· business  · 7 min read

The Dark Side of Gusto: What Users Wish They Knew Before Signing Up

An honest, practical look at the most common problems businesses encounter with Gusto - from surprise fees and tax headaches to customer support frustrations - plus concrete steps you can take before and after signup to avoid costly mistakes.

An honest, practical look at the most common problems businesses encounter with Gusto - from surprise fees and tax headaches to customer support frustrations - plus concrete steps you can take before and after signup to avoid costly mistakes.

Start here: what you’ll get from this article

By the time you finish this piece you’ll know the specific pitfalls current and former Gusto users commonly face - and the exact steps to avoid them. Read fast for the red flags, or read thoroughly for checklists and mitigation tactics you can apply today. You’ll be able to sign up with confidence or walk away knowing exactly what to watch for.

TL;DR - the bottom line up front

Gusto is a powerful, widely used payroll and HR platform that simplifies many routine tasks. But it isn’t trouble-free. Common problems include unexpected costs, payroll/tax mistakes, slow or inconsistent support, limitations for complex or international payrolls, and friction during onboarding or cancellation. These issues are real for some users - and they’re preventable if you know what to test, document, and negotiate up front.

What Gusto gets right (quick acknowledgement)

Before we dig into the negatives: Gusto automates payroll, tax filing, benefits administration, and basic HR tasks in ways that save many small businesses time and manual work. Its product design and integrations are strong reasons many start there. But every tool has trade-offs, and that’s what we’ll explore now.

The dark side: common pitfalls and controversies

Below are the consistent themes that appear in user reviews, complaint boards, and customer conversations. For each one I explain the problem, the real-world impact, and what you can do about it.

1) Pricing surprises and feature fragmentation

Problem: The base vs. per-employee costs, add-ons (benefits, 401(k), time tracking), and setup fees can add up faster than expected. Impact: A simple headcount increase can jump your monthly bill significantly. Small businesses with tight margins feel the pinch. What to do:

  • Review pricing line-by-line on Gusto’s pricing page before you start: https://gusto.com/pricing
  • Ask for a written estimate that shows typical monthly cost for 12 months, including onboarding and benefit admin fees.
  • Confirm which features you’ll actually use and whether they’re included or add-ons.

2) Payroll and tax errors (and the fallout)

Problem: Some users report payroll calculation mistakes, incorrect tax deposits, or incorrect tax filings - especially during the first few payroll runs after onboarding. Impact: Payroll mistakes mean unhappy employees and potential tax penalties for employers. What to do:

  • Run parallel payrolls for 1–2 pay cycles - generate payroll in Gusto but do not submit the first one; reconcile against your existing records.
  • Keep detailed employee tax documents (W-4s, state forms) and confirm employee-withholding values in the system before the first run.
  • Read Gusto’s tax and filing documentation so you understand what Gusto files for you and what remains your responsibility: https://support.gusto.com

3) ACH delays, bank connectivity, and timing problems

Problem: Some employers have experienced ACH or direct-deposit delays because of bank verification steps, funding timing, or unexpected holds. Impact: Late paychecks and frustrated staff; emergency manual payments increase overhead. What to do:

  • Verify your company bank account with Gusto well before your first payroll. Expect verification holds (don’t schedule payroll the same week).
  • Keep a reserve to cover at least one payroll cycle in case transfers are delayed.

4) Customer support variability

Problem: Users report inconsistent support experiences - great help from some reps; slow or unhelpful responses from others. Impact: When a payroll/tax issue is urgent, slow or inconsistent support raises the risk of penalties and damage to employee trust. What to do:

  • Ask what support SLA applies to your plan, and whether dedicated account management is available for your account size.
  • Document and escalate issues in writing; copy relevant stakeholders so there’s a traceable ticket trail.
  • If support is critical to your operations, negotiate account management or consider higher-tier plans that include faster support.

5) Limited or no international payroll

Problem: Gusto primarily focuses on U.S. payroll and benefits. If you have global employees or contractors, you’ll likely need additional services. Impact: Managing international payroll through Gusto can create compliance gaps. What to do:

  • If you hire outside the U.S., evaluate global payroll providers or EOR (Employer of Record) services as part of your stack.
  • Use Gusto for U.S. employees and a specialist for non-U.S. payroll, documenting processes for each.

6) Onboarding friction and data migration

Problem: Importing historical payroll and tax history, setting up prior-year liabilities, and migrating contractors can be time-consuming and error-prone. Impact: Mistakes in migration can cause incorrect year-to-date figures and mismatched tax filings. What to do:

  • Prepare a clean export from your previous payroll vendor and map fields before importing.
  • Do a full reconciliation of year-to-date wages, taxes, and deductions before your first live run.
  • Consider using a CPA or payroll implementation specialist for the first payroll run.

7) Cancellation, data access, and offboarding

Problem: Some businesses find it difficult to cancel services cleanly or to extract historical payroll reports and tax records in an instantly usable format. Impact: Loss of easy access to historical records complicates audits and future payroll transitions. What to do:

  • Before signing up, ask how to export - payroll registers, tax filings, 1099/1094s, and benefits data.
  • Keep periodic full backups of key reports (quarterly or annually) in your own accounting system.

8) Worker classification and 1099 mistakes

Problem: Misclassification of workers (employee vs contractor) is a risk on many payroll platforms. Some users reported incorrect 1099 preparation or misunderstandings about classification responsibility. Impact: Misclassification leads to penalties, back taxes, and legal exposure. What to do:

  • Use classification checklists and have a CPA review borderline cases.
  • Don’t assume software alone resolves classification risk; document why you classified a worker a certain way.

What the complaint data actually shows

Public review platforms and complaint boards reveal patterns more than isolated stories. See user reviews on Trustpilot and complaint summaries on the Better Business Bureau to get a sense of frequency and themes:

Note: these sources contain a mix of one-off problems and systemic concerns. Use them to identify recurring issues relevant to your business size and complexity.

How to test Gusto risk-free (step-by-step)

  1. Map your payroll complexity. Headcount, pay schedules, benefits, contractor mix, multistate taxes.
  2. Ask for a detailed quote and scope of what Gusto will file and what remains your responsibility.
  3. Run a parallel payroll for at least one cycle before you fully switch.
  4. Reconcile taxes and YTD numbers with your accounting records.
  5. Test key flows - onboarding an employee, terminating and final pay, contractor 1099 processing, benefits enrollment changes.
  6. Document support contacts and escalation paths before anything goes live.

Decision checklist: is Gusto right for you?

  • Are most of your employees U.S.-based? If no, look for global payroll options.
  • Is your payroll structure relatively standard (W-2 employees with simple benefits)? If yes, Gusto is a strong contender.
  • Can you live with periodic fees for add-ons like time tracking, 401(k) admin, and premium support? If not, budget for alternatives.
  • Do you have a CPA available to help with the migration and tax questions? If not, factor in consulting costs.

Alternatives to consider (short list)

  • ADP - robust for larger businesses and more complex tax footprints.
  • Paychex - strong payroll and benefits for mid-market employers.
  • Square Payroll - lower-cost option for very small employers with simple needs.
  • Remote or Deel - for hiring international employees or contractors.

Choose an alternative that matches your complexity, support expectations, and global needs.

Final thoughts - don’t let fear of problems drive decisions; let clarity do so

Every payroll vendor has trade-offs. Gusto dramatically reduces manual payroll work for many companies - that’s real value. But the issues described here are also real. The good news is you can eliminate most of the risk with careful planning: verify pricing, run parallel payrolls, document everything, and secure backup processes and professional help where classification or tax filings are complex.

If you sign up with eyes open and a test plan in place, Gusto will likely save you time. If you skip those steps, you risk surprises that are costly in money and trust. The difference comes down to planning - and the strongest protection is simple: don’t go live until you’ve reconciled, tested, and asked for the support path you’ll need when things don’t go perfectly.

Sources and further reading

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