Payroll Software for Businesses: Streamline Pay & Compliance

Published Monday 26 January 2026

Table of contents

• What is payroll software?
• Key features that streamline your payroll
• Understanding employee motivation
• Give your employees what they need
• How payroll software ensures compliance
• Choosing the right payroll software
• Making payroll software work for your team
• Streamline your payroll with the right solution
• FAQs on payroll software

Key takeaways

• Prioritise employee satisfaction by implementing payroll software that guarantees automated direct payments on promised dates, as consistent and accurate compensation is the primary motivator for your team.
• Ensure compliance with New Zealand tax obligations by using software that automatically updates tax rates, files employment information with Inland Revenue within two working days of payday, and correctly calculates PAYE deductions to avoid the 45% non-notified rate penalty.
• Choose cloud-based payroll software that integrates seamlessly with your accounting system to eliminate manual data entry, reduce IT costs, and provide secure remote access from any device.
• Implement employee self-service features that allow your team to access payslips, update personal details, and manage leave requests independently, freeing up your time to focus on running the business.

What is payroll software?

Payroll software helps you manage everything related to paying your employees. It automates calculations for wages, taxes, and leave, ensuring everyone is paid accurately and on time.

The software also helps you stay compliant with tax laws and integrates with your accounting system to keep your financial records in sync.

Key features that streamline your payroll

Good payroll software offers a range of features designed to save you time and reduce errors. Look for tools that simplify your day-to-day tasks.

• Automated pay runs: Calculate and process pay for your team in just a few clicks.
• Tax and compliance: Automatically calculates PAYE, KiwiSaver, and other deductions to help you meet your obligations.
• Leave management: Track and manage employee leave requests and balances all in one place.
• Employee self-service: Give your team access to their payslips, leave balances, and personal details.
• Direct integration: Connects seamlessly with your accounting software to keep your books up to date.

Understanding employee motivation

Employee motivation differs significantly from business owner goals. While you focus on growth and profitability, your employees have different priorities.

Key differences include:

• Ownership stakes: They don't own the business or benefit from future sale profits
• Career focus: They have personal career paths separate from your business goals
• Employment duration: They may work for you temporarily while pursuing other opportunities
• Financial stability: They need regular, predictable income to cover monthly expenses
• Work purpose: Despite loving the job, their primary motivation is consistent compensation

One of the biggest motivators for your employees is money. Not money at an unspecified date in the future, but money paid on regular dates each month. That's why an efficient payroll process is vital for your employees.

Give your employees what they need

Reliable payroll systems directly impact employee satisfaction and productivity. Consistent, accurate payments create happier, more efficient workers.

Your payroll software must deliver these employee essentials:

• Automated direct payments: Guaranteed bank deposits on promised dates eliminate payment delays
• Fast tax code updates: Quick adjustments for legislative changes or personal circumstances like marriage or parenthood
• Accurate tax calculations: Correct deductions prevent financial hardship, as failing to receive a completed tax code declaration form (IR330) from an employee requires you to deduct pay as you earn (PAYE) at the non-notified rate of 45%, which can cause significant issues for them.
• Employee self-service access: Limited system access lets staff update personal information and reduce errors
• Holiday tracking: Automated leave balance management and approval workflows
• Quick expense processing: Fast reimbursement for business-related costs reduces employee stress
• Automated benefits handling: Seamless processing of healthcare, pension, and superannuation contributions

How payroll software ensures compliance

Staying on top of tax rules and regulations is a major concern for business owners. Payroll software makes compliance simpler and less stressful.

• Up-to-date tax rates: The software automatically updates with the latest tax and KiwiSaver contribution rates, so your calculations are always current; for example, the Inland Revenue states the lowest rate for your contribution to an employee's KiwiSaver is 3% of their gross wages.
• Payday filing: Directly file your employment information with Inland Revenue (IR) each payday to avoid penalties, as electronic filings are due within two working days of the employee's payday.
• Accurate record-keeping: The software securely stores all your payroll records, from payslips to leave history, so you can quickly access information for audits or reporting.

Choosing the right payroll software

Quality payroll software handles employee needs while providing additional business benefits:

• Simplified tax paperwork: Automated data retrieval from your accounts streamlines tax submissions
• Streamlined employee transitions: Easy processing for new hires and departing staff
• Reduced IT costs: Cloud-based systems eliminate in-house support, upgrades, and downtime. By using online payroll accounting software (sometimes called cloud payroll software) you can stop worrying about IT issues, because they are all taken care of remotely.
• Remote access capability: Secure online access from any device, anywhere
• Automatic compliance updates: Built-in updates for changing tax laws and employment regulations

Making payroll software work for your team

Choosing the right software is just the first step. To get the most value, your team needs to be able to use it with confidence. An intuitive, user-friendly platform means less time spent on training and fewer mistakes. When employees can manage their own details and leave requests, it frees up your time to focus on running the business.

Streamline your payroll with the right solution

An efficient payroll system keeps your employees happy and your business compliant. By automating calculations, simplifying tax filing, and providing easy access for your team, you can run your payroll with confidence.

Ready to see how Xero can simplify your payroll process? Try Xero for free.

FAQs on payroll software

Here are answers to some common questions about payroll software.

What is payroll software?

Payroll software is a tool that automates the process of paying employees. It handles tasks like calculating wages, withholding taxes, managing leave, and filing information with tax authorities.

What are the different types of payroll systems?

Businesses can manage payroll manually with spreadsheets, outsource it to a service, use dedicated payroll software, or partner with a professional employer organisation (PEO) that handles all human resources (HR) and payroll functions.

What software do most businesses use for payroll?

Many small businesses use online payroll software that integrates with their accounting platform, such as QuickBooks or Xero. This keeps payroll and financial data synced in one place.

How does payroll software integrate with accounting systems?

Payroll software connects to your accounting system to automatically record wage expenses, tax liabilities, and other payroll-related transactions. This eliminates manual data entry and ensures your financial reports are accurate.

Can employees access their own payroll information?

Yes, most modern payroll software includes an employee self-service portal. This allows employees to view their payslips, check leave balances, and update their personal details online or through a mobile app.