- Feb 7, 2025
Optimal Software Stack for Payroll and Benefits
- Upward Insights | Luis Lomanov
We spend a lot of time doing HR, even though we never imagined that we would. Here is the list of software we use to manage payroll and benefits for our clients in the tech, AI and SaaS verticals (and others) - all of them are awesome, low cost platforms that work together in one software stack:
Payroll: Gusto
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why we like it:
Offer Letters: we can issue offer letters and get them signed - it's a nice feature and works well
Onboarding: We can onboard employees with all the necessary, boring docs: collect and sign forms I-9, W-4, Handbooks, and policy documents - we can add any docs in there we want. Employees self-onboard.
Payroll: it runs automatically, it runs smooth and right; no action required unless you have changes
Payroll Tax Compliance: End of year W-2s are done automatically. Registering with every state where you have employees is a nightmare and it will likely continue being so, but once registered, Gusto can file, collect and remit all taxes automatically to both IRS and state agencies
Integrations: lots of integrations with a large variety of ancillary software
Employee Experience: Self-onboarding with own login. Employees actually like using it and find it easy to navigate (changing their tax status, finding paystubs, getting tax forms, etc.)
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Additional Services: Gusto offers a variety of additional services now, some of them work and some not so well.
Healthcare Brokerage: The software component of their healthcare brokerage is good, the people side isn't. Their healthcare software flow is good because it's scalable and enrollment is quite easy on the business - so we can add a new employee and they'll automatically receive all the paperwork they need to enroll in healthcare. Once they do, payroll is automatically updated for deductions . But the actual people (brokers) are not that great - they're too busy to give you decent responsiveness or any hands on support to troubleshoot things and their pricing isn't great. Oh well, can't be good at everything
State tax registrations: Gusto recently started to offer state tax registration services (good idea; it's a nightmare) for their clients and Gusto now has a nice little button to click to request for someone to register your business in a new state when you hire an employee in that state. The data flow and experience is nice, but to someone that knows how to register, we found it annoying to play back and forth email with the sub-contractor service provider who actually does this work for Gusto. The takeaway is as follows: if you have no clue how to do state registrations, it's a good service. If you do, it's easier to do it yourself.
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what sucks (maybe?)
Support: Gusto has been growing very fast and some of our clients are upset at their responsiveness, but if you have priority support they'll take care of you. We get priority support automatically, so we haven't experienced this issue.
Bill Pay and Contractor Payments: they started offering a service to pay contractors via Gusto. It works decently well, but it's an inferior product from an internal controls perspective to Ramp, Bill.com or Airbase (all Accounts Payable platforms with awesome approval flows and additional features)
401K / Retirement Benefits: Guideline
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Why we like it:
Integration and Enrollment Automation: We connect Guideline to Gusto and when we set up a new employee in Gusto, Guideline is triggered to enroll the employee in 401K.
Employee Experience: Employee self onboards and has their own account where they can select their contribution and investment choices easily.
Automated Compliance: retirement plans have to go through compliance testing and annual filings - Guideline has the best compliance testing and form 5500 filing workflow that I know. They took something painful and made it a non-issue - Bravo!
Healthcare Benefits: Thatch
this is a new player in the game and we're taking a risk to write about them, but we're excited. We've got one client using them and we're going to push it with our other clients also. Thatch provides ICHRA plan administration - it's different than a traditional group health plan.
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Why we like it:
Onboarding & Employee Experience: Company sets a budget that the employee is given. Employee creates an account once they've accepted our invite. They can see how much the company is giving them and they can shop healthcare plans that work best for them. No more "I don't like the plans you offer" or "My doctor doesn't accept this plan" - all problems that arise when you, the employer, have to pick a few plan options that you hope will suit everybody. With this, the employee gets to choose a plan they like from lots of different providers.
Integrations: There is an integration with Gusto and a bunch of other software
Low Admin Burden: Gusto is the only other solution that can provide a similar low-admin burden experience for the business. And trust me, THERE IS A LOT OF ADMIN BURDEN with traditional healthcare plans and brokers - think lots of PDFs, docusign signatures, updating payroll, quoting and back and forth Q&A - ugh! Absolute nightmare to avoid at all costs!!
International Payroll: Remote
Why we like it:
Admin Burden: It used to be extremely complicated to pay employees internationally. Now it's the same as with US employees - easy.
Payment Flow: Automatic debit from the bank account with FX translations handled.
Benefits: You can actually offer healthcare and retirement benefits to people in other countries with a couple of hours of upfront set up time. If you don't think this is impressive - try offering someone in Ireland or Poland benefits while sipping coffee in your home office in the US.
Why It Sucks
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It is quite expensive on a per-employee basis (few hundred $$ to close to $1,000/ employee/mo depending on location), but it's much cheaper than the alternative of doing it the old fashioned way
We usually set a rule that we employ up to 10 people in any given country via Remote before we incorporate there and do it the old fashioned way. We also don't use Remote if the employee is going to be low cost (e.g. it doesn't make sense to pay $600/mo to remote if that employee is in Pakistan making $1,000-2,000/mo)
All of them work together in one software stack and enables a super scalable infrastructure to pay your employees!