incorrect filings.

Winner: While Xero’s sales tax management capabilities are more extensive than Gusto’s, it does not offer much more beyond that. Therefore, Gusto wins because it handles tax requirements across federal, local, and state levels.

Dashboards

The Xero dashboard serves as a centralized hub, providing users with a comprehensive snapshot of their business's financial status. It displays key metrics such as bank account balances, outstanding invoices, and upcoming bills, enabling users to monitor cash flow effectively. The dashboard is also customizable, allowing users to prioritize the information most relevant to their operations. Additionally, it integrates seamlessly with other Xero features, such as reports and cash flow projections, supporting informed business decisions.

On the other hand, Gusto offers a modern accounting dashboard designed to streamline payroll, benefits, and HR tasks for businesses. The Gusto Pro dashboard, in particular, is tailored for accountants, providing a centralized platform to manage client information efficiently. It facilitates easy access to payroll runs, benefits administration, and compliance tasks, enhancing the overall user experience.

Winner: This category ends in a tie as both software aim for different goals. Xero’s dashboard aims to provide a clear overview of a business’s financial situation, whereas Gusto uses its dashboard to centralize all HR-related activities. Therefore, it’s up to the user to decide which one would suit them.

Reporting

Xero offers a comprehensive suite of financial reporting tools that provide businesses with real-time insights into their financial health. Users can generate essential reports such as profit and loss statements, balance sheets, and cash flow statements, all of which can be customized to highlight specific metrics relevant to the business. The platform also allows for the addition, removal, and reordering of rows and columns through a simple drag-and-drop interface, enabling businesses to make customized reports.

Furthermore, Xero's reporting capabilities include the use of formulas and calculations to compare budgeted spending against actual amounts, facilitating informed decision-making and effective performance tracking.

Gusto provides businesses with insightful HR reporting tools designed to enhance workforce management and strategic planning. The software enables the creation of custom-built reports, allowing businesses to analyze crucial data at a glance and make swift, accurate decisions. Features include survey trend analysis, which helps in comparing employee feedback over time to identify trends and inform meaningful actions.

On top of all that, Gusto also offers workforce cost analysis, providing a clear understanding of expenses related to staffing. These insights, in turn, can aid in optimizing budget allocations and improving the company's bottom line.

Winner: Once again, it’s a tie as Xero and Gusto offer features directed at different audiences. Xero specializes in finance, making it a good fit for financial reporting. Conversely, Gusto specializes in HR, meaning it excels in analyzing workforce trends.

Mobile App

Xero offers the Xero Accounting app—a mobile extension of Xero's accounting software, designed to help small business owners manage their finances on the go. Available for iOS and Android devices, the app allows users to create and send invoices immediately after a job is completed, facilitating quicker payments.

Users can also monitor cash flow through real-time profit and loss reports and customizable dashboards, providing a clear view of financial health. In addition, the app enables bank reconciliation by matching bank transactions with existing invoices and receipts, ensuring up-to-date financial records.

In a similar manner, Gusto offers a mobile app called Gusto Wallet. This application is designed to empower employees with control over their finances. Available for iOS and Android, the app provides features such as viewing paychecks, managing savings goals, and accessing emergency funds. Employees can also clock in and out, log hours, and view work schedules directly within the app, streamlining. time tracking and attendance .

Furthermore, Gusto Wallet offers financial wellness tools, including insights into spending and the ability to set up direct deposits into savings accounts, promoting better financial planning among users.

Winner: Gusto Wallet offers more features than the Xero Accounting app, which is limited to financial management. Therefore, it wins this category.

Pricing

Xero offers three primary pricing plans to accommodate various business needs:

  • Starter – $29/month
  • Standard – $46/month
  • Premium – $69/month

The starter plan includes all essential features like bank reconciliation. Meanwhile, the higher tiers, such as Standard and Premium, offer unlimited invoices and bills, with Premium in particular offering multi-currency support.

Gusto's pricing structure is designed to cater to small and medium-sized businesses, offering transparent and flexible plans:

  • Simple – $40/month plus $6/person
  • Plus – $80/month plus $12/person
  • Premium – $180/month plus $22/person

Similar to Xero, Gusto’s simple plan offers basic support and a full-service single-state payroll. As one may guess, its higher tiers offer more advanced tools designed for more extensive needs, such as multi-state payroll and next-day direct deposits.

Winner: From an affordability point of view, Xero wins. However, Gusto offers many more features compared to Xero’s highest tier.

Which One To Choose – Xero Payroll Or Gusto?

Gusto Vs Xero Conclusion

In the end, both Xero Payroll and Gusto provide robust payroll solutions, but each caters to distinct business needs.

Xero Payroll stands out for its seamless integration with Xero’s accounting software, making it an excellent choice for businesses already using Xero for their financial management, especially in industries requiring detailed accounting features.

Meanwhile Gusto is tailored for small to medium-sized businesses looking for an all-in-one payroll and HR solution, offering user-friendly tools for tax management, benefits administration , and employee self-service.

Therefore, the best choice depends on your business's size, existing software ecosystem, and specific payroll or HR requirements. However, if neither software is what you’re looking for, try other alternatives, such as Rippling HR or Justworks HR .