Is Gusto Legit? Here's What You Need to Know Before Signing Up

If you're searching "is Gusto legit," you're probably wondering whether this payroll company is trustworthy enough to handle your employees' paychecks and your tax filings. Fair question. Getting payroll wrong can mean IRS penalties, angry employees, and a massive headache.

Let me cut to the chase: Yes, Gusto is a legitimate payroll company. They've been in business since 2012, serve over 400,000 businesses, and are BBB accredited with an A rating. But "legit" and "right for you" are two different things. Let's dig into the details.

Gusto's Credentials: The Legitimacy Check

First, the basics that confirm Gusto is a real, established company:

This isn't some fly-by-night operation. They're well-established and have legitimate credentials. But that doesn't mean they're perfect.

What Real Users Say About Gusto

Here's where it gets more nuanced. I dug through Trustpilot, G2, BBB, and Reddit reviews to find the common themes.

The Good

The Bad

The Pattern That Emerges

The pattern is clear: Gusto works great for straightforward payroll with minimal complications. The interface is genuinely excellent, the automation is reliable, and the features are solid for small businesses.

But if you run into issues-tax complications, state-specific requirements, benefit errors, or unusual payroll situations-getting them resolved can be painful. Customer support is the weak link. You'll often get cycled through different representatives who read help articles rather than providing hands-on solutions.

Common Complaints from Real Users

Let's get specific about what goes wrong. Here are actual issues reported by Gusto users:

Tax Filing and Compliance Issues

Multiple users report receiving IRS or state tax notices due to Gusto errors:

One BBB complaint detailed how Gusto processed a client's tax payment but failed to file the return. The filing was rejected by the state on a certain date, but Gusto never notified the client when it occurred. By the time the issue was discovered, penalties and interest had accrued.

Another user reported that a bonus paid on the last day of the year was recorded in Gusto's system as the following year, requiring extensive corrections and leading to IRS notices months later.

Customer Support Horror Stories

The customer support issues go beyond just slow response times:

One particularly troubling report from Reddit mentioned a support representative who "literally started crying on the phone" during tax season, suggesting the support team is overworked and understaffed.

Even Premium plan customers-who pay $180/month base plus $22 per employee-report that the "dedicated support" isn't what it used to be. Previously, Premium (formerly Concierge) plan users had a dedicated team who knew their account. Now, even Premium customers report getting routed to a call center where they must re-explain their situation each time.

Billing and Account Issues

Setup and Onboarding Problems

While many users praise the easy setup, others report issues:

Gusto Pricing: What You'll Actually Pay

Let's talk real numbers. Gusto has four main pricing tiers:

PlanBase PricePer EmployeeBest For
Simple$49/month$6/personSmall teams, single-state payroll
Plus$80/month$12/personMulti-state payroll, time tracking
Premium$180/month$22/personDedicated support, HR resources
Contractor Only$35/month*$6/contractor1099 contractors only

*Gusto sometimes waives the base fee for the contractor-only plan as a promotional offer for the first 6 months.

Note: Gusto raised their Simple plan from $40 to $49/month in March. That's a $108/year increase-worth knowing if you're comparing older pricing info.

What's Included in Each Plan

Simple Plan ($49/month + $6/person)

Plus Plan ($80/month + $12/person)

Premium Plan ($180/month + $22/person)

Contractor Only Plan ($35/month + $6/contractor)

Note: You're only billed for contractors in months when you actually pay them, making this flexible for irregular contractor work.

Hidden Costs to Watch For

The base pricing looks clean, but add-ons can stack up:

A $49/month plan can easily become $100+/month once you add features. For a business with 10 employees on the Simple plan paying for next-day direct deposit, you're looking at $49 + $60 (employees) + $15 (next-day base) + $30 (next-day per person) = $154/month, or $1,848/year.

For more details, check out our Gusto pricing breakdown.

Real-World Pricing Examples

Let's look at what you'd actually pay:

Scenario 1: Solo business owner with 2 employees, single state

Scenario 2: Growing company with 10 employees across 3 states

Scenario 3: Established company with 25 employees, benefits, multi-state

Scenario 4: Freelancer paying 15 contractors monthly

How Gusto Handles Tax Filing (And Where It Can Go Wrong)

Tax filing is arguably the most important function of payroll software. Here's what you need to know about how Gusto handles it.

What Gusto Files Automatically

Gusto handles tax filing across all 50 states and files these forms on your behalf:

They automatically deduct the correct amounts for:

Where Tax Filing Goes Wrong

Based on user complaints and Gusto's own help documentation, here are common tax issues:

Third Party Authorization Problems: Tax agencies need to authorize Gusto to file on your behalf. If the TPA isn't set up correctly, or if your previous payroll provider is still listed as your reporting agent, Gusto's filings get rejected. The agency may not notify you, and penalties accrue.

Account Number Errors: If state tax account numbers are entered incorrectly in Gusto, tax payments go to the wrong place. Gusto warns users to never enter placeholders for missing account numbers, as this can result in incorrect payments and penalties.

Deposit Schedule Changes: The IRS and state agencies assign deposit schedules (monthly or semi-weekly). If the schedule changes and isn't updated in Gusto immediately, you risk late deposits and penalties.

Tax Rate Updates: State unemployment insurance rates change annually. If you don't update your SUI rate in Gusto when you receive your notice (typically between November and March), your tax withholding will be wrong.

Quarter-End Reconciliation: Gusto runs "tax reconciliation payrolls" when something changes after regular payroll. This could be due to benefit adjustments, work location changes, or tax rate updates. These reconciliation debits can come as surprises if you're not expecting them.

Mid-Year Provider Switches: Switching to Gusto mid-year is complex. You need to coordinate which provider files which quarterly returns. If both your old provider and Gusto file for the same quarter, the second filing gets rejected and may cause penalties.

State-Specific Limitations: Some local taxes aren't supported. Portland Metro taxes are specifically mentioned in reviews as not supported. If you're in a jurisdiction with unusual tax requirements, verify support before signing up.

What Happens When You Get a Tax Notice

If you receive a tax notice from the IRS or a state agency, here's Gusto's process:

  1. You upload the notice to Gusto through your admin dashboard
  2. The notice goes into a queue for review
  3. Gusto's tax specialists review it (they're not available for inbound calls)
  4. They email you with next steps
  5. Resolution can take days to weeks

Multiple users report this process is frustratingly slow when you have a deadline approaching. The tax specialists can't be reached directly, and support representatives don't have the expertise to help with tax issues.

How Gusto Compares to Alternatives

Is Gusto the right choice for your business? Here's how it stacks up:

vs. QuickBooks Payroll

QuickBooks wins on:

Gusto wins on:

Verdict: If you use QuickBooks for accounting and need fast deposits, choose QuickBooks Payroll. If you want more HR functionality and better UX, choose Gusto.

Read our Gusto vs QuickBooks Payroll breakdown.

vs. ADP

ADP wins on:

Gusto wins on:

Verdict: For small businesses under 50 employees, Gusto is typically cheaper, more transparent, and easier to use. ADP may offer better enterprise pricing and features for 100+ employees.

See our Gusto vs ADP comparison.

vs. Rippling

Rippling wins on:

Gusto wins on:

Verdict: Rippling is more comprehensive and powerful but also more expensive and complex. It's overkill if you just need payroll. Gusto is better for straightforward payroll and HR needs.

See Gusto vs Rippling.

vs. OnPay

OnPay wins on:

Gusto wins on:

Verdict: OnPay offers better value for nonprofits and niche industries. Gusto has a better overall platform for most small businesses.

vs. Paychex

Paychex wins on:

Gusto wins on:

Verdict: Paychex has dated interfaces and higher costs but bundles benefits better. Gusto is better for tech-savvy small business owners who want modern software.

See Gusto vs Paychex.

vs. Justworks (PEO)

Justworks wins on:

Gusto wins on:

Verdict: Justworks is a PEO, which means they become a co-employer. This provides stronger benefits and HR support but less control and higher costs. Gusto gives you more autonomy.

Our Gusto vs Justworks guide explains the differences.

For more options, check out our guide to payroll software for small business.

Security and Data Protection

When you're trusting a company with sensitive payroll data, Social Security numbers, and bank account information, security matters. Here's what Gusto does:

Gusto's security infrastructure is solid. There are no widespread reports of data breaches or security issues in user reviews. The company takes data protection seriously, which is essential when handling payroll information.

Red Flags to Consider

Before you sign up, consider these potential issues:

  1. Customer support limitations: Only Premium plan customers get extended support hours and dedicated account managers. Simple and Plus plan users are limited to basic business hours-and even then, getting help can be difficult. Average hold times exceed 30 minutes. Support quality is the most common complaint across all review platforms.
  2. Per-employee costs add up: At $6-$22 per employee per month, costs climb quickly as you grow. A 25-employee business on the Premium plan pays $730/month before any add-ons. Business.org notes that "if you have more employees than five to ten, you'll get more HR features at a lower starting cost with a competitor."
  3. No same-day deposits: Unlike QuickBooks Payroll, Gusto doesn't offer same-day direct deposit. The fastest you can get is next-day (which costs $15/month + $3/person extra). Standard direct deposit takes 2 business days.
  4. State tax complexity: Some reviewers report Gusto doesn't support specific local taxes. Portland Metro taxes are specifically mentioned. If you're in a state or city with unusual tax requirements, verify support before signing up. Multi-state payroll requires the Plus plan at minimum.
  5. Limited reporting customization: Compared to enterprise platforms, Gusto's reporting is less customizable. You get standard reports, but advanced customization requires the Premium plan.
  6. No global employee payroll: Gusto can pay contractors in 120+ countries, but employing international workers requires their Employer of Record service (Gusto Global), which costs $599 per employee per month through their Remote partnership-significantly more expensive than domestic payroll.
  7. Tax specialist access: When you have tax issues, you can't call tax specialists directly. You must upload notices and wait for email responses. This can be frustrating when dealing with time-sensitive tax problems.
  8. Price increases: Gusto raised their Simple plan from $40 to $49/month in March (a 22.5% increase). As a cloud software service, pricing can change with minimal notice beyond your current billing period.
  9. Declining support quality: Multiple long-term users report that support quality has declined as Gusto has grown. The Premium (formerly Concierge) plan used to include a dedicated team; now it routes to a call center even at the highest tier.

Who Should Use Gusto?

Based on my research, Gusto makes the most sense for:

Ideal Gusto Customers

Who Should Look Elsewhere

Gusto probably isn't the best fit if you:

How to Minimize Risks When Using Gusto

If you decide Gusto is right for you, here's how to avoid common problems:

During Setup

Ongoing Management

When Problems Arise

Alternatives If Gusto Isn't Right

If after reading this you're not convinced Gusto is the right fit, here are quick alternatives to consider:

The Bottom Line: Is Gusto Worth It?

Gusto is absolutely a legitimate payroll company. They've been around for over a decade, serve hundreds of thousands of businesses, and have proper credentials, licensing, and security infrastructure.

The software itself is excellent-clean interface, good automation, solid features for small businesses, and genuinely helpful tools like the employee Gusto Wallet app. The user experience is consistently rated among the best in the industry.

Where Gusto excels:

Where Gusto falls short:

The key question: How complicated is your payroll, and how much support will you need?

If you have straightforward payroll needs-standard employees, simple benefits, no unusual tax situations-and don't anticipate many support tickets, Gusto is a solid choice. The pricing is transparent, the platform is easy to use, and it handles the basics well. Most users (80% according to some metrics) are satisfied.

If you expect complexity-unusual tax situations, frequent changes, multi-state complications, or specific state requirements-consider whether Gusto's support limitations might become a problem. The 20% of users who have issues report that those issues are very difficult to resolve.

My Recommendation

For businesses with 1-20 employees, straightforward payroll needs, and basic tax situations, Gusto is one of the best options available. The interface alone saves significant time, and the automation works reliably for most users.

For businesses with 20-50 employees, Gusto can still work well, but evaluate whether you need the Premium plan for better support. At $180/month base + $22/person, you might find better value with competitors at that scale.

For businesses with 50+ employees or complex needs, seriously evaluate alternatives like ADP, Paychex, or Rippling that are built for scale and provide more robust support infrastructure.

Try Gusto and see if it works for your business. They don't lock you into long-term contracts, so you can switch if it doesn't work out. Most businesses can be up and running within an hour, and you'll know pretty quickly whether it meets your needs.

For a deeper dive into features and costs, read our full Gusto review or check out what other users are saying.

Frequently Asked Questions

Is Gusto actually legit or a scam?

Gusto is 100% legitimate. It's been in business since 2012, serves over 400,000 businesses, is BBB accredited with an A rating, and is licensed by the California Department of Insurance. It's not a scam. However, legitimacy doesn't mean it's perfect-customer support issues are real and documented.

Can Gusto steal my money?

No. Gusto is a licensed payroll provider that debits your account for the exact amounts needed for payroll and taxes. All transactions are tracked and documented. However, some users report unexpected debits (like tax reconciliation charges) or billing errors that required time to resolve.

What happens if Gusto files my taxes wrong?

If Gusto makes a tax filing error, they're supposed to help resolve it. However, according to their terms, the employer remains ultimately responsible for tax compliance. If penalties or interest accrue due to Gusto errors, getting reimbursement can be difficult. This is why monitoring your tax accounts is important even with automated filing.

How hard is it to cancel Gusto?

Gusto operates on month-to-month terms with no long-term contracts. You can cancel anytime. However, some users report being charged after cancellation or having difficulty getting final refunds. Make sure to officially cancel through your account and get confirmation.

Is Gusto's customer support really that bad?

It depends on what you need. For simple questions, chat and email support work fine. For complex tax issues or urgent problems, many users report frustration with slow response times (2-15 business days), long hold times (30+ minutes), and representatives who lack authority to fix problems. The support quality is Gusto's biggest weakness based on user reviews.

Does Gusto work for my state?

Gusto handles payroll in all 50 states. However, some specific local taxes aren't supported (like Portland Metro taxes). If you're in a jurisdiction with unusual local tax requirements, verify support before signing up. Contact Gusto's sales team to confirm.

Can I use Gusto if I already have a payroll provider?

Yes, but switching mid-year requires careful coordination. You'll need to determine which provider files which quarterly tax returns and ensure no duplication. Gusto's Premium plan includes migration assistance. For simple switches at year-end, the process is easier.

Is Gusto better than doing payroll myself?

For most businesses, yes. Manual payroll is time-consuming and error-prone. Gusto automates calculations, tax filing, and payments, reducing your risk of costly mistakes. The time saved typically justifies the cost, even for very small businesses. However, sole proprietors with no employees might not need it.

Will Gusto protect me from IRS penalties?

Gusto's automated tax filing should prevent most penalties, but not all. If you enter incorrect information, fail to update tax rates, or have complex situations Gusto can't handle, penalties can still occur. Gusto's terms state that employers remain responsible for tax compliance. Consider it a tool that helps, not a guarantee.

What do I do if I get an IRS notice while using Gusto?

Upload the notice to your Gusto account immediately and contact the IRS or state agency directly to request an extension or hold on penalties. Don't wait for Gusto to resolve it, as their review process can take days or weeks. Keep Gusto informed, but proactively manage the issue yourself.