Top 3 Payroll Software: Comparison of Gusto, Wave and Xero

Gusto: Top Payroll Management


Why do you need payroll management software? Well for one, authorizing and controlling the payroll process and managing multiple approval processes are two of the most common pain points of global payroll

In our globally connected economy, it’s hard to ignore these pain points. The good news is, they can easily be addressed by a cloud payroll software using good user permissions and process automation.

Payroll management software systems provide more benefits, as such, addressing the following issues:

  • You’ve outgrown spreadsheets
  • You want to focus on the  core tasks
  • Your current system doesn’t cut it any more
  • You want to bring payroll in house to cut cost
  • You want to consolidate all payroll-related tasks

Interestingly, the last one reflects the majority why businesses go for payroll software. A separate report by TMF shows that 36.5% of companies want efficiency in their payroll process.

If you have any or all of the issues above, you need payroll software. We prepared a brief guide here to help you gauge three of the best payroll solutions out there. Let’s start.

Highlights of the article

You’ll get to know the top three payroll software solutions in our directory, such as their value proposition, main benefits and unique features. Then, we’ll compare the key features and see which one is better on what, and show the one that, overall, stands out in our mashup.

  1. Gusto Free trial ]
  2. Wave
  3. Xero

Key features of payroll software

  • Payroll processing. Calculates wages, estimates total cost, schedules pay period, distributes payroll via direct deposit or check printing
  • Attendance management. Manages working hours, absences and leaves, adds/removes employees
  • Add-on features. Bonus calculator, expense management, core accounting tools
  • Employee records. Centralizes database, may feature self-onboarding to let employees complete their own profiles
  • Payslip generation. Prints out current or previous pay stubs, allows employees to save PDF payslips for future reference
  • Accounting, HRM or ERP integration. Integrates with essential tools like timesheet, accounting, recruitment, analytics and reporting
  • Compliance. Helps you comply with various state and federal taxes and social security requirements using manual entries or default settings

1. Gusto

Sample benefits page of Gusto.

Gusto is one of the best payroll software we’ve seen for small businesses. Don’t be fooled by its lightweight appeal; it’s effective to run payroll processing in the background, while you focus on other HR tasks.

Gusto won our Expert's Choice Award for 2017

We found Gusto a focused payroll management app; you get the payroll essentials without being burdened by extra features that add to the confusion or costs. You can experience for yourself how this app fits your small business payroll requirements by easily opting for a Gusto free trial sign-up here.

It features payroll and HR processes like employee onboarding, health benefits, retirement plans and worker’s compensation. It also displays a simple but very intuitive interface with clear navigation to set wage computations, federal and state taxes and employee records.

Specifically, it has one of the better benefits management features for  small budgets. You can customize various packages for different employees, giving you much room to set up special compensation plans for high-value employees. Likewise, Gusto is easy to set up. Employees can be required to enter their own details and save you the hassle of entering each record.

Key features

  • Payroll and worker’s compensation
  • Direct deposit & checks
  • Vacation & sick days
  • Pre-tax benefits
  • Collaboration
  • Reimbursements
  • Mobile responsive
  • Hourly or salary rates
  • Digital signatures
  • Health, retirement, college benefits
  • Unlimited bonus and off-cycle payrolls
  • Easy cancellations
  • Flexible payment schedules
  • Automated new hire reporting
  • Easy charitable donations
  • Digital paystubs
  • Automatic tax processing
  • Payroll on AutoPilot
  • Multiple Pay Schedules
  • Detailed payroll reports
  • Time Off Requests

2. Wave

Wave payroll dashboard.

Wave is a free small business cloud accounting with an integrated but separate payroll app. It features invoice and payments and expense management, aside from payroll. The accounting tools are free, but the payroll app starts at $14 per month.

Wave has a neat dashboard that gives you quick access to sales, purchases, accounting, banking and payroll. It’s one of the most empowering small business apps, in fact, supporting double-entry accounting and helping you track all your transactions like collectibles and dues.

Key features (payroll management)

  • Direct deposits
  • Self-service pay stubs and tax forms
  • Integrates with Wave accounting, receipt scanning and invoicing apps
  • Payroll reminders sent to your inbox
  • Clear tax liabilities
  • iOS app

3. Xero

Xero payroll interface.

Xero is an accounting and inventory suite integrated with payroll management. Aside from payroll, Xero features core accounting, inventory management, bank reconciliation, purchase orders and pension and finance management. The payroll app is bundled with core accounting and can’t be subscribed to separately. It can handle five to a hundred employees.

Key features (payroll management)

  • Payroll-business finance integration
  • Built-in timesheets
  • Leave management
  • Self-service access for employees
  • Streamlined superannuation
  • Flexible pay calendars
  • Multiple pay rates
  • Detailed payroll reports
  • Expense management
  • Payroll collaboration

Comparison of Payroll Software Features

1. Setup and ease of use

All three apps walk you through the critical task of setting up the payroll process for 100% accuracy. They use demo files and help prompts to ensure you have the correct template for employee data.

We give Gusto two thumbs up for the self-onboarding option. You can send an email inside the system to ask employees to complete the setup process, a great time-saver. You can always cross-check their outputs, which is still faster than entering data one at a time. The app also sends a bank synchronization test to make sure you start off on the right foot.

Like Gusto, Wave is also quick to set up in three simple steps: add employee information, provide your business details and apply for direct deposit. You also need to provide primary currency, user permissions and allow seven days to sync your bank and your employees’ banks to the app. Running payroll with Wave is also simple: create attendance timesheets, review and approve payroll, then submit.

When compared to Gusto and Wave, Xero looks complex because you’re setting up accounting features, too, such as, chart of accounts, purchases and sales, tracking categories and bank reconciliations. Yes, Wave features billing and payments also, but its payroll app is separately set up.

2. Feature set

We’ll be saying this a lot here: we like the focused simplicity of Gusto. Among the three solutions, it’s the true payroll software. Wave and Xero are accounting solutions with a  payroll feature. That’s not necessarily a bad thing, after all payroll is an operational expense that must be entered in the books. But if you only need payroll tools, Gusto simplifies your life.

  1. Interface. Gusto and Wave have the simpler interface, which we like because it helps doing the math less confusing. The basic payroll tools are immediately obvious in Gusto. Its  exceptionally intuitive navigation makes it easy to transfer volumes of data to the system, for instance, pay stubs from last year and current year.Wave, too, has a simple UI and clear navigation. You have on the left pane the essential tools: dashboards, banking, payroll, reports, sales and purchases. All transactions pulled from your bank or entered manually are listed on one page.
  2. Payroll tools. Gusto covers the payroll feature set that all a small business needs. It features automated payroll, tax processing, multiple pay rates, flexible schedules, hourly or salary-based calculations, direct deposit and checks and payroll reporting.We’re also drawn to Gusto’s benefits administration, one of the better tools we’ve seen for tight budgets. It allows you to configure different compensation plans for employees, so you have much room to wiggle in when negotiating terms with high-value hires.Xero and Wave have more feature set for payroll because they also accommodate accounting tools. Wave has invoice and payment features and Xero has a slew of accounting and inventory functions. Mind that you’re paying for these non-payroll tools with Xero. As for Wave, you’re getting its accounting features for free (payroll is charged), so we’re not complaining.
  3. Dashboard. Gusto keeps it tight and neat, displaying a to-do list, reminders and upcoming employee birthdays. It looks oversimplified, and that’s the point. It makes payroll a recurring, automated process that runs in the background, so you can focus on core tasks.On the other hand, Wave adds a few elements on its payroll tab. You see the schedule of next payroll, its total cost, to-do list and important dates like holidays and special occasions. You’re also alerted for important notices on the dashboard.Meanwhile, Xero has more complex payroll dashboard. It shows total wages of the previous month, upcoming tax obligations and next pay run date. It even details the pay schedule with total amount, date and status.
  4. Check printing. Gusto supports “personalized with check on top” and “blank with check on bottom” printing. Likewise, check printing runs even as you process payroll, which is a great time saver. You can also print previous payroll, if the need arises.Xero also has a good check printing feature. It even has a check style editor and lets you choose from various print layouts that adapt to any check stock. Just drag and drop elements and you can fully customize the check layout. If you fancy check customization, you’ll like Xero. Otherwise, a straightforward Gusto check printing does the job.On the other hand, Wave doesn’t have a built-in check printing tool. Rather, it integrates with a third-party, Check Print, to handle custom checks, which is,  admittedly, a tad more complex than with the other two.

3. Integration

All three solutions allow CSV importing, a handy feature when you’re migrating from spreadsheets to payroll automation. Gusto works smoothly with popular accounting and HRM systems, including Xero. These include QuickBooks, Nimble and Bamboo HR and over ten more top-tiered accounting and HR solutions.

Xero, being the complex, comprehensive solution on our list, expectedly has the widest integration, more than 400 partner apps. Not only that, Xero pitches to you cloud integrators, third-party providers that’ll help you cherry pick business apps for Xero… for a fee, of course.

On the other hand, Wave integration hinges much on Zapier, a third-party app integration platform with its separate price plans. So you might end up paying for double.

4. Compliance

Compliance is pretty standard (for U.S. and Canada, at least) and we don’t find any issue for Gusto, Wave and Xero. We just want to point out the convenience afforded by Gusto when it comes to payroll reports and taxes. It asks you to enter the necessary information at the initial setup, including FEIN, EIN, business type, the form you use and state requirements like SUI. We feel this is smoother—while you’re looking through employee data—than asking for similar information at a latter stage.

All three apps let you manually enter tax rates or use the default settings. All three also accommodate federal income tax and state taxes, such as: SUTA, SUTA SC, SUI and SDI. Likewise, they have the flexibility to handle local taxes, where applicable.

5. Scalability

Even if Gusto appears small next to Wave and Xero, its flexibility to integrate with other systems makes it very scalable. We give it our top nod from the perspective that you’re only looking for a payroll app for now. That said, once you require accounting or other business process solutions, you can bring Gusto with you as you build on your company-wide systems, including CRM, HRM and ERP.

Xero, meanwhile, may be comprehensive, but you can’t start with payroll alone. It includes basic accounting in its entry plan, so you end up paying beyond payroll costs. Wave is the better option to Xero in such case. Wave has accounting tools but are separately set up from its payroll app.


As a standalone payroll software, Gusto is the more focused app. The system revolves around basic payroll tools. It’s simple, yes, but, that’s exactly what you need to process payroll faster. Wave is also quick to set up and use. It has more than payroll, though, and the presence of invoice and payment features may add to the processing muddle, especially if you’re already using accounting software. Xero is the most complete in features. But it has too much of a good thing if you’re only looking for an app to handle payroll.

Category: B2B News

Leave a comment!

Add your comment below, or trackback from your own site. You can also Comments Feed via RSS.

Be nice. Keep it clean. Stay on topic. No spam.

You can use these tags:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This is a Gravatar-enabled weblog. To get your own globally-recognized-avatar, please register at Gravatar.

I agree to publishing my personal information provided in this comment.

Page last modified