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Getting ready for New Zealand Payroll in Xero

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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

Brad Golchin
February 26, 2015 at 2.26 pm

I don’t think a SMB owner should consider price only when making a purchasing decision. As accountants we always ask our clients to make their purchasing decisions based on ROI and efficiencies that will bring new business opportunities. Xero being a real cloud solution with all the integrations with Banks and Add-ons would be the solution of choice for any SMB Owner looking to streamline their business.

Josh Ambler
February 26, 2015 at 2.30 pm

When a builder considers buying a new power tool they go straight to De Walt or Hilti regardless of price. The builder knows that form, function and quality will be more valuable to him in the long run rather than saving a few bucks initially. They want the best tool for the job.

So Lynley, you could save a few dollars by going with MYOB but how does it feel to be the Black and Decker of accounting software?

Di Crawford-Errington
February 26, 2015 at 2.33 pm

Fantastic @Xero to see this arrive for the NZ SME’s. Always great to have an option here. Lynley I did wonder why the comparison with MYOB on a Xero blog. When we all align ourselves with a particular piece of software, we tend to get a bit precious about it. And, as Gayle said, always interesting to see others opinions. There are benefits of using any of the accounting software programs, and partners will push their software no matter who they have aligned themselves with. And I once upon a time was a MYOB girl. I choose to support and align myself with Xero as a Gold Partner. Just remember this a Xero blog for Xero partners and Xero users. They see the value in using this software, or they wouldn’t be partners, and its not always about the actual cost, its about the cost of your time, and of course a whole raft of other things.

Once again, congratulations Oliver and the Xero team for another awesome release. Keep up the great work.

Wayne Findlay
February 26, 2015 at 3.08 pm

Hi Lynley re your comment’s above, I think you are missing point. Improving your businesses isn’t necessarily just about saving money on software. You need to look at big picture Xero’s reporting is the best on the market, the user experience and speed of Xero is far superior to MYOB essentials.
Clients do not always enjoy doing book work so they should enjoy the time they have to spend doing their books. Xero clients love the product and the cost becomes irrelevant.

Hayden Kirk
February 26, 2015 at 3.18 pm

Still more expensive than smartpayroll.

Gayan Perera
February 26, 2015 at 3.25 pm

This is great! big question is will there be a full API for this?

Shaun
February 26, 2015 at 3.25 pm

Seems way to expensive for the gain. Even more so if staff are on salary….

Other things like multi currency expenses, would be more useful for that kind of cost (already on the prem plan just for the multi currency and it only does a portion of what’s needed)…..

I’m all for NZ made and have been a supporter of Xero from the start, but the limitations and cost are starting to turn me away.

Deidre
February 26, 2015 at 3.27 pm

@Lynley I would hate to see this blog turn into a scrap over Xero vs MYOB . But just need to say that we have now converted more than 600 clients to Xero over the last couple of years and have not had any of our clients want to revert back to their old system.

I love the way Xero continues to adapt and evolve, seeking their clients input along the way. I hear people talking about Xero like it is a badge of honor to be a Xero user and I hear people everyday saying how much they love it. We don’t need to compare with other systems because Xero is speaking very loudly for itself.

We are excited about payroll and will be keen to share it with our clients – there will be many who will use it and there will be many who will stay with Thankyou or Flexitime or Smart or whatever system suits them. Thank goodness for choices!!

Keep up the great work Xero – you make people’s lives easier -love your work!

Claudia
February 26, 2015 at 3.31 pm

I was wondering if the journal that posts will have the ability to including the tracking options and the ability to split the payroll so that different staff time can be coded to different tracking options?

Nicky
February 26, 2015 at 3.34 pm

I am delighted to see this and I believe the price charged looks to be great value. For those going on about FREE payroll systems you typically have to transfer funds to them 2 days ahead to cover the payroll so there is lost interest income. We currently use SmartPayroll because of this (approx $55 per month) but I have always been miffed that there was no employee self service portal (looking up and requesting leave) so we use Bamboo HR to enable this part. It does deliver more then just an employee leave portal but at USD169 per month dropping both SmartPayroll and Bamboo HR for Xero Payroll will really be a no brainer for us. I hope loading leave types and accruals is straight forward and well documented as this has always been a major headache to get right.

Carol Wilkinson
February 26, 2015 at 3.36 pm

Will you offer the PAYE intermediary service with the IRD?
If not I will keep my clients on iPayroll – it is so much easier for them not to have to worry about PAYE each month.
Love Xero but feel it will be hard to compete against some of the benifits and prices of your Payroll add ons

Motu Esson
February 26, 2015 at 3.38 pm

I think this is an exciting move!! The price scared me a bit until I realised this was the subscription + payroll which is only about $15.00 more then what I am paying for the payroll system we currently use but is capped at 20 staff members.

I think everyone is comparing what we currently know to what is being proposed which is hard to reconcile (because all we know is all we know), but Xero was very different when they first came into the market and I’m expecting the payroll to be the same as well (easy to use, saves time and does not need a degree to use)

Gill Doms
February 26, 2015 at 3.39 pm

I was quite excited by the prospect of payroll but after viewing the pricing structure have changed my mind entirely.
We start the year off with a core of 10 staff and end the year with as many as 250 after twelve months of hiring weekend and daily casual staff – I would be looking at increasing my subscription from $50 pm to $140 pm, and I doubt that Xero can outflank ACE in terms of speed or efficiency – and that costs less than $140 for the entire year.
Sorry Xero you won’t be getting this orgs payroll business – but well done on the release, I’m sure it will benefit some people.

Sam Anderson
February 26, 2015 at 3.41 pm

I support the ethos of Thankyou Payroll, who are a fantastic NZ company, have a savvy workflow, complete with XERO push-integration. Their support channel is great and i find we need a real-time response to our questions. I see that the pricing plan for XERO Payroll is to heavy for the number of employees we have.

Nicole
February 26, 2015 at 3.45 pm

Hi there,
Just a few quick questions regarding this new payroll features.
It states that this is suitable for 20 or under staff members, however there is pricing for up to 100 employees?
Also the pricing is the Xero monthly charge, including the functionality of the new payroll?

Victoria Crone
February 26, 2015 at 4.07 pm

Hi, a couple of responses for you.

1. API – The API is being developed for the new payroll and is on our short term roadmap
2. Tracking Categories – Yes, you’ll be able to assign which tracking categories employee costs go to, when you set up.

Jan
February 26, 2015 at 4.28 pm

Lynley – I have just had a look and see you work for MYOB. How rude and unprofessional of you to post that on here!

Paul Dawson
February 26, 2015 at 4.29 pm

I am really excited about this release from Xero and along with upcoming releases for basic stock, and the new reporting framework, Xero offers even better value than ever before. The real value in Xero comes from the time saving and the ability to business owners to better understand their financial performance. Very rarely is the cost of Xero ever brought up as an issue with the clients I work with.

Xero has been a a game changer and MYOB know it.. That’s why they are heavily investing in R&D (rip-off and duplication) and copying a lot of what Xero have already done. Their current roadshow was a great demonstration of this.

Getting a right fit for the client is always the most important part of selecting accounting software but for me Xero fits this bill in 95%+ of the businesses I look at. And the culture at Xero I think is what will continue to deliver Xero significant advantages over their opposition.

Great work team.

Lisa Martin
February 26, 2015 at 4.31 pm

I think everyone should go to Xerocons to learn about the future road map and get fizzing about all the amazing enhancements coming our way – one software one login all done for you, it’s a trainers dream and it’s a no brainer that this will be another huge success – we should celebrate that Xero do so much for the ecosystem rather than getting out our rulers – keep up the great work don’t stop ever being the BEST!

Brian Patchett
February 26, 2015 at 4.33 pm

I administer a charitable entity where every dollar is precious. We currently pay 5 employees through one of Xero’s payroll partners for under $12pm and that includes bank charges, filing with IRD and paying the tax liability – and the payroll system integrates with Xero. Why would we pay the extra to move to Xero Payroll?

Scotty J
February 26, 2015 at 4.35 pm

Great job to see Xero getting payroll and making some awesome developments around quotes. Xero is a much higher quality product than others like MYOB, so if you are price driven at up front costs rather than looking at the cost benefits around time saved within your own business by using an online system that can save you time then by all means keep trucking on the path you are on. We have seen massive growth with our Xero clients and are continue to get clients on other programs come to us wanting to move to a better system. In these cases cost is not an issue as they know that the gains they will get will save them $$$$$. Xero is more user friendly for accountants, bookkeepers and clients as well as bank managers to access. Xero files is the best thing out to save and store data. No more year end paper boxes for our clients or end of year questionnaires as it is all there for us to access.

Victoria Crone
February 26, 2015 at 4.40 pm

Carol – we are not offering an intermediary service as that is not our strategy. We are working with the IRD on web services and once this is available we will be able to push payroll straight in. There’s also some exciting developments we are working on with banks in this space (can’t share more at the moment on it as it’s confidential). Again it’s horses for courses, some want intermediary and there are many that don’t. Re changing to Xero Payroll, that’s an individual choice and we are pretty confident around the benefits of payroll and accounting true integration and only time will tell. Thanks for your comments.

James Frankham
February 26, 2015 at 4.43 pm

I currently use the PayRun function to pay five employees and about a dozen infrequent magazine contributors (tax code WT) who I am duty-bound to pay PAYE for. We currently pay $50/month. This is a very welcome feature but to use it I’ll have to upgrade through a few plans to accommodate the infrequent contributors. I’ve been looking forward to this feature, but it seems the pricing structure puts it out of range for many business with seasonal, part-time or contractual ’employees’ on WT-type tax codes.

Ideas?

Victoria Crone
February 26, 2015 at 4.44 pm

Nicole – as with Xero, it is designed with smaller businesses in mind however will stretch to slightly larger businesses as well. So payroll is designed for up to 20 staff however it will stretch up further. The cost of payroll is included in the Xero monthly subscription and the pricing plans are in the blog above.

Sandra
February 26, 2015 at 5.21 pm

It’s great that xero will have a new wage system, but I personally feel that the price is not appropriate for small businesses that have a handful of staff! If we wanted to put 2 admin staff through xero’s payroll it would literally cost us $35 for 1 member because the standard already has 1 included?? Seems extreme! Unfortunalty that aside our staff wages are driven by time sheets and that is not a function that is offered and we can not omit it..

Sandra
February 26, 2015 at 5.27 pm

Sorry that’s 25$ for the extra member.

Graeme McInteer
February 26, 2015 at 6.27 pm

@Victoria

Re: Tracking Options.

I see you’ve confirmed that tracking options can be used to “assign which tracking categories employee costs go to”.
Will this be at the Employee level or at the coding level within an employee?

Mark Mees
February 26, 2015 at 8.32 pm

Keep up the great work guys, As soon as functionality to pay IRD direct comes online, I’ll be signing up for payroll in a flash 🙂

Paul Greaves
February 27, 2015 at 12.12 am

well what a surprise, I have just went through the whole process of going into xero with a new business and have spent considerable time in looking and assessing payroll addons, now I get this launch emailed to me. Wish some one could have given me the heads up and saved me time in doing due diligence on the addons. But from all comments above i feel i will stick with my selection I am not going to start comparing again. But 5 weeks ago I did ask what are the developments for the future. could have let me know. Will start using Xero 1 April and a payroll package.

steve nathan
February 27, 2015 at 3.54 am

Congratulations on the new payroll. I am intrigued by the number of comments here around price. While price is important especially for a SME, what is far more important when it comes to payroll is functionality, service, support and the value these bring. Payroll is not just a function of accounting; it is a critical part of business that deserves focus. Unlike most accounting software payroll is one area that requires constant updating given how often the government changes things.
I don’t understand why people feel there should be a “free” level. In fact I would not have included the 1 employee free option as this adds no real value. When it comes to what tiers to offer this will always be subjective. The person with 4 employees will always want a 5 employee version but what about me with 6 employees? Why can’t there be a 7 employee tier. The 10,20,50,100 model has always been the standard for most of the good desktop solutions such as Exo (Comacc), IMS etc. and this again reflects the value you are getting from the system. My only question in this area will be how the staff numbers are calculated i.e. employee records, staff actually paid in a period etc.
I look forward to having a play with the payroll and assuming the functionality is there I will be moving my businesses over from our current cloud payroll.

Oliver Furniss
February 27, 2015 at 5.39 am

@Slyvia. 5 (or more) weeks annual leave can be handled. Any weeks over the minimum of 4 can be paid out using the Holidays Act rates, or the employee’s normal pay rate. Xero accrues Annual Leave based on the employee’s standard work week. (i.e. there is no option to accrue based on the actual hours worked). For casual employee’s Holiday Pay is accrued at a minimum of 8% of gross earnings.

In a near future release we will have the ability to show how much annual leave can be ‘taken in advance’.

Oliver Furniss
February 27, 2015 at 5.41 am

@Mark, as soon as the Inland Revenue supports electronic filing where we can offer seamless filing from Xero we will offer it. Right now there is no service we can use that allows us to electronically lodge. Xero is not an payroll intermediary, and has no plans to be, so can’t file on behalf of any business.

Oliver Furniss
February 27, 2015 at 6.02 am

@Lynley, for employers to enter the previous 12 months gross earnings we use information collected in the setup process to automate this as much as possible. Using the pay frequency and salary/wages information we auto-calculate the dates and gross pay looking back over 12 months in an easy to edit grid. Its then easy for any edits to be made before saving.

Our blog is for partners and customers and is not the place to advertise other solutions, especially without being open about where they are coming from. We’ll keep your comments visible so to be open and transparent.

Gillian
February 27, 2015 at 9.41 am

I was looking forward to this Payroll add on, but will concur with comments above. This is not price competitive (especially seeing AUS/US options) so we won’t be using this service.
If you review the pricing to compete with your competitors then I may revisit our decision.

Oliver Furniss
February 27, 2015 at 9.45 am

RE: Questions about Xero filing Inland Revenue returns and making employee payments

Payroll intermediaries are registered with the Inland Revenue to provide these services including managing employee payments and Inland Revenue filing. As a result they receive a subsidy from the Inland Revenue.

Xero is not offering an intermediary service as that is not our strategy. We are working with the Inland Revenue on electronic services. Right now its not possible for us to electronically file, the technology is not available from the Inland Revenue. Once this is available we will be able to file electronically without the need to download and upload via ir-File.

One benefit of managing payroll directly is that the business stays in control of your cash at all times. They take the employee payments and Inland Revenue payments at the point of processing the payroll, by managing this yourself its always in the control of the business owner until it needs to be used to make payments.

We understand that some want the intermediary service to handle everything, but there are many that don’t. That’s why the payroll add-on partnerships with SmartPayroll, iPayroll and others is important to Xero and we will still be supporting them moving forward.

Shirley
February 27, 2015 at 10.11 am

Hi We currently use Xero and Flexitime. We use Flexitime as it integrates with Workflowmax timesheets – will the new Xero payroll integrate with Workflowmax as well?

Laurent
February 27, 2015 at 10.55 am

@Victoria Crone. I found the justification for NZ pricing plan vs AUS and US very interesting.

If “90%+ of NZ Small Business employ less than 5 people”, why not creating a plan for this market at $63. But not, Xero prefer to up-sell the product to 10 employees. It represents an uplift of 50% by comparison with the standard plan!

So why not if NZ clients are ready to pay. It is a little bit like Lions Beer who is selling NZ beer twice more expensive in NZ than UK and US (exuding taxes).

Is there real additional cost to provide the solution for NZ market? Probably not really (or you would have underlined this in your previous comments)

So I would say “Hey, na”. The pill and price and your justification is a little bit difficult to swallow.

Laurent.

PS: your justification of cost to create a 3-5 employees plan is frankly ridiculous. I am working in consulting fro many corporate companies around the world, and it is really the first time I heard this kind of justification. If XERO would have had the willingness to create such plan, it would have been done. XERO just do not want to do it.

Roger Gadd
February 27, 2015 at 11.03 am

I quickly read about this upgrade yesterday, but didn’t have time to post a comment.
I am concerned that this improvement to Xero is a price increase by stealth.
We use the existing Xero payroll feature as a recording tool (to keep payroll separate from creditors and general bank transactions). We use Smartpayroll, which is very good and very well priced. I see there may be Smartpayroll integration with Xero, which we are not currently using.
It appears that if we keep using even the basic Xero payroll functionality for several employees, our Xero costs will increase by 50%. I am concerned that even if we cease using the Xero payroll function, the fact that we already have employees set up in several of our entities may mean we will have to pay the 50% price increase, or move those entities to another accounting package.
Could someone from Xero get back to me via email regarding my concerns?

Roz Turner
February 27, 2015 at 11.28 am

You may have already addressed this in previous comments – but i would like to know what your help desk will be like – with my current payroll system provider I know that I can get a real person on the phone talking me though any query straight away – or if too busy I will get a call back within the hour – without any further cost to me. What will you be providing?

Oliver Furniss in reply to Roz Turner
February 27, 2015 at 11.36 am

@Roz,have a read of this blog which explains how Xero support work. We have dedicated payroll support teams in Melbourne, Auckland, Denver and Milton Keynes. You can raise a support request inside Xero or via email. Given payroll issues are usually time sensitive we pick up the phone and give you a call back if we can’t get it resolved quickly via email. This is of no extra cost to you.

Nikki McGill
February 27, 2015 at 11.31 am

This was my first thought too – will you be removing the current pay run functionality (which I too have been using to make reconciliation matching easier, separate and confidential from staff involved in invoicing). I do hope you are not intending to remove this function which is part of my current subscription?

Please contact me about this concern too.

thanks

Oliver Furniss in reply to Nikki McGill
February 27, 2015 at 11.41 am

@Nikki, for customers who have used the existing Pay Run feature it will still be available for use with no change. For new customers it will not be available and will be removed.

Shelley
February 27, 2015 at 11.32 am

I agree with James above – we routinely pay 8-10 staff weekly but occasionally pay 11. Under the current pricing structure we will need to pay an additional $35 per month in order to pay that one extra person every once in a while. This is almost 4x the price of our current payroll package. I was looking forward to this new release but will probably keep doing a manual Pay Run entry for now.

Nick Carter
February 27, 2015 at 11.33 am

We are using Xero with 2 employees, who are paid by AP as they are on a set salary. Don’t see any time saving using Xero payroll, as we are only talking about 2 people, so why would I pay more? Would be happy to pay more if I could find suitable time saving and certainly if we had more employees that may be the case.

Nikki McGill
February 27, 2015 at 11.47 am

Hi Just to add a couple of other comments. I too find it distasteful that New Zealanders are disadvantaged price wise because we are generally smaller and as a country may not generate as much revenue for Xero. However, we supported you through your start up (I’ve been with Xero from the start), and I have been disappointed at the ‘Americanising’ of Xero – look at the help webinars, no kiwi accents anymore – and now feel discriminated against by your pricing models. With so many cheaper/free payroll alternatives that will offer more – i.e IRD filing – why would I pay extra to use Xero payroll? I also recall being told when I first signed up that the monthly fees would not increase … that didn’t last!

Oliver Furniss
February 27, 2015 at 11.49 am

@Roger, the current Pay Run feature is being maintained for existing customers who have used it. There is no price change to continue to use this for however many employees you currently manage. You will only have to pay extra if you start using the new Payroll in Xero feature. You can continue to use Pay Run + SmartPayroll with no extra cost to you.

Nick Carter
February 27, 2015 at 12.14 pm

Can see the point paying a bit for 1-5 employees, but why would you pay more for just one salary employee?

Oliver Furniss
February 27, 2015 at 12.16 pm

@Nick, we include one employee for free in the current Standard plan. So if you have one employee you can use Payroll in Xero with no increase in the monthly subscription.

Cathy
February 27, 2015 at 12.22 pm

Is this going to be the same as what Xero offers in Australia. Are we going to be able to have a look around before we decide to go. We currently use the Smart Payroll add on and its great. I use the AU payroll which I find really difficult to navigate so will be wanting a look before committing.

Oliver Furniss
February 27, 2015 at 12.25 pm

@Cathy, it is similar to Australia but every screen has been improved and designed for New Zealand. We actually get a lot of positive feedback on Australian Payroll so this is disappointing to hear. New Zealand Payroll will be available from next Wednesday (4 March) in New Zealand – which will give you the rest of March to see if its right for you before processing payroll from 1 April.

Rochelle
February 27, 2015 at 1.36 pm

Great idea but totally agree about pricing. Ridiculous to only have 1 employee on the standard plan. It’s not worth it to me to pay another $25 a month for one more employee. Would like to see you consider changing it to 3 or 5 employees for premium.

Graham Findlater
February 27, 2015 at 3.35 pm

So I use SmartPayroll currently which costs an extra $23.50/month and it does all the backend paying of staff, IRD etc. Each additional person is $1.14. So I think they perhaps are looking to not compete with existing Xero plugins.

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