Gusto and Wave Payroll both show up when buyers search this category, but they're built for different needs. This page breaks down pricing, features, and what should actually decide this — in plain English, for buyers, not vendors. Not sure which fits? Take the quick quiz below to find out in 30 seconds.
Gusto and Wave Payroll appeal to small businesses on tight budgets, but they are not equivalent products. Wave Payroll is free in some states and inexpensive elsewhere — a straightforward tool for businesses where payroll is simple and budget is the primary filter. Gusto is more expensive but covers benefits, compliance support, and HR features that Wave does not touch. If your payroll is genuinely simple and cost minimization is the goal, Wave makes sense. If you expect your HR needs to grow alongside your headcount, Gusto covers more of what comes next.
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Side-by-side comparison of pricing, deployment, platform support, and trial availability.
Wave Payroll and Gusto both target small businesses, but they serve different points on the size and complexity spectrum. Wave Payroll is a bare-bones payroll processor built for micro-businesses and solopreneurs who want the minimum viable payroll at the lowest possible price. Gusto is a full-featured small business HR and payroll platform that bundles payroll, benefits, onboarding, and HR tools for growing companies. The comparison is mostly about whether you have outgrown Wave yet.
Wave Payroll is part of Wave's broader free accounting and invoicing suite. The payroll product is intentionally simple: run payroll, pay employees and contractors, handle direct deposit. In tax-service states, Wave automatically handles payroll tax calculations, filings, and remittances for $20/month. In self-service states, the price drops to $6/month but you file payroll taxes manually. The accounting integration means payroll entries post directly to Wave's accounting ledger without manual journal entries.
Wave Payroll's limitations are significant once you grow. There is no benefits administration — health insurance, 401(k), FSA/HSA are not available. There are no HR workflow tools — no onboarding checklists, offer letter templates, PTO tracking, or time tracking. Multi-state payroll is not supported in the tax-service model. Customer support is limited. For companies with real employees who receive benefits or need any HR functionality beyond payslips, Wave Payroll creates gaps that require separate tools to fill.
Gusto was designed for small and growing companies that want payroll, benefits, and HR in one platform without enterprise complexity. It handles automated payroll tax filing in all 50 states, benefits administration (health, dental, vision, 401(k), FSA/HSA), onboarding workflows, PTO management, time tracking, and contractor payments — all in a clean interface accessible to non-specialists. For companies actively hiring and managing a real workforce, Gusto handles the operational HR layer that Wave does not touch.
Gusto's cost is higher than Wave's — $190/month for a 25-person team on the Simple plan versus Wave's $20 in a tax-service state. For a company of 3–4 people with no benefits and tight cost constraints, that gap is material. As headcount grows and benefits enter the picture, the cost-per-employee drops and Gusto's bundled value becomes easier to justify. Most companies on Wave Payroll migrate to Gusto when they hit 5–10 employees or start offering health insurance.
The single biggest gap between Wave and Gusto is benefits. Wave does not administer health insurance, 401(k), or any employee benefits. If you offer health benefits, you need a broker and a separate platform — adding cost and complexity that often exceeds what Gusto would have cost in the first place. Gusto's licensed benefits brokers can set up and administer health plans directly, and 401(k) through Guideline (Gusto's partner) can be connected in a few clicks. For companies offering or planning to offer benefits, the Wave-plus-separate-benefits path is usually more expensive and more complex than Gusto all-in.
OnPay is worth comparing if you want more than Wave but find Gusto's pricing high — OnPay starts at $40/month plus $6 per person with strong customer support and full-service payroll tax filing. QuickBooks Payroll is the natural choice if you use QuickBooks for accounting instead of Wave. Square Payroll is a low-cost option for retail and restaurant businesses that already use Square for payments and POS.
Wave Payroll is the right choice for sole proprietors, micro-businesses, and very small companies that want basic payroll at the lowest possible cost and already use Wave for accounting. At $20/month in tax-service states (Wave handles tax filings) or $6/month in self-service states (you file manually), Wave Payroll is the most affordable option in the market. For a two-person company paying founders or a handful of part-time employees, Wave handles the basics without overbuilding. The integration with Wave's free accounting software is genuinely useful if you are already on that stack.
Gusto is the right choice once you have real employees, need benefits administration, want automated tax filing in all states, or require any of the HR workflow tools — onboarding checklists, offer letters, time tracking, PTO management — that Gusto bundles into its platform. Gusto's Simple tier at $40/month plus $6 per person is affordable even for small teams, and the HR features it includes make it a full people operations platform, not just a payroll processor. For companies that are hiring actively, offering health benefits, or managing more than a handful of employees, Gusto's broader capabilities justify the cost over Wave.
The practical dividing line is about 5 employees and whether benefits matter. Under 5 people with no benefits and cost sensitivity: Wave is sufficient. At 5+ employees or any time benefits administration enters the picture: Gusto's bundled approach is worth the monthly cost and Wave's limitations become friction.
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Wave Payroll is not fully free. In tax-service states (where Wave handles your payroll tax filings), it costs $20/month plus $6 per employee per month. In self-service states (where you file taxes manually), it costs $6/month plus $6 per employee. Wave's accounting and invoicing tools are free, but payroll always has a cost. The $20/month tax-service price is among the lowest in the market for full-service payroll.
No. Wave Payroll does not administer health insurance, 401(k), or other employee benefits. If you offer or plan to offer benefits, you will need a separate benefits broker and administration tool. Gusto handles both payroll and benefits administration in one platform with licensed brokers who can set up health plans directly. For companies with benefits, Gusto's all-in approach is typically more cost-effective than Wave plus a separate benefits admin.
The most common triggers for switching from Wave Payroll to Gusto are: reaching 5–10 employees where HR workflow tools start to matter, offering or planning to offer health insurance or 401(k), hiring in multiple states where Wave's tax-service coverage is inconsistent, or needing onboarding, PTO, or time tracking tools that Wave does not provide. Most Wave Payroll customers who grow past the micro-business stage migrate to Gusto or OnPay within 1–2 years.
Wave Payroll is available in all US states, but the tax-service model (where Wave handles payroll tax filings automatically) is not available in every state. In non-tax-service states, Wave Payroll runs at a lower price but you are responsible for filing payroll taxes manually. Before committing to Wave, verify whether your state is on Wave's tax-service list — the manual filing requirement in self-service states adds administrative overhead that narrows the cost advantage over Gusto.
At 3 employees with no benefits, Wave Payroll's $38/month (base $20 plus $18 for 3 employees in a tax-service state) is genuinely cheaper than Gusto's $58/month (base $40 plus $18). If cost is the primary concern and the company does not need benefits administration or HR tools, Wave is sufficient at that size. Gusto becomes the better value when any of the following apply: benefits are offered, HR workflows are needed, or team size is growing past 5.
Gusto does not have a native Wave accounting integration. If you use Wave for accounting, you would need to manually export payroll data or use a third-party connector. Wave Payroll's native accounting integration is one of the primary reasons Wave users stay on Wave Payroll rather than switching to Gusto. If Wave accounting is important to your workflow, factor in the accounting integration gap before switching.
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