Managing payroll and HR is one of the important factors in ensuring your business runs smoothly. Beyond ensuring employees are paid accurately and on time, effective payroll and HR management helps maintain compliance with labor laws, improve employee satisfaction, and supports overall operational efficiency.

In this article, we’ll explore how leading payroll software platforms can transform the way businesses manage payroll and HR. By analyzing their core features, usability, and overall value, you’ll gain the insights needed to make an informed decision that aligns with your operational goals.

At A Glance

Standout Feature Xero Payroll Gusto 
Payroll Processing Simple and automated payroll runs, with Xero accounting software Automated payroll, direct deposit, and tax filing 
HR Tools Basic HR tools like employee records and leave management Comprehensive features like employee onboarding, performance tracking, and document management 
Compliance & Tax Filing Automated tax calculations and filings, compliance with local regulationsFull tax filing and compliance, including state, federal, and local taxes 
Time Tracking Accurately record hours for tasks, start-stop timer, hourly rates Built-in time tracking, PTO management, and scheduling 
Employee Self-Service Xero Me app empowers employees to self-serve work admin tasksEmployee portal for pay stubs, benefits info, and time off requests 
Pricing Structure Subscription-based, with pricing tied to Xero plans, starting with $29/month with a free trial Subscription-based, starting with $40/month 

What Is Xero Payroll?

Xero Payroll is a cloud-based payroll solution designed to optimize employee payment and compliance processes for small businesses. As part of the broader Xero ecosystem, it integrates smoothly with Xero’s accounting platform, which makes it a preferred choice for companies already using Xero for financial management. Xero Payroll focuses on automating routine tasks such as calculating pay, managing employee leave, and ensuring accurate tax compliance.

The software simplifies payroll processes through automation while maintaining compliance with local labor laws and tax regulations. With an emphasis on small businesses, Xero Payroll provides a platform where payroll and accounting are interconnected, reducing errors.

Unique Features Of Xero Payroll

  • Bank Connections: Offers bank connections with over 21,000 financial institutions globally, which saves users time through bank feeds and automated reconciliation
  • Manage Xero Contacts: Allows for contact management by providing a comprehensive view of a customer’s or supplier’s sales, invoices, and payments in one place
  • Quotes: Makes it easy to create professional online quotes and estimates, which can be converted into invoices once accepted

Who Are The Main Users?

Xero payroll is ideal for small business with various types, including:

  • Retail and hospitality
  • Freelancers and contractors
  • Construction and trades
  • Car dealers
  • Agriculture

Pros And Cons Of Xero Payroll

Pros

  • Users, operating internationally, appreciate its multi-currency support
  • Fully functional mobile app enables payroll actions from anywhere
  • Employees can access their pay history through customized pay slips

Cons

  • Might be complex to setup for non-Xero users
  • PTO lacks advanced scheduling features

What Is Gusto?

Gusto is an advanced payroll and HR management platform designed to provide small and medium-sized businesses with an all-in-one solution for employee management. It optimizes payroll processing, benefits administration, and employee onboarding. Gusto’s aims are to simplify HR tasks and reduce the complexity of compliance to allow business owners to focus on growth rather than administration.

The platform integrates payroll with tools for managing benefits, time tracking, and HR functions. Its approachable interface and extensive employee self-service options make it a favorite among businesses that value simplicity and transparency in operations.

Unique Features Of Gusto

  • Onboarding Tools: Optimizes new hire onboarding with customizable offer letters, e-signature capabilities, and employee document storage
  • Built-In Time Tracking: Allows to log hours, manage PTO, and track schedules directly within the platform
  • Gusto Global: Allows to hire, pay, and manage international contractors and employees all in one platform

Who Are The Main Users?

Small and medium-sized businesses looking for a simplified payroll platform are the main users of Gusto. These include:

  • Professional services
  • Retail
  • Manufacturing
  • Startups
  • Freelancers and Contractors

Pros And Cons Of Gusto

Pros

  • Regular software improvements and feature rollouts
  • Available through multiple channels, its support team is widely praised
  • Employees have direct access to detailed pay breakdowns

Cons

  • Not ideal for businesses requiring complex accounting services
  • Reporting features are useful but lack advanced customization

Xero Payroll Vs Gusto: Side-By-Side Comparison

1. Payroll Processing

Xero Payroll simplifies payroll processing by automating tedious calculations and ensuring compliance with tax regulations. The software supports multiple pay schedules, including weekly, bi-weekly, and monthly, which is especially beneficial for businesses with diverse employee payment cycles. Employers can run payroll with a few clicks, automatically calculate deductions, and generate pay slips that can be sent directly to employees via email.

Additionally, Xero Payroll integrates with Xero’s accounting suite, meaning that payroll data is instantly reflected in your financial statements that eliminates the need for manual reconciliation. For businesses operating in countries like Australia, the platform offers advanced features like superannuation calculations and compliance with Single Touch Payroll (STP) reporting.

Gusto makes payroll processing efficient by automating federal, state, and local tax filings and handles year-end forms like W-2s and 1099s for contractors. One of its standout features is the ability to run unlimited payrolls at no extra cost, which makes it an ideal solution for businesses that process payroll frequently.

Gusto is also designed with flexibility by allowing you to process off-cycle payments or bonuses with ease. Its platform integrates easily with various accounting software, such as QuickBooks and Xero, ensuring accurate record-keeping. Additionally, Gusto allows employees to opt for a cash-out feature which enables them to access part of their paycheck early.

Winner: Gusto takes the edge here because of its more comprehensive approach and a broader range of features, such as automatic tax filings and year-end forms

2. Employee Self-Service

Xero Payroll provides different options for employees to access their pay information. The Xero Me application is a self-service platform that optimizes payroll and expense management by empowering employees to handle work tasks independently from anywhere. It allows team members to capture, submit, and track expense claims digitally, view and update personal information, and securely exchange requests; all without manual paperwork.

Managers can assign role-based access to customize features for each employee, which ensures a secure and efficient workflow. By reducing administrative burdens and enabling easy access to information, Xero Me enhances team efficiency, saves time, and supports a more productive work environment.

Gusto offers an advanced employee platform where team members can view their pay stubs, access tax documents like W-2s and 1099s, and manage their benefits. Employees can also request time off and track PTO balances directly within the portal.

Gusto’s emphasis on employee empowerment ensures that HR teams spend less time addressing routine queries, while employees enjoy more control over their information. The portal is intuitive and mobile-friendly, which makes it easy to access on the go.

Winner: Gusto wins in the employee self-service category due to its advanced platform, which offers greater functionality and more control.

3. Reporting Capabilities

Xero Payroll offers a range of reports tailored to payroll and accounting needs that enables businesses to generate insights on payroll costs, employee leave, and tax filings. These can be exported or smoothly integrated into Xero’s financial reporting platform. The user-friendly tools allow businesses to customize reports, compare budgets with actuals, and analyze KPIs using built-in formulas.

Accessible anytime, these reports provide insights into workforce costs, profit and loss, cash flow, and compliance, which makes it easier to track and forecast payroll-related expenses. Additionally, collaboration with advisors is a simple process that ensures reliable data to support evidence-based business decisions.

Gusto offers advanced reporting capabilities, which makes it a comprehensive tool for business insights. Employers can generate detailed reports on payroll expenses, tax liabilities, employee benefits costs, and time-off trends that enable accurate tracking and financial forecasting. Its reporting tools are highly customizable and allow businesses to filter data by departments, roles, or specific time periods, and drill down into individual metrics for deeper analysis.

What sets Gusto apart is its HR-centric approach, which includes insights into employee engagement, benefits usage, and hiring trends. These reports help businesses identify patterns, such as high turnover rates or underutilized benefits, and make strategic adjustments to improve workforce satisfaction and efficiency. With visually intuitive dashboards, Gusto simplifies complex data and makes it easy to use them to drive decisions.

Winner: Xero Payroll takes the lead with its smooth integration into the Xero accounting ecosystem and allowing businesses to consolidate payroll and financial reporting in one platform.

4. Contractor Payments

Xero Payroll offers powerful accounting software tailored for contractors, where contractors can efficiently track expenses, manage invoicing, create estimates, and process payroll. The platform’s smooth integration with third-party apps through the Xero App Store further enhances its flexibility.

Xero’s mobile app allows users to handle administrative tasks on the go, which ensures productivity. With features like tax support, bank feeds, and a user-friendly interface, Xero empowers contractors to manage their finances with ease and focus more on growing their business.

Gusto simplifies contractor payments by providing a dedicated workflow for managing 1099 contractors. It enables businesses to pay contractors through direct deposit at no additional cost and automatically handles 1099 tax form generation and filing at year-end.

Contractors can access their payment records through the self-service portal. Gusto also allows for quick and easy onboarding of contractors, optimizing their integration into payroll workflows without needing to create separate systems.

Winner: Xero wins with its comprehensive suite of tools for contractors, including expense tracking, invoicing, payroll, and easy app integrations.

5. Pricing Comparison

Xero Payroll offers various pricing plans according to the requirements of a business. These include:

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

Gusto offers clear and flexible pricing plans for its payroll and HR services. The available plans are:

  • Simple: $40 per month, plus $6 per additional employee
  • Plus: $80 per month, plus $12 per employee
  • Premium: $180 per month, plus $22 per employee

For businesses that only have contractors and no W-2 employees, Gusto provides a dedicated plan:

  • Contractor Only: $35 per month, plus $6 per contractor

Final Thoughts: Weighing Your Payroll Needs For The Right Fit

When choosing between Xero Payroll and Gusto, it’s clear that both platforms bring impressive functionality. Each offers a comprehensive approach to payroll, with standout features that cater to different business needs. Xero Payroll excels with its smooth integration into the Xero accounting ecosystem. On the other hand, Gusto takes payroll management to the next level by offering a complete HR suite.

Ultimately, the best choice depends on the specific needs of your business. The decision comes down to your company's size, complexity, and how much you need from your payroll and HR systems.