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Payroll has arrived

Anyone in the world can now pay their staff in Xero. Payroll in Xero offers a much more granular view of employee expenses for those with the right permission. Employee costs are the largest expense for most small businesses. For a small business, having this level of control over costs is essential to prosper and grow.

Payroll in Xero lets you generate payslips, create batch payments to make it easier to pay staff and manage your wage related expenses with all the associated compliance. Watch this video to see how it works – note that Payroll in Xero is available globally, but in this overview we’ve used some Australian terms.

When you next use Xero, make sure you give yourself the new Payroll Admin permission – only users with this permission can use these new features and see sensitive employee information.

If your business has a handful of employees or pay runs that don’t change a lot, Payroll in Xero is ideal for you. If you need a full payroll/HR system which handles things like tax calculations and leave deductions, then check out the great payroll add-ons which integrate seamlessly with Xero.

As well as Payroll we’ve even made time to add a few more features including:

  • Invoice templates – additional custom fields
  • Google Docs update
  • Contacts – import updates
  • Partner Edition – staff access to practice billing plans
  • Global Partner Edition – new
  • API – access to reports

For all the detail about this release have a look at our Release Notes.

As always, keep the feedback coming.


Read more about Business



Andrew Haynes
23 March 2011 #

Fantastic news! This will be well received and certainly represents a tipping point in my opinion, especially in Australia.

The competitors are stalling but you continue to deliver. Well done Xero!

Andrew Cowan
23 March 2011 #

Great to see this! Another great selling point. Keep up the good work.

23 March 2011 #

Our workshop staff & designing staff handle more then one Job per day. Can you tell me whether you software has the facility to identify wgaes cost for each job end of the pay period ?

Sanjesh Lal
23 March 2011 #

Great news!…Bye bye Excel sheets.

Bob Boxall
23 March 2011 #

Great news will you be doing the associated IRD DED payment returns at sometime, like you do gst etc

Vicki Kenny
23 March 2011 #


David Vaassen
23 March 2011 #

Great news. Even for a small team this looks like a worthwhile edition. Move over Excel.
Where does that leave Payroll only vendors I wonder?

Jane Brabham
23 March 2011 #

Brilliant! Love it and will be using it for next month’s payroll…along with spreading the word. Thanks Xero for listening!

23 March 2011 #

Great to see continued development happening. I just tried the new payroll functionality but was disappointed to see that it doesn’t do the PAYG and Super calculations for you.. you have to calculate them manually and enter them in. Maybe I won’t switch to Xero for my payroll just yet.

Jamie Hayman
23 March 2011 #

OMGOMGOMGOM! This is the best news, that has just made an awesome day even more awesome. <3

23 March 2011 #

Does this integrate with Freshbooks time tracking? In other words will it import the time worked for each employee as tracked in Freshbooks and then let me run payroll against it?

23 March 2011 #

This may be a stupid question but is there a way that holiday pay owing will show up i n financial position statement.

Nicole Leatherby
23 March 2011 #


Just a couple of quick questions,

1. Are the ATO tax tables loaded and such does it auto calcuate PAYG?
2. Are PAYG Payment summaries included in the reporting


Nick Schembri
23 March 2011 #

Goodbye MYOB what a horrible experience it has been!

Andrew Tokeley
23 March 2011 #

Thanks for all the feedback people – good to see it hits the spot for some of you.

@Bob – definitely looking in to this and are actively looking at ways we can prepopulate payroll related information on tax returns across NZ/AU/UK – no timeframes yet but on the cards.

@Upali – Xero doesn’t currently do job tracking, while you could set up individual pay items for each project and enter time against each one I suggest it would be better to use one of our payroll partners for this sort of thing – check out one of our payroll ( or time tracking ( partners

@Blake – no we don’t have any integration with Freshbooks time tracking.

@Gared – no we aren’t tracking holiday pay, again, for this sort of thing check out our partners.

@Nicole – no we don’t auto calculate PAYG or any other amounts for you. If you need this then check out our partners at the above link. We don’t yet have the PAYG Payment Summary report but are considering other reports we could deliver – will make sure this is on the list.

23 March 2011 #

and this costs how much per month??

23 March 2011 #

Any reason why partner edition cant have payroll as well? Very annoying :(

ps. if your in australian and want a tax calculator to input right ammounts into xero check this out –

23 March 2011 #

@Shelley Nothing. Free as part of your Business subscription!

Victor Solijan
23 March 2011 #

So no tax tables or means to enter them in? you have to manually calculate the data each week? I think we might still need excel

Andrew Tokeley
23 March 2011 #

@Rhys – thanks for the link your (?) google spreadsheet tax calculator. People can also use ATO’s one (, IRD’s ( or HMRC’s ( – and I’m sure there are others out there.

Partner edition products (Cashbook and Ledger) have been priced low to attract customers with relatively simple requirements – having payroll (and lots of other goodness) in business edition plans is a great reason to get your clients to consider upgrading!

23 March 2011 #

yes i agree, but $31 a month for a payroll feature that doesnt even calc the tax automatically.. they most well give their money to paycycle :)

23 March 2011 #

I would love to change to xero however payroll is a large part of my current accounting software (MYOB). Great work on introducing the basic payroll but you need to take the whole step and do it properly for me to come over. i am not interested in paying a monthly subscription fee to you guys and a payroll company when my current software can do it all for 1 price….worth thinking about

Jimmy Hempenstall
24 March 2011 #

A “global” payroll just isn’t going to work. If this is a pay entry procedure to get amounts paid and liabilities to revenue into the accounts then call it that, but a payroll it isn’t !!

Payroll software ties in with local payroll legislation and rates and this doesn’t.

As to cost, I can get up to three companies payrolls calculated, returns calculated, correctly formatted and uploaded to Revenue for € 100 and if I want a bureau version for unlimited companies it is only € 300 all in !!

If this is to work it needs to be “real” payroll functionality and competitive as well.

Earl Rudolfo
24 March 2011 #

That great news news Xero! So now Canadian Xero users can input the tax calculations from CRA at

P.S. – Can payroll information be imported in Xero Payroll (maybe csv format or something similar) ?

@Freshbooks users in Canada may want to consider utilizing the CRA payroll calculator as part of a Freshbooks payroll/time tracking workaround solution

Brian Sheridan
24 March 2011 #

I have tried the new payroll system. I notice that the net pays are accumulated in a liability account called Wages Payable. But when the actual payment is made to employees it is Accounts Payable account that is debited. Thus Accounts Payable in the balance sheet is understated while the Wages Payable account still show the net pays balance even though it has been paid. This is not satisfactory. Can it be fixed please?

Dave Jessep
24 March 2011 #

This looks superb for my small business clients who were trying to manage this by spreadsheet!

Andrew Tokeley
24 March 2011 #

@Jimmy – thanks for the feedback. We’re not claiming to have delivered a payroll solution that will suit everyone. Clearly if you need more advanced features you should (and we are actively encouraging you to) check out our payroll partners – they are awesome. Our research shows that there is a strong demand amongst our target audience for this sort of solution.

Andrew Tokeley
24 March 2011 #

@Brian – well spotted and thanks. We have confirmed what the problem is and are working on a hot-fix as I speak. Should have it sorted soon.

Tordis Flath
24 March 2011 #

Great if you do your pays manually but I use AcePayroll. It works out everything automatically. They send updates of any tax legislation changes which automatically updates everything and keeps me tax compliant. I just enter the hours and click a few buttons, check it and print it and it’s done. It produces my monthly employer deduction report in a format that IRD accepts. And there are no ongoing costs except tax updates which occasionally come through. If I have a problem, I call the 0900 line and pay $2.25 p/minute for help. Fantastic service. Can’t beat it , sorry.

24 March 2011 #

I agree with others in that for us to consider using it, it needs to integrate with local legislation, and also needs to automatically calculate leave and manage Kiwisaver and PAYE (ie. be an IRD intermediary).

We currently use your payroll partner iPayroll but it would be great to be able to manage it all from one place and have one supplier rather than two.

FYI we are a small business of only 6 employees yet it is still preferable for us to pay for a payroll solution rather than manual processing. I wonder who your target audience is? Thanks :o)

Mark Jenkin
25 March 2011 #

Good to see additional development but am a bit dissapointed that simple PAYG caluclations have not been included. A lot of small business have casual staff whos hours change from week to week. Having to work out PAYG manually seems a bit cumbersome. I would have thought it would have been quite simple to add a reference to a tax table into the payroll section.
Well done for making improvements though.

[…] and is yet again dropping the pricing on it’s solutions. Xero’s not standing still either and announced its basic payroll service. Meantime MYOB has announced a delay to it’s long-awaited cloud […]

Andrea Mead
28 March 2011 #

Eagerly waiting to use your product, but no advantages for me if the payroll does not do PAYG or superannuation calcs, or holiday pay tracking. Job tracking is also a necessity for me. Why would I use an additional package and pay additional costs over an above what I am paying now – not good sense! I will keep waiting for the next version.

30 March 2011 #

Love it but when I email payslips the order of pay items changes. I want a logical sequence eg Ordinary pay followed by a higher rate for Saturday, then a higher rate for Sunday etc. I use drop down boxes when processing pays to get in the order I want but all this changes when I send payslips. Help!

30 March 2011 #

We have been waiting for the Xero payroll module hoping to finally abolish spreadsheets when we start using it, however in its current form Payroll unfortunately does not fulfil our requirements.
We are perfectly ok with entering numbers and tax calculations manually, however what deterred us is that there is no convenient way to track leave, and payslips do not show current leave balances for employees (we think it is important for people to know what their current leave figures are). We would still have to use spreadsheets for that.
Further, numbers from Payroll do not seem to flow through to the BAS statements, which is a shame – you still have to enter all the PAYG withheld manually, even though Xero would have that data if Pay Run was used.
Finally – and we were hoping this would be our biggest time-saver in comparison to spreadsheets – there seems to be no way to quickly prepare end-of-year PAYG Payment Summaries for employees and the ATO. There are Payroll summary reports but you can’t import your previous data for the year, making them useless that late into the Financial Year.
All this, combined with the fact that it is “unaware” of local tax legislation (things like payroll tax in NSW), hardly makes it more appealing than entering the same data manually into spreadsheets.

Andrew Tokeley
30 March 2011 #

@Brian – all good now.

@John – thanks for the feedback. The logic to order pay items is defined by Xero rather than the order in which they are entered onto an employee’s payslip. We order lines by Pay Item Type (Wages, Allowances, Deductions, Taxes… ) then within each type descending by amount. However… this logic is working as designed when you edit a payslip however the ordering is sometimes mixed up when viewing/printing payslips. We will be addressing this in the next release in a few weeks time. Sorry about that.

@Konstantin – sorry to hear it’s not going to work for you, we have toyed with the idea of pre-populated the BAS and producing regional reports like Payment Summaries, however, at this stage we are aiming to keep things simple (and free!) and as generic as possible across regions.

Agus Echague
30 March 2011 #

@Konstantin – If you are looking for time-saving automated super/tax calculations, leave management, opening balances and payment summaries, may I suggest you check out Paycycle (, we are one of Xero’s Australian payroll partners.
If you have any queries, feel free to drop us an email!

4 April 2011 #

Client really impressed until we both found out it is half a system- no calculations for Paye and no ability to handle annual and sick leave calculations.Can’t see the benefit. Leave calculations are critical now and software needs to incorporate legislative changes. Misleading advertising-

Simon Garner
6 April 2011 #

I agree with the other comments above. It’s hard to see what market Xero has identified here. I’m running a small business with 3 staff and I can’t see any use for this “solution”. I need to track leave and don’t want to manually calculate tax, KiwiSaver etc.

I’m currently using Flexitime, which is integrated with Xero and works fairly well, but it would be so much better to be able to do it all inside Xero without going out to a different interface, and without paying extra fees to another company.

I can’t help thinking Xero has shied away from making a full-featured system to avoid stepping on the toes of their partners who are currently filling this hole by providing integrated payroll solutions. Which shows admirable loyalty, but is not really in the best interests of customers.

brian k
6 April 2011 #

are there any payroll add on providers in the u.s.? the website link seems to be blank.

we have 100 people that are currently using Quickbooks built in payroll, and need a fully automated system. thanks in advance!

Andrew Tokeley
13 April 2011 #

@Brian – yes, MyPayUSA ( integrate with Xero. Will add this to our list of solution providers – thanks for letting us know.

[…] company has recently introduced a Pay Run facility but this does not perform the tax and NI calculations; it’s really just a tool to […]

Hayden W
18 April 2011 #

Adding my name to the long list of clients and potential clients disappointed at the lack of Tax and Leave calcs. We’re a small operation with some commission-based staff so taxes and pays vary each week. Not a chance we’re paying $29/month more for a Partner’s solution when this is a standard feature in most other cloud-based accounting packages.

With transition from MYOB planned for end of this FY, we’d need at least a commitment from Xero that this functionality was on it’s way. Otherwise Xero is a non-starter for us.

Sad and annoying. :(

21 May 2011 #

i too want to make the swith to cloud come year end. my preference was xero but due to ineffcient payroll am now contemplating sassu which has a much better payroll system incorporated into it.

23 May 2011 #

I agree with Simon & Hayden, not providing integrated payroll solutions is not really in the best interests of customers. Almost all business has a few employees at least, but doesn’t want to pay extra to manage payroll/PAYG payment summaries.
Hopefully Xero will start considering to develop at least automatic tax calc/PAYG payment summaries print outs.

Michal Turek
27 May 2011 #

I was looking forward to payroll in Xero. The initial excitement was very quickly replaced by disappointment. I guess I got used to perfectionism from Xero and the payroll is just not there. It does not deliver
– tracking of entitlements (annual leave, sick leave should be part of payslips)
– PAYG summaries printout at EOFY
– incorporated PAYG-W tables
– integration with BAS
It is a very nice first step, please keep going, we need step 2,3… to call it suitable payroll for small businesses.

13 July 2011 #

I just wanted to add my name to the list of another who is waiting for Xero to introduce a proper payroll system before making the switch from MYOB. I already need to purchase 2 Xero licesnes, one for our AUS company and 1 for our UK company. To then have to pay a payroll company (paycycle) a further $99 per month for our 40 AUS staff, and a further $39 per month for our 12 UK staff is way too hard to justify. I really do hope Xero release a v.2 payroll soon to include tax, super, annual leave etc. I can justify 2 Xero licesnes but not 2 Xero licenses + 2 payroll licenses. Especially when the payroll ones are more expesnive than the accounting software licenses. Xero any comments on introducing a more developed payroll system so everything can be done from within Xero without the need for 3rd party payroll partners?

Mike Block CPA
15 July 2011 #

Without automated payment of U.S. federal and state payroll taxes, you have no effective U.S. payroll. AccountantRelief should integrate very soon. Either they will do this or my programmers will do it for them. Costs, from a CPA-run company with about a thousand payroll clients, will be far lower than comparable Intuit minimum payroll costs. Features will be comparable to top of the line Intuit – ADP offerings. They also will do U.S. 1099 processing. Please email me non-binding estimates on how many clients you will have for this.

25 August 2011 #

Any help here would be much appreciated: I am trying to do our end of FY year accounts and I am having real difficulty with the Wages figures. It looks like the PAYG withholding tax payments have been included for the period April 2011 to July 2011 – after we started using the Payroll function, but not for the period July 2010 to Mar 2011. These payment are sitting in PAYG Withholdings Payable and do not appear on the P&L. Should those PAYG Tax payments be included under Wages?. Thanks..

Grant Nelson
8 August 2012 #

I’ve been looking for a Canadian provider for payroll in Xero – PaymentEvolution ( and Simpleepay ( were options. After looking at both we chose PaymentEvolution because their connection to Xero looked easiest and it also linked up with our Freshbooks account so we could import employee timesheets.

I think the CRA calculator + the general Xero payrun function is adequate for some very small businesses but the integration with Freshbooks and Xero makes PaymentEvolution a good choice for us.

29 July 2013 #

good stuff. Hope to see more on this!

2 November 2013 #

second time I have use pay run and already a problem. I have to pay one employee a tax rebate – I cannot enter this – negative tax is not allowed!

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