Gusto payroll: I run payroll for one employee, and he is me

My accountant told me to become an S-corp two years ago. She said it would save me on self-employment tax. She did not emphasize what came with it, which is that I had just hired my first employee, and the employee was me. Payroll, filings, the whole machine, for one guy who builds websites.

Here's the thing she said after I stopped laughing. Once you have W-2 employees, even one, the government does not care how small you are. Miss a filing or guess wrong on withholding, and the penalties show up like water on a basement floor. So I run payroll through Gusto, and I pay for it, $49 a month plus $6 per person. One person. $55 a month to keep myself out of trouble.

What it does and what it costs

Gusto is a cloud payroll service. You put hours in, it does the ugly parts. It calculates withholding, pulls the direct deposits, and files federal, state, and local taxes on its own schedule. W-2s and 1099s show up in January without anyone driving anywhere. That last part is the actual product. The tax filing is the thing you are buying.

The tiers, straight from their pricing and confirmed by a few independent reviews this year.

1. Simple: $49 a month plus $6 per person. This is what I buy.
2. Plus: $80 a month plus $12 per person. Multi-state, next-day deposit, more HR stuff.
3. Premium: $180 a month plus $22 per person. Full HR support, a real person to call.

Total for me: $55 a month, $660 a year. My accountant had quoted me $95 a month to run the same payroll by hand. The service pays for itself and then some, and I do not have to think about it in February.

The part-timer, and the per-person math

Marcus started helping me last spring. College kid, cable pulls, camera installs, the jobs I do not love at 7pm. Twenty hours a week, some weeks. On Gusto that is another $6 a month. Six dollars. When I started in HVAC, adding a guy to payroll meant a conversation with the bookkeeper and a week of forms.

Marcus clocks in on his phone and the app does the rest. He got his first direct deposit three days after we set him up, and he has never once asked me about a tax form. He sees his pay stubs in the app. I see his hours in the app. The 9pm "hey what was my gross last week" texts stopped, and I did not miss them.

The honest downsides

Listen, because this one is a trap. The Simple plan is single state only. If you have people in two states, you are bumped to Plus, $80 a month plus $12 per head. That is nearly double, and most people find out after they sign up. I know Marcus is Ohio-only, so Simple holds. If your crew crosses state lines, price Plus before you price Simple.

Support is not the strong point either. I called once about a state filing notice I did not understand, and the wait was longer than I wanted. Independent reviews this year say the same, along with gripes about add-on fees for benefits and HR features. I have never bought any of those. The $49 plan files my taxes and that is all I asked of it.

One more thing I learned the hard way, and it is not Gusto's fault. Run payroll on a schedule and leave it alone. I changed Marcus's hours the night before payday once, mid-cycle, and the system held the run until I called. Water heater logic. Nobody thinks about the pressure valve until it dumps. Set the cycle, feed it hours on the same day every week, and let the machine run. Payroll is a furnace you maintain on a schedule, not one you relight every two weeks.

What to do Monday

Write down how many W-2 employees you actually have. Not 1099s, W-2s. Then multiply that headcount by $6, add $49, and compare it to whatever your bookkeeper or accountant charges you for payroll. If the difference is more than fifty bucks a month, make the call before the next quarter starts. If you are paying people by personal check with a shoebox of stubs, the comparison is not even close.