Let’s be real: payroll is one of those things in your business that you’ve got to deal with, but gawd, is it boring! Like, so boring that it makes reading Moby Dick sound like a night out in Ibiza.
You’ve got two choices when it comes to payroll: run away to Spain with Melville and pretend like it doesn’t exist OR start using a payroll company that makes payroll tolerable or, dare I say it, even exciting.
And while I’m sure reading about whales in Spain sounds like your dream vacay, finding a payroll service that takes the edge off payroll is a much better decision for your business.
Enter Gusto, one of our favorite payroll companies. It makes payroll super easy, and super fast.
With Gusto, you can run payroll in just a few minutes, and all the hardest parts of payroll (like the math) are taken care of for you. You might not be able to make payroll disappear, but, with Gusto, at least it’s quick, painless, and colorful.
And if you’d rather not run payroll at all? Keep reading. We’ll cover that too.
But first: why do you need a payroll service?
Well, you don’t NEED a payroll service. Technically, you can run payroll all on your own. BUT, without a payroll service, you’ll be taking the DeLorean back to the dark ages of business finances fast.
You see, payroll services take care of the most time-consuming and tedious aspects of running payroll. Writing yourself a paycheck is the easy part. Dealing with federal and state taxes…not so much.
Here’s what it would look like to run payroll all on your own:
- Every time you run payroll, you’d calculate the amount of federal and state taxes that are withheld from your employees’ paychecks. This involves math. Serious math.
- Then, you’d calculate how much you, the employer, will need to pay in taxes.
- THEN, you need to put this money aside so it’s available when it’s time for you to pay your payroll taxes.
- THEN, you’ll pay your federal and state payroll taxes either monthly or semiweekly.
- THEN you’ll fill out a form every quarter reporting your federal (and possibly state) tax withholdings.
- Oh…and then at the end of the year, you’ll generate a W-2 for every employee and deliver it by January 31st.
Sound like a lot of work? It is. And keep in mind that this is the CliffsNotes version of all the forms and calculations you need to do. There’s more…so much more.
Which is why you probably want to skip the hellish number crunching and go straight to a payroll service, or to a team that runs payroll for you.
Payroll services take care of all the math, tax deposits, and reporting for you, on both the state and federal levels. There’s not much you need to do besides entering your pay details and making sure you have enough money to cover payroll.
And while payroll services aren’t free, they’re totally worth the small monthly fee.
First, because payroll mistakes cost money. Miss a zero or forget to add a decimal? You could pay some serious penalties for your mistake. And second, because it’s way more cost-effective to pay a provider to do your payroll the right way.
Which is a better use of your time and money: spending three hours every month figuring out your payroll, or paying about $56/month and spending five minutes running your payroll, with the peace of mind that everything will be done correctly?
I think you know the answer.
Why Gusto is one of our favorites
Gusto makes running payroll an absolute dream. It handles federal and state payroll tax filings and reporting requirements for most states, and it supports employee time tracking, vacation and sick time, and paid holidays on its higher-tier plans.
Unlike other payroll providers, Gusto really shines when it comes to navigation and ease of use. Here are our favorite Gusto features:
Simple setup
Getting started with payroll involves some setup. You have to register with the appropriate state agencies, obtain account numbers, and set up pay schedules. It can be daunting to get started, especially if you’ve never navigated payroll before.
Luckily, Gusto walks you through the payroll setup process. Not only is the setup broken down into small, doable steps, but Gusto provides plenty of information (and links to outside resources) in case you get stuck.
Straightforward payroll
With Gusto, running payroll is SUPER straightforward. Once you’re set up in the system, you enter the pay details and that’s it. For an S Corp owner paying yourself a regular salary, it can take just a few minutes.
You can easily add additional earnings, like bonuses, commissions, tips, and reimbursements, with a single click because everything is laid out for you in the payroll window.
Easy to navigate
Whether you have a simple payroll with just one employee or a more complicated payroll with multiple employees, vacation time, and benefits, it’s easy to find what you need through the Gusto dashboard.
Unlike other payroll services, where you have to search high and low for that one thing, Gusto’s menus are intuitive and use language you actually understand. Nothing is hiding behind nested menus, confusing icons, or vague descriptions.
Employee benefits
While running payroll in Gusto is gloriously simple, make no mistake that Gusto is a robust payroll provider, especially when it comes to employee benefits.
Through Gusto, you can set up standard employee benefits, like health and retirement, along with more unique benefits like charity matching and commuter benefits. Note that commuter benefits require health insurance through Gusto or its broker integration.
Fun colors and icons
Running payroll is probably not something you’re dying to do every month. And if you have to log in to a payroll dashboard that looks like MS DOS, you’re probably going to put off running your payroll. C:\Nope. But if the dashboard looks inviting, and even fun, you’re less likely to skip out on your payroll at happy hour.
Integrates with accounting software
Every time you run payroll, Gusto calculates your salary, how much tax is withheld from your paycheck, and how much tax your company pays. And while it’s great that you don’t have to figure this stuff out yourself, this information still needs to end up in your accounting program.
I’m betting you don’t want to be the one to enter it.
Lucky for you, Gusto integrates with popular accounting programs. Every time you run payroll, Gusto can automatically send the details of your payroll to your accounting software, including how much of your payroll went to salaries, reimbursements, and taxes.
Gusto for S Corps
Besides Gusto’s basic payroll features, Gusto offers a few additional features that make it a total JTT-level dreamboat for S Corp owners.
A plan built for one-person S Corps
Gusto has a Solo plan designed for owner-only businesses. It’s priced the same as the Simple plan, and it includes S Corp tools like reasonable salary guidance, a compliance hub, and a Solo 401(k) option. If you’re an S Corp owner paying only yourself, it’s worth a look.
Additional tax withholdings
Technically, any employee can set up additional tax withholdings when they fill out their W-4 information in Gusto. But many S Corp owners like to include additional tax withholdings to help cover the income tax they will pay on their taxable profits at the end of the year.
If you’re really bad at saving for taxes and want to ensure that you’re stashing away enough, you can automate your tax savings through your payroll runs.
Benefits tracking for S Corp owners
If you’re an S Corp owner and paying for your health insurance (or other fringe benefits) through your company, you must include the cost of your fringe benefits in your W-2 wages.
Wait, what? How am I supposed to keep track of that?
It’s confusing, I know. Which is why it’s super awesome that Gusto keeps track of which employees are more than a 2% owner of the company, and it takes care of reporting your health insurance (and other fringe benefits) for you on your W-2. Health insurance premiums for a more-than-2% owner are reported as wages for income tax purposes, but they’re generally not subject to Social Security and Medicare taxes.
Setting up an employee as a more than 2% owner is SUPER easy (Gusto will even remind you to do it). Then, all you do is let Gusto know how much the benefits cost every month, and they take care of the rest.
Competitive pricing for one-employee payroll
Gusto is one of the most competitively priced payroll services out there.
Unlike other payroll companies that charge you every time you run payroll, Gusto charges you a monthly fee. Regardless of how many payrolls you do in a month, your monthly fee won’t change.
Also, Gusto’s fee structure is based on a monthly base fee and an additional charge per person. If you’re only running payroll for yourself, that structure is very reasonable.
Plus, filing W-2s is included, with no extra charge.
How much should you expect to pay? Gusto’s Simple and Solo plans cost $49/month, plus $7 per person. If you’re just running payroll for yourself, you’ll pay about $56/month. Simple covers one state. Multi-state payroll requires the Plus plan, which costs more.
Some extras cost additional money, like faster direct deposit options. Gusto has changed its pricing more than once, so confirm the current numbers on Gusto’s pricing page before you sign up.
Or skip payroll altogether: let Collective run it
The thing about S Corp payroll is that it isn’t optional. Once you elect S Corp status, you have to pay yourself a reasonable salary through real payroll, and that payroll has to be registered, run, and filed correctly. A good payroll tool helps. But you’re still the one who has to set it up, run it on time, and make sure the numbers match your books and your tax return.
That’s the part Collective takes off your plate. When you’re a Collective member on the S Corp plan:
- We handle employer registration, so your payroll is set up correctly with the right agencies.
- We run your payroll, so salary, withholdings, and deposits happen on schedule.
- We help you set a reasonable salary, so you’re not guessing at the number the IRS actually looks at.
- It all ties together. Your payroll feeds your bookkeeping, and your bookkeeping feeds your S Corp tax return, all with one team that works only with solopreneurs.
- You get a dedicated account manager who knows your business.
Payroll software saves you from the math. Having someone run payroll saves you from thinking about it at all. If you’d rather spend your time on your work, see how Collective handles payroll as part of your S Corp.
