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Payroll in 2011

It’s been a huge year for Xero with 2011 looking like our biggest yet. We thought for Christmas we’d give you a sneak peek into another of the big projects we’ve been working on.

Xero Payroll is shaping up well and is due for release early next year.

Wages and salaries are the largest expense for many businesses, so sending detailed cost information from a pay run straight into the accounting ledger gives business owners a much better understanding of where the money is flowing. They can then prepare for the deduction of large expenses and the likes of superannuation payments.

This video previews how Xero Payroll will work:

Xero Payroll is ideal for small businesses that still run their payroll manually. With Xero Payroll you create your template payslips to use each week and easily copy previous pay runs for faster processing where the amounts don’t vary much. We’ve introduced a ‘payroll admin’ user, so only people with this access can see the detail of a pay run anywhere in Xero, and there’s also a new employee contact for pay transactions.

Xero Payroll complements our existing payroll partners who take the payroll process a few steps further to include automated tax calculations, leave accrual and other payroll specific functions. Over time we envisage these partners will continue to build out on Xero’s core payroll features and provide other valuable services such as self-managed employee kiosks.

See a full list of our payroll solution providers here.

Xero Payroll is included free in our business editions, and users of the Xero Small plan will be delighted to know that invoices created by our payroll function, to post amounts into the ledger, won’t affect invoice limits each month.

Managing payroll is a big chore so we want as many people as possible to get off manual systems.

Stay tuned for this release in 2011.


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21 December 2010 #

Great Work ! – I am just a little puzzled as to why do all this fantastic work, but ‘not’ include tax schedules and leave entitlements. I do realise it is a global product, but tax rates generally only change annualy. Question/Request for superannuation – does system cater for $450/mth threshold? – Keep up the good work !
Merry Christmas to you all !

21 December 2010 #

I agree with Stewart. It seems strange to do all this good work, and leave me still needing to talk to my accountant each week to check i get the tax and NI deductions correct. I know it is tough on your third party payroll providers, but tough! I think you should build the proper functionality in to your product – I feel it would give you a massive competitive advantage here in the UK where your top competitor has to use third party payroll providers, but the “plucky” UK new entrant builds it right in.

21 December 2010 #

I agree with Stewart and Nigel – it will be a real shame to have to keep using 3rd-party services to perform PAYE calculations and keep track of leave balances etc. We currently use SmartPayroll, but it is far from ideal. For a start, we couldn’t make full use of the service (where they pay staff directly, and process return with IR) because we couldn’t get a letter of credit from the bank – we are a new business, and would have had to jump through numerous hoops to get this. So every month I have to go through and enter stuff into Smart Payroll, then jump onto IR’s online services to submit the return, then log in to Xero and enter everything all over again. A real headache – and lots of room for error. I’m all for partnering where it makes sense, but what you’ve demoed above in combination with calculations and balances would be perfect for what we need.

21 December 2010 #

We at Paycycle really look forward to working with Xero on the integration possibilities that this functionality can provide. More about this here

Congratulations Rod and the team, more great functionality on the way.

David Kime
22 December 2010 #

Can’t wait for this to hit the UK – please get it here ready for new tax year on 5/4/2011 as that would make the most sense and be the best time for people to switch to it

24 December 2010 #

As I have mentioned to both Rod and Hamish, a fully functional Payroll integrated within Xero is what businesses want. As a business advisor, this is the big hurdle that is holding me back from converting most of the businesses I look after from another Accounting package to Xero.
Xero is the best invention for small to medium size businesses since the introduction of MYOB. That is a big statement from me given that I have been one of the biggest supporters of MYOB since the introduction of the Software many moons ago.
Rod, Hamish and the team have done a fantastic job with the software and I know they are always looking for ideas to further improve the software by listening to people who are at the cold front of the software. Keep up the great work and look forward to the new year in having Xero as one of the partners in my business in assisting my clients with their Accounting software needs.
Merry Xmas and a prosperous new year to Rod, Hamish and the team at Xero.

Earl Rudolfo
30 December 2010 #

What countries will be able to use Xero Payroll? Is Xero Payroll available for use in Xero Global?

Rod Drury
30 December 2010 #

Hi Earl, Payroll is in the global version as well our country specific versions. So available for all countries.


Earl Rudolfo
31 December 2010 #

Thanks for your response, Rod, Based on the video, I’m assuming that all the tax deductions are input manually as opposed to being automatically calculated in Xero? Would be ideal if payroll calculations using a Payroll Deductions Online Calculator like this one – can be integrated in Xero.

Rod Drury
31 December 2010 #

The features we’ll release shortly, which are global in nature, are a natural release point. Lets get those out and see where our customers want us to go next.

Earl Rudolfo
11 January 2011 #

Looking forward to testing Xero payroll features with Payment Evolution –, a Canadian online payroll service provider for small businesses

Hayden W
20 January 2011 #

I agree with the consensus here – fully functional payroll is a must and is the one reason we haven’t yet been able to adopt Xero here. Encouraged to see some movement in that direction, but it’d be great to see a commitment to a full payroll service – this is a consistent theme on discussion boards on several sites discussing Xero’s merits and limitations so it would certainly seem worthwhile!

Keith Marshall
10 February 2011 #

Interesting, i agree with all the comments RE: Full Functionality and about converting clients, especially micro business clients. I don’t believe that pricing of 3rd party payroll software and Xero is an issue for larger companies as the pricing is less significant for that market. The reason that Xero have stated for adding in payroll is that is it something that Australia customers want, however I think some of the comments suggest that’s it’s actually a global demand. I do think that any payroll functionally that can’t track leave entitlments is useless unless you only have casual employees or you have a company with a single employee/director that doesn’t track their leave. In spirit however, the idea of integrated payroll is awesome and i’d love to see it developed further.

11 February 2011 #

Any update on release date? :)
I have a feeling it will be included on Monday’s update!

Sam Kennedy
17 February 2011 #

This looks fantastic and pretty much handles my preferred requirements for payroll in Xero. I would prefer Xero focused on its prime purpose of providing an accounting package that handles transactions and produces the relevant reports. I would prefer a dedicated integrated payroll system that keeps up with the yearly governmental requirements. There is an overhead for this and I would prefer Xero dedicated its resources to providing an excellent accounting tool.

Jon Johnson
17 February 2011 #

I have to agree with the other comments so far – I have a couple of clients ready to migrate to Xero but they do need functional payroll i.e. tax scales, entitlements, group certificates.

9 March 2011 #

I also want a complete payroll system in xero – there is no point having a payroll tool available that cant handle the basics (especially automated tax and super calculations). I would be more than happy to pay an extra $10 per month for a fully functional payroll system in xero.

Benedict Appleby
11 March 2011 #

Hey guys,

Do we have an ETA for this? Really need to know for our planning!


14 March 2011 #

@Benedict Targeting late March – so not too far away now.

21 March 2011 #

And here it is! Just in time for month end payroll. Thanks!

Julie Russell
21 March 2011 #

Awesome! – was just about to sign up two companies to another online payroll provider, but this has saved everyone money and time. Brilliant timing! Xero!

Simon Lampen
21 March 2011 #

Have just seen this. Great News! However leave entitlements (or indeed any non-cashable benefits eg product allowances) are going to be one thing that we will still need to maintain elsewhere, is this on the cards for v2?

21 March 2011 #

You need to do the Payroll yourself. What’s the point of using a 3rd party service? The point is getting off a 3rd party and condence it in to one.

Not impressed at all.

[…] at Xero’s partner conference many payroll providers were a little dismayed to hear that Xero was developing it’s own payroll solution – albeit a very very simple one that was rudimentary to say the […]

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