Gusto vs Xero
A head-to-head comparison to help you pick the right tool
Last updated: April 30, 2026
Gusto
Gusto is a full-service payroll platform built for small businesses in the US. It handles payroll taxes automatically, offers employee benefits administration, and includes onboarding tools that make it easy to bring on new hires. Gusto is known for its clean interface and transparent pricing, making it a top choice for founders managing payroll for the first time.
Xero
Xero is a cloud-based accounting platform popular with small businesses and accountants worldwide. It is known for its clean interface, strong bank reconciliation tools, and excellent integration ecosystem. Xero is particularly popular in Australia, New Zealand, and the UK, and is considered the main alternative to QuickBooks for cloud-based accounting.
Pros
- ✓Automatic federal, state, and local tax filing saves hours each month
- ✓Transparent flat-rate pricing with no hidden fees
- ✓Excellent onboarding flow with offer letters and e-signatures
- ✓Strong benefits administration including health, dental, and 401k
Cons
- ✗International payroll is limited and requires third-party tools
- ✗Can get expensive as headcount grows beyond 50 employees
- ✗Reporting and analytics are basic compared to enterprise tools
Pros
- ✓Beautiful and intuitive interface — one of the cleanest in accounting software
- ✓Unlimited users on all plans — no per-seat pricing
- ✓Excellent bank reconciliation with smart matching
- ✓Strong ecosystem of 1000+ integrations
Cons
- ✗Payroll requires a separate add-on in most regions
- ✗Inventory management is basic compared to QuickBooks
- ✗Reporting is less comprehensive than QuickBooks on lower tiers
- ✗Customer support is primarily online with no phone support
Gusto vs Xero: Side by Side
| Factor | Gusto | Xero |
|---|---|---|
| User Rating | N/A | N/A |
| Category | Payroll Software | Accounting Software |
| Pricing Model | Paid | Paid |
| Starting Price | $40/mo + $6/person | $15/mo |
| Best For | Small businesses under 100 employees wanting full-service payroll with benefits | Small businesses and accountants wanting a clean, modern alternative to QuickBooks |
| Our Pick | — | — |
Gusto Features
- ✓Full-service payroll
- ✓automatic tax filing
- ✓direct deposit
- ✓employee benefits
- ✓onboarding
- ✓PTO tracking
- ✓time tracking
- ✓contractor payments
Xero Features
- ✓Bookkeeping
- ✓invoicing
- ✓bank reconciliation
- ✓expense claims
- ✓payroll
- ✓financial reporting
- ✓inventory
- ✓project tracking
- ✓integrations
- ✓mobile app
Pricing Comparison
Our Take
Choose Gusto if small businesses under 100 employees wanting full-service payroll with benefits. Choose Xero if small businesses and accountants wanting a clean, modern alternative to quickbooks.
Best For
Small businesses under 100 employees wanting full-service payroll with benefits
Best For
Small businesses and accountants wanting a clean, modern alternative to QuickBooks
Also Consider
If neither Gusto nor Xero is the right fit, Multiplier is worth evaluating.
Multiplier
Startups and SMBs hiring internationally on a budget
From $40/contractor/mo
Frequently Asked Questions
What is the difference between Gusto and Xero?
Gusto is best for small businesses under 100 employees wanting full-service payroll with benefits. Xero is best for small businesses and accountants wanting a clean, modern alternative to quickbooks.
Which is better, Gusto or Xero?
Choose Gusto if small businesses under 100 employees wanting full-service payroll with benefits. Choose Xero if small businesses and accountants wanting a clean, modern alternative to quickbooks.
How much does Gusto cost?
Gusto starts at $40/mo + $6/person. Pricing model: Paid.
How much does Xero cost?
Xero starts at $15/mo. Pricing model: Paid.
Who should use Gusto?
Small businesses under 100 employees wanting full-service payroll with benefits
Who should use Xero?
Small businesses and accountants wanting a clean, modern alternative to QuickBooks