$560 million ZenPayroll has changed its name and is expanding into benefits to take on Zenefits and ADP

ZenPayroll, the startup that wants to reduce the pain and possibility of error for business owners who hand-process payroll, will be expanding into offering benefits and will no longer be called ZenPayroll, the company announced Thursday.

From now on, ZenPayroll will be called Gusto.

CEO Josh Reeves told Business Insider that the name change "is something we've been aware of and knew we were going to do since month 3 of the company."

Reeves tells Business Insider that the team chose ZenPayroll as its initial name "because we had two days before [Y Combinator] Demo Day and needed to print our t-shirts."

But the new name, Gusto, which Reeves says the company has been working on for a while, was inspired by the business owners they want to serve.

The San Francisco-based company has offered a cloud-based system to automate tax calculations and payroll payments. Its web-based services are already used by more than 20,000 small businesses.

When it was still ZenPayroll, the company's sights were set on helping the six million US-based small businesses - places like florists, churches, and salons - that have, in the past, done payroll by hand.

But in its announcement on Thursday, the company also announced that it will now also be rolling out health benefits and workers' compensation to these businesses, so employers and employees can use Gusto's system as a one-stop shop for all their compensation-based needs.

"It's something that, if we were to go back to 2012, to our seed fundraising document, it was something we said we would do from the very beginning," Reeves told Business Insider, regarding offering benefits. "Now we're excited to sharing it publicly with the world."

On Gusto's platform, employees can access and manage all their benefits and payroll information in one place. And since Gusto already has businesses' payroll data, Reeves says, they can seamlessly apply it to benefits.

The announcement seems to confirm earlier reports that Gusto and Zenefits, a $4.5 billion company that lets employers manage their benefits, are squaring up to become rivals, though the two companies have worked closely in the past. Zenefits is working on a system to process payroll, according to a BuzzFeed report earlier this week, and Gusto is now breaking into handling benefits.

Gusto, which was valued at $560 million after the company announced a $60 million Series B round of funding led by Google Capital earlier this year, says it processes billions of dollars in payroll annually, and works with businesses in every US state. The company has about 250 employees now, and Reeves says it will have 300 in the next new months. Gusto has also opened up an office in Denver, in addition to its San Francisco office.

The startup is super popular with top Silicon Valley CEOs too. A list of angel investors in the company, disclosed in November, reads like a who's who of Silicon Valley.

CEOs of companies including Stripe, Evernote, Eventbrite, Instagram, and WordPress all invested in the company's $20 million Series A round. Ashton Kutcher, Jared Leto, and founders of tech companies including PayPal, Nest, Mint, Twitter, and Reddit also participated.