Assertion Supported AI assessment confidence: 95% certainty 4/5 debate potential 1/5

Reeves: About 40% of US companies were penalized yearly for manual payroll

Josh Reeves · Early days building a decacorn · Jun 4, 2025 · at 6:21

This episode carries Josh Reeves's own address, with nobody on the show putting questions to them. It still counts as said, and it is kept out of every score on their page.

Josh Reeves, co-founder and CEO of Gusto, describes the market research that validated Gusto's initial decision to build a payroll solution for small businesses.

0:00 / 0:06exact quote · 6.3s

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“Like, about 40% of companies were doing it manually and getting fined every year because you have local, state, federal.”

quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →

The claim, plainly

Around the time Gusto was founded (circa 2011–2012), approximately 40% of small businesses in the United States processed payroll manually and incurred payroll-related tax penalties from the government each year.

a quote alone can be ambiguous, so this restates it with the references and context of the conversation around it resolved. AI-written; the tape below the player is the source.

Assessment

Josh Reeves's statement accurately reflects widely cited IRS and payroll industry compliance statistics from the early 2010s. Multiple independent industry and business sources contemporaneous with Gusto's founding era (including HireLevel in August 2012, Vision HR in July 2014, and subsequent analyses by the American Payroll Association, Inc. Magazine, and Paychex) confirm that according to IRS statistics, approximately 40% of small businesses in the United States incurred penalties annually (averaging approximately $845 to $850) for late or incorrect payroll tax filings and deposits.

August 2012 industry reporting (HireLevel/Extra Help) citing IRS figures that 40% of small businesses pay an average penalty of $845 per year for late or incorrect payroll filings and payments.
Multiple business and trade publications (Inc. Magazine, American Payroll Association, Paychex, and U.S. Chamber of Commerce) documenting IRS data showing 40% of small businesses incur annual employment tax penalties.
IRS Form 941 failure-to-deposit and failure-to-file penalty rates align with the small business payroll compliance failure figures reported during Gusto's 2011–2012 founding period.

Checked against

[1] gusto.com [2] hirelevel.com [3] vision-hr.com [4] pymnts.com [5] inc.com [6] paychex.com [7] paychex.com [8] uschamber.com

"40%" small businesses payroll penalties IRS "40 percent" "845" "IRS" payroll small business "40 percent" small business "payroll" penalties IRS "40%" "$845" "IRS" payroll IRS small business payroll tax penalties 40 percent

assessed as of 2026-09-02

This assessment is an AI reading of a public statement, made against the cited references with the confidence shown. It can be wrong. The quote, the tape and the references are all on this page; if something is off, use report an error below. full disclaimer →

Mentioned

companies Gusto payroll

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Disclosure

Reeves: Gusto initially ran payroll via in-person visits on a co-founder's laptop

“So the first set of companies that onboarded to Gusto, and we had a different name at the time than Payroll what that meant was we would go to your house and You would type into, it was typically Tomer one of my co-founders, and we love to say you can't spell …”

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Disclosure

Reeves: Gusto's first cohort was restricted to salaried California first-time employers

“So there was a really clear scoping here to companies in California that had never used payroll before, were paying employees for the first time. They were all salaried employees.”

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Assertion Not checkable as stated

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Reeves: About 40% of US companies were penalized yearly for manual payroll

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