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Getting ready for New Zealand Payroll in Xero

Posted 6 years ago in Advisors by
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We’re getting ready to bring New Zealand Payroll in Xero to life! Soon we’ll be offering a seamless online payroll and accounting experience for our New Zealand customers.

Changing payroll software is a big decision, so we want to share details on what you should expect. This will make it easier than ever for you to process your payroll, stay compliant, pay your employees and report to the Inland Revenue.

Integrated accounting and payroll

With New Zealand Payroll in Xero, information from payroll seamlessly flows into your accounts – eliminating manual data entry and processing. In short, it’s designed to help make running your business easy.

We’ve built beautiful, smart payroll that’s easy to implement and can be used from anywhere. We’ve designed the experiences for businesses with less than twenty employees. If you work with your accountant or bookkeeper they can be invited in to manage payroll for you. Or you can invite someone in to manage payroll without seeing the rest of the business financials.

 

New Zealand payroll overview

 

New Zealand Payroll in Xero features

New Zealand payroll supports Small & Large employers for Inland Revenue reporting & filing obligations. You can also:

  • Save time and increase productivity when payroll and accounting software work as one. You’ll decrease the amount of time spent on data entry. Payroll journals are automatically created on the general ledger when posting the payroll.
  • Relax with the peace of mind that Xero automatically looks after tax calculations for you. Built-in Tax, ACC, Student Loan, Payroll Giving & ESCT calculations. Updates to New Zealand payroll regulations and tax rate changes are handled automatically so you don’t have to worry about staying compliant.
  • Manage KiwiSaver details including employee eligibility, employee & employer contribution rates, opting out and contributions holidays.
  • Electronically report your payroll information with the Inland Revenue. Your reports are created, pre-populated for downloading and upload to the Inland Revenue with ir-File including KiwiSaver, Additional & Voluntary Student Loans and Child Support.
  • Create unlimited and flexible earnings, deductions, including Payroll Giving, and reimbursement types to meet the needs of any business. No limits on the number of pay calendars you can create so you can easily have multiple pay frequencies to suit your business needs.
  • Manage Statutory Deductions for Child Support, Court Fines, MSD Repayments and Inland Revenue Arrears.
  • Download your bank’s payment file for ease of upload into online banking to pay your employees. Email your employees their payslips to give them instant access to their pay details.
  • Easily and accurately accrue and record employee holidays and leave accruals including managing leave entitlements for individual employees. Manage statutory leave types including Holiday Pay (8%) and unpaid parental leave types.
  • Invite employees to access pay history, payslips, view leave requests and request new leave via the employee app without seeing the business or payroll financials. Available online via the web on release along with iOS and Android phones shortly afterwards.
  • Collaborate with your accountant or bookkeeper on payroll. Allow them to manage payroll on your behalf by giving them the Payroll Administrator user role.

This is just the beginning. You’ll see constant enhancements, improvements and features being made available as we get your feedback and strive to make it smarter and more powerful. If you’re using the current ‘Pay Run’ feature you’ll be able to continue using this if you wish. Any new businesses will not have this option available to them from Wednesday 4 March.

And if Payroll in Xero does not meet the needs of your business we recommend selecting one of our payroll partners from the Add-on Marketplace.

Pricing, rollout and key dates

We’ll be making New Zealand Payroll in Xero available on Wednesday 4 March. This includes setting up your business and employees with required payroll details.

This means you’ll be able to use New Zealand Payroll in Xero to process payroll and pay employees from 1 April – in time for the new financial year.

With New Zealand Payroll being released we’re removing our existing Premium plan from 31 March and introducing new Premium plans, based on the number of employees you pay each month. If you’re on the Standard plan you’ll get one employee included free of charge.

The new monthly prices (below) represent one monthly cost, which covers both accounting and payroll.

New Zealand Payroll in Xero pricing plans New Zealand Payroll in Xero pricing plans

If you don’t have any employees and you’re currently on the Premium plan you will continue to pay $65 a month for the next 12 months.

However, If you start to use Payroll from 1 April to pay employees, you’ll be moved to a Premium plan that suits the number of employees you pay.

You’ll see more information over the next few weeks as we get closer to making this available including full education material and webinars to help you get started.

There’s not long to wait.

127 comments

Jono
February 24, 2015 at 9.20 am

This is great news!!

Gayle Buchanan
February 24, 2015 at 9.29 am

Bloody marvellous news Oliver – our DIYers will be over the moon!

Chris Doms
February 24, 2015 at 9.30 am

This is a very welcome feature. I don’t necessarily agree with the pricing strategy, but despite protests from some it really isn’t that expensive considering its functionality.

How do these new pricing plans work with the existing structure – e.g. if I want Premium because of foreign exchange but have no interest in payroll, am I now in for an extra $10/month with no extra functionality? That’s a tough pill to swallow to be honest.

Doug
February 24, 2015 at 9.31 am

Sounds great but I think the standard plan should include 5 employees, just 1 seems a bit silly really

Julie
February 24, 2015 at 9.33 am

Hi, will Payroll be available on Partner plans also?

Sandra Hunter
February 24, 2015 at 9.39 am

This is very good news. However for the vast majority of NZ businesses that have a handful of employees they will need to move from the $50 plan to the $75 plan, an increase of $25. For a few dollars more they could go to an Add-on and get far more benefits including the return being filed with IRD and specialist employment law advice. Something to think about.

Alex Zilionis
February 24, 2015 at 9.49 am

Too expensive. Ten employees for the $50 plan then increase from there.

Julie
February 24, 2015 at 9.49 am

So, if you have two employees, using Xero payroll will cost you $25 per month?? That’s ridiculous.

Oliver Furniss
February 24, 2015 at 9.52 am

@Chris, if you want Premium but don’t use Payroll then you will continue to pay the current price of $65 a month.

Oliver Furniss
February 24, 2015 at 9.52 am

@Julie, Payroll is only available on Standard and Premium plans. It is not available on partner plans like Cashbook at this stage.

Indy Bandara
February 24, 2015 at 9.57 am

This is excellent news!

Oliver Furniss
February 24, 2015 at 9.58 am

@Doug, Sandra, Alex and Julie – Payroll in Xero adds real value to small business employers and as we continue to develop and improve all features of Xero we constantly review our pricing and other factors such as the number of employees.

If you’re currently on the Premium plan and don’t use the Payroll feature then there is no price change and you’ll continue to pay the current price.

We’re constantly improving the Xero platform improving the lives of business owners including recent features like Quotes. Other improvements including Inventory will be released in the near future as we continue to invest in few features and product.

Sylvia
February 24, 2015 at 10.15 am

Hi there, will Xero payroll handle 5 weeks leave and flexitime accruals?

Thanks

Damian
February 24, 2015 at 10.24 am

Sounds good. But there are free payroll services out there such as Thank You Payroll which works well for small business. Not sure why I would pay extra or Xero Payroll

Jo
February 24, 2015 at 10.29 am

Hi – I assume these prices are exclusive of GST?
With the Premium plan you advise current clients not needing payroll will still be charged $65/month, what about new clients. Are they going to have the choice or automatically be charged the $75?

Amanda
February 24, 2015 at 10.38 am

Sorry guys I think you’ve missed a fairly large chunk of the market here, nad I’m usually a huge cheerleader for Xero. You should have had an option for 1-5 employees as so many small businesses employ less than 5 staff. I personally have 2, so would need to use the Premium 10 plan – an increase of $25 a month. Why would I – when I can use Thank You Payroll for $0-6.50 a month (max), and they do my monthly PAYE schedules for me too!

Brett
February 24, 2015 at 10.43 am

$50 for one employee is a bit hard to swallow. Especially when the Aussies are paying $50 for five employees and the Americans only $30 (circa $40NZ) for five employees. Where is the national pride and benefit of Xero being a NZ company?

Sandra Hunter
February 24, 2015 at 10.44 am

Jo, yes the prices are Plus GST.

Thanks Oliver for your feed back. It would be great if you can answer Jo’s question above regarding new clients because I would like to know that as well. Also the blog says that if a customer is already on the Premium plan but don’t need payroll they will continue to pay the $65 per month for the next twelve months. That sounds like the price will go up to $75 after that? Can you let us know? Thanks.

Lisa
February 24, 2015 at 10.55 am

We were excited about moving our clients onto Xero payroll but not at those prices!! It is not worth it. We love Xero and about to reach gold status but certainly won’t be using the payroll except if they have the one employee.

Kerry Gemmell
February 24, 2015 at 11.16 am

This is brilliant! Well done Xero.

Mar Arcus
February 24, 2015 at 11.54 am

This is a great release, but I think pricing is off like others have said. It is too big a jump from 1 employee to 10, needs to be more like 5 under the existing plan or an intermediate price step. Why do we not get the special offer like the UK payroll release? Seems to be big disparity in NZ pricing already.

Harm
February 24, 2015 at 12.00 pm

This is excellent. I’m all for the integrated/seamless approach.

Would have liked to have known about it a month sooner though. I would also urge you to consider 5 employees for free.

Nick
February 24, 2015 at 12.04 pm

Great news!

What I really don’t understand is why everyone whinges about pricing? Like seriously, its $25/$50/$100 a month…….are you crazy? How much do you value your own time at, I guarantee you value it at more than $25/hour, which I am absolutely certain that Xero saves you in excess of 1 hour a month.

You can just continue to do it the old way, or the new way and save money and more importantly get back you time! I guarantee your net position will be MONEY/TIME saved!

Natasha
February 24, 2015 at 12.18 pm

I was excited about xero bringing out payroll and am a huge fan of xero, but at this pricing many of my clients won’t be using it. a number are just using the cashbook and would need to jump to the $75 package, the others would have more than 1 employee. They should make it a minimum of 1-5 employees. Often you have husband and wife plus a couple of staff and if you don’t put all your employees on you don’t get the benefit of running the month end reports. It is a relatively expensive option to upgrade to considering other payroll options out there.

Victoria Crone
February 24, 2015 at 12.19 pm

MD of Xero NZ here.

Thanks everyone for your feedback and comments. Just to reinforce that the pricing above reflects your Xero subscription plus also now includes Payroll. Did you know that the majority (350,000) of NZ businesses don’t have employees, so they’re just paying themselves? So that’s why we put only 1 in the Standard plan.

We don’t plan to giveaway payroll (I know I can hear groans!!) as it does cost money to not only develop, iterate but also support it, however having looked at the market pricing for Payroll we’re pretty comfortable we’re competitive! Desktop and Cloud payroll software alone tends to be priced at a base level around $20-$30 a month, and often with either setup or other transactional fees.

Xero is fully in the cloud, fully integrated into your accounting software and so easy to use. That brings many time savings, and often when we view pricing we forget to think about how much time integrated cloud software can save us and therefore the whole raft of ways we can better use that.

Catherine
February 24, 2015 at 12.48 pm

To promote xero payroll, please the standard price with1-10 employees keep it $50/month+GST. That will help Xero booster more users, and I believe Xero is still at this early stage attracting more users. Thanks

Brett
February 24, 2015 at 1.46 pm

@Victoria
You have excluded yourselves from the assessment of “competitive pricing”. Assuming 1 employee NZ version for $50 compares to the AU version $25! Why are the prices across the ditch HALF the NZ price at this level?

Andrew
February 24, 2015 at 1.59 pm

I think this is a great addition to a great product. It would be good over time to see this move to the level of other payroll products with automatic return filing and bank transfers but there is a lot of functionality here and there is value in an integrated product. Complaints over a few dollars a month seem to miss the point – time is money!

Philip
February 24, 2015 at 4.19 pm

I agree with Brett and others above: why is the basic NZ payroll for only one employee, when the basic Aust and US payrolls allow up to 5 employees for the same or less cost? It can’t be because the NZ payroll, tax and holiday accrual systems are 5 times as complex to provide for and maintain!

Rob Seddon-Smith
February 24, 2015 at 9.42 pm

Hmm. A welcome idea though about 3 years too late for me. I use a fully paid payroll service which costs me $6 per month for 13 employees and 2 businesses. I’d say you’re a long way off the money on this one. I do pay for xero of course, which is about the most expensive accounting package available but that does not mean I’d be keen to move across. Small business gains little from xero yet, I’d suggest, we make up the majority of your earnings. Throw us a bone guys…

Leigh-Ann
February 25, 2015 at 12.19 am

What happens to all your payroll partners that have supported Xero?

Oliver Furniss
February 25, 2015 at 5.22 am

@Leigh-Ann, there will be no change to the relationship between Xero and our add-on partners who offer huge value to our customers.

Sandra Hunter
February 25, 2015 at 9.12 am

As I understand it when Xero first offered payroll in Australia they were going to allow ONE employee on the standard plan. The Aussies kicked up so much Xero changed it to allow 5 employees on the standard plan.

So here we are in NZ relegated to second place again. I suggest we keep up the pressure on Xero and maybe they will give us the same consideration as they gave their Aussie customers. Seems fair to me.

Graeme McInteer
February 25, 2015 at 9.12 am

@Victoria

I think all you need to do here is introduce an intermediate step in the pricing and most grumbles will go away. If you had a 3-5 employee option for $10/mth increase there wouldn’t be this argument. (You’ll note I started at 3-5, making 2 employees ‘free’ will allow all the ‘mum & dad’ companies to maintain their love affair with Xero).

Nobody (really) expects you to ‘give it away’, but by tying the payment increase to 10 employees @ $25, a lot of people see this as having to pay for employees they don’t have. Having 1-2 employees covered under the existing standard plan would not be ‘giving it away’, remember these people are still paying $50/mth.

Also the reasoning behind Aus & US getting 1-5 free and NZ not seems a bit odd. Doesn’t show a lot of loyalty to your early adopters.
Graeme

Mat Arcus
February 25, 2015 at 9.51 am

Well put Graeme. It looks like a long awaiting fantastic addition to Xero. None of us expect Xero to give anything away. They have shareholders to please. On the flip-side we have to make sure we get the best value for our clients. One way of assessing this value is to look at competitors pricing and also overseas pricing. I cant see why in NZ we only get 1 employee with the Standard plan v 5 in Aussie. If there is a logical explanation then I would like to hear this from Xero. While the cost might not be huge compared to the time savings achieved, it is still a big jump for those clients with 2-5 employees who will be hard to convince to move over at the moment.

Victoria Crone
February 25, 2015 at 11.06 am

Victoria, MD Xero NZ again. Just to go into a bit more detail on the question comparing NZ to Australia markets and pricing. SME’s in Australia are defined as 200 or less employees, in NZ they are 50 or less. When you break down the number of employees, NZ has a significantly higher number of employees in 0 and 1-5 than Australia does, who have higher numbers in the 20-200 range. The pricing in each market reflects the make up of the SME’s in each country. 90%+ of NZ Small Business employ less than 5 people. If we were to give 5 away for free in the Standard product that would mean 90% of businesses would get payroll free. While this sounds awesome(!) we’d be inciting issues around pricing (not covering costs to develop or support payroll) and impacting heavily our add on partners which just doesn’t fit with our values. So we have tried to balance the following – delivering a great cloud Payroll product, being competitive in the market and ensuring we don’t trounce all over our Payroll add ons, and also that our pricing is contributing to the development and support costs for Payroll.

Of course Xero Payroll is a cloud service with great features and fully integrated. The beauty of an open market is you’re free to choose what suits your clients and your business and only you can make the trade offs between price, integration and the time savings you’ll get. As I’ve said we remain confident that when you go through that assessment we are competitive on price, we’re just not free!

Can I reinforce we remain hugely thankful to all our partners who have supported us in New Zealand. We continue to regularly release updates to our software, have delivered some big feature enhancements over the past year (notifications, quotes, new dashboard design, new report layouts, bulk recoding and smart lists are just some examples) and in NZ we are working very hard on further integration with big business to save our small businesses even more time (more to come on this at Xerocon!) I am really happy to chat in person on this one so please feel free to email me (victoria.crone@xero.com) with details and I can give you a call.

Chris Doms
February 25, 2015 at 11.56 am

Victoria, you might want to critically assess your own justification for the pricing structure. When we break down what you’re saying, the basic message is that because NZ businesses are smaller they should be whacked with higher fees. I’m sure your justification is passable when presenting it to shareholders, but you’re leaving your customers confused and angry.

No one is asking for anything free here, just reasonable fees. I would love to see the market research that went into your pricing, because you’ve put yourselves way outside your competitors. I know, I know, you’re “fully integrated” etc etc. All of that means something, but in my view you’ve grossly overestimated that value to small businesses.

I think the product is great, and I will be recommending payroll to the few of my clients who I think will benefit from it. The vast majority of my clients will be better off sticking with Smart Payroll, Thank You Payroll, or any of the decent desktop solutions that have served them well.

Victoria Crone
February 25, 2015 at 12.23 pm

Hi Chris – I’m really happy to discuss with you in more detail how we got to where we got too. Just flick me an email and I can call you and talk you through it (email address above). Cheers.

Victoria Crone
February 25, 2015 at 12.28 pm

Graeme – just a comment around an interim plan with 3-5 employees. We certainly looked at this, it is very intensive to set up new plans as any new plan has to cover all of Xero features (limitations of current billing system – which is being replaced at some stage!) and therefore we were unable to proceed with that given the timings of getting to market and the little upside in bringing in a new plan. I do get the perception that some clients will think they’re paying for extra as they have a smaller number of employees. We have done a fair amount of analysis around number of employees and how we compare to other offerings that have set up, monthly and transactional charges as well, and when we did that we are priced competitively for the value we bring. And ultimately you have to do that analysis for your clients and take into account all variables (set up, monthly, transactional prices, features) and go from there. We are just one option!

Amy
February 25, 2015 at 3.56 pm

Does anyone know if this service will be submitting monthly employer returns to IRD on employers behalves, and also if payroll will be able to be paid via direct debit?

Oliver Furniss in reply to Amy
February 25, 2015 at 4.00 pm

@Amy, Xero does not handle the filing to the Inland Revenue on your behalf. We provide completed Inland Revenue forms to be uploaded. Initially you’ll be able to download a payment file for your bank with other payments options coming in the future.

Darren
February 25, 2015 at 4.30 pm

I applaude Xero for bringing the option of this new feature, it’s great to see you are enhancing the features on your packages, however your pricing plans and Staff levels are way off the mark, we all realise time is money and if we can save both then even better, but when Xero is offering the same service with greater benefits at a lower cost to the international market I for one won’t be moving my Payroll across to Xero. SBE Current employee level 2 persons. Payroll provider Smart Payroll.

Josh
February 25, 2015 at 9.39 pm

More than happy with the proposed pricing, to me it reflects good value. Subscription pricing should never be the centre of conversation with clients anyway. Too often the client is allowed to dictate terms and pricing as if it’s their right to have cheap/free software. Sometimes I think subscriptions should be higher in price then perhaps it would be respected as a service as well as respecting those who provide a service around it.

If you give it away for free or next to nothing then there is an ongoing expectation that everything associated with it should be free too.

Simon L
February 26, 2015 at 12.12 am

super-stoked about the payroll announcement. Been waiting a long while for this to come in… the extra cost does not bother me – offset it against the saved time and/or the costs you pay for payroll programmes – bargain. Xero makes running my business so simple and this just makes it better. Good work guys 🙂

CAthy
February 26, 2015 at 9.15 am

Hopefully the NZ payroll will be easier to navigate around than the Aussie one. I use the Aussie one and it takes me the same time to pay one employee as it does using Smart Payroll NZ to pay 10. Would like a look around NZ payroll before I commit to!

Nicole Elvy
February 26, 2015 at 10.05 am

Awesome work Xero. Well priced thumbs up from Equation 🙂

Lynley Averis
February 26, 2015 at 10.55 am

At $85 a month it simply doesn’t compete with MYOB AccountRight Plus (at $60 + GST pm).

MYOB AcccountRight Plus includes accounting (full stock control & time billing) PLUS MYOB Payroll (which is one of the most used payrolls in NZ). It is better value for money…

My other question is how does one easily enter the 52 weeks of pay history (required by DOL) into this payroll when they move from their existing payroll to Xero?

Lynley Averis
February 26, 2015 at 12.35 pm

Forgot in the note above to mention MYOB Essentials.
Essentials is just ..$29 per month (nearly a third of the cost of Xero & offers incredible value)
MYOB Essentials has full accounting & payroll (GL, sales, purchases, banking, GST) and includes an unlimited number of employees on the payroll… you can have 100 employees on Essentials and some businesses do…

Brett
February 26, 2015 at 1.38 pm

Seeing as the pricing plans use the same terms as the existing plans Starter, Standard & Premium. Can you please clarify if all plan prices will increase to the new “payroll inclusive” prices (either now or in 12 months). After reading the UK release some clarity here for those that do not use payroll will not see a price increase?

Victoria Crone
February 26, 2015 at 1.55 pm

Brett – In NZ, when payroll is launched users who opt not to turn on payroll will not see a change to their pricing. We are communicating directly to those on Premium so if you have customers on this plan then keep an eye out. If you don’t no stress!

Gayle Buchanan
February 26, 2015 at 2.04 pm

Hi Lynley … always lovely to hear industry thoughts and interestingly a MYOB specialist which seems a bit wierd to have you on our Xero blog …. anyways

When I see a bookie or trainer mention software cost as a deterrent I cringe and wonder why a member of an F&A Department of a business would ever use that as a measure.

TIME … more precious than ever far out weighs a software cost.

Help the customer understand true time cost and if it isn’t your favoured software (obviously mind is Xero) point them away from yours, I don’t think posting what you have here is very professional – but that just maybe me.

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