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In this Xero payroll review, I’ll answer the question you’ve been searching for: Is Xero the best payroll software for small businesses?
I’m sure you’ve heard of Xero, a popular online bookkeeping and accounting software solution tailored to small-medium-sized growing businesses.
But did you know that Xero also includes dedicated payroll software that promises to simplify payroll processes, save time, and ensure accuracy?
Xero Payroll Review
If you’re looking for the best payroll solution for your small business, Xero Payroll is certainly a top contender.
In this Xero Payroll review, I’ll cover Xero payroll’s pricing, ease of use, features, and more to determine whether it’s the best choice for your small business.
Before we start, it’s important to note that Xero Payroll is only available for users in New Zealand, Australia, and the United Kingdom.
Users located in the United States must use the Gusto Xero integration to manage their payroll needs within Xero effectively.
So, with that said, let’s dive in to find out more about Xero Payroll now!
Read more: How To Use Xero?
What Is Xero Payroll?
Xero Payroll is a feature available within Xero that’s designed to simplify and streamline your payroll processes within your business.
The feature seamlessly integrates with Xero’s other features, making it ideal for businesses that already use the software to manage their finances.
The integrated tool offers slightly different key features depending on whether you’re based in Australia, New Zealand, or The United Kingdom.
However, the core functionality of the software remains the same.
Xero Payroll streamlines and automates critical processes, such as calculating employee wages, tax codes, leave, and more, while always maintaining accurate tax compliance.
Read more: 5 Best Xero Alternatives For Small Business.
For a visual walkthrough of this process, check out my video guide on How to use Xero below.
Xero Payroll Ease Of Use
Xero is known for its sleek, simple, and easy-to-navigate interface, so it’s no surprise that the payroll feature is also easy to master!
The intuitive interface allows you to navigate, set up, and take action on various payroll tasks effortlessly, from setting up new employees to processing payments with just a few clicks.
This seamless experience allows you to streamline payroll processes and always stay on top of crucial financial tasks.
Read more: How Much Does a Bookkeeper Cost For Small Business?
Xero Payroll Pricing
Xero Payroll is available in higher-tiered pricing plans (Grow, Comprehensive, and Ultimate).
The current costs (December 2024) for these plans are as follows:
- Grow: $70 AUD/ $75 NZD/ 33 GDP per month.
- Comprehensive: $90 AUD/ $99 NZD/ 47 GDP per month.
- Ultimate: $115 AUD/ $113 NZD/ 59 GDP per month.
Note: Xero Payroll is not available on Xero’s Ignite plan.
The ‘Grow’ plan covers payroll for one employee, while the ‘Comprehensive’ plan supports up to 5 employees.
The ‘Ultimate’ plan can accommodate up to 10 employees, and you can add more employees for just $1 per month per person (with a limit of 200 employees).
Xero also offers a 14-day trial for all paid plans.
Check out my comprehensive article on Xero’s pricing plans and current offers here.
Xero Payroll Features
Xero Payroll offers robust features designed to streamline payroll management and comply with the latest regulations at all times.
Again, it’s important to note that Xero Payroll features may differ depending on whether you’re based in Australia, New Zealand, or The United Kingdom.
Here’s an overview of its main features:
Automated Payroll Calculations
With Xero’s intuitive payroll software, paying your employees becomes effortless!
This powerful online system not only streamlines payment processing but also automatically updates your accounts to reflect the latest changes.
It can calculate tax codes, superannuation, and leave entitlements for you, ensuring accurate data every single time.
You can also adjust tax and pay rates and easily email payslips to employees (which are also accessible through the Xero Me mobile app).
Imagine a payday where the software handles everything for you—accurate tax calculations, up-to-date data, and quick, secure direct deposits!
Well, with Xero, it’s a reality! You can pay your team in just a few clicks, giving you complete control over pay calendars and rates.
Read more: 6 Best Accounting Software For Self Employed.
Flexible Pay Schedules
Did you know that Xero Payroll offers flexible pay schedules depending on what works best for you?
Essentially, you can effortlessly pay your employees weekly, fortnightly, or monthly! How impressive is that?
You can even set up multiple schedules for different employee types, such as salaried or hourly workers.
This ensures that your payroll matches your business needs and that your employees are always paid on time.
Read more: Top 5 Bookkeeping Spreadsheets For Small Business.
HMRC Compliance (UK users)
HMRC compliance is essential for any UK payroll software. Not using a recognized system could result in a massive fine!
Luckily, Xero Payroll is fully HMRC-recognised and always keeps up to date with the latest changes for you.
Xero Payroll also automatically sends your payroll data to the HMRC for online filing in real-time.
This feature covers tax, National Insurance (NIC), student loan deductions, and pension contributions.
It can also help you:
● Maintain an accurate digital record of employee pay.
● Calculate employment allowance.
● Provide automatic tax code updates to ensure precise tax calculations for employees.
Xero Payroll basically takes all the guesswork out of manual payroll calculations, significantly reducing the risk of costly errors.
Read more: How To Export Customers In Xero?
Employee Leave Management
With Xero Payroll, your employee leave balances are updated automatically once a leave request has been approved.
The system comes pre-configured with all standard leave types (depending on your country), saving you time.
Additionally, the system makes managing rostered days off and time in lieu easy, making leave tracking and roster planning straightforward and efficient.
You can also easily manage various leave types, including sick leave, maternity and paternity leave, bereavement leave, and more.
This ensures smooth payroll administration for you and your team, no matter the circumstance or urgency of the request.
Read more: What Is The Best Bookkeeping Template For Small Business?
Employee Self-Service
Imagine a world where your employees can access their own payslips, submit timesheets, request leave, and effortlessly update their details?
Well, with Xero Payroll and the Xero Me self-service portal, your employees can do all this and more online or via the mobile app!
This greatly reduces the administrative load on HR and payroll teams and encourages employees to manage their own information for increased accuracy.
Payroll Reporting
Xero Payroll generates all essential payroll reports relevant to your country, such as:
● Employee leave balances.
● Transactions.
● Payroll activities.
● Timesheets.
● Superannuation data, and more.
These reports can be exported to PDF or Excel file, helping you with further analysis or record-keeping.
This advanced reporting feature is usually only available in high-end payroll systems, which is why Xero Payroll is a strong choice for small—to medium-sized businesses!
Integration with Xero Accounting
As part of Xero’s accounting suite, Xero Payroll integrates seamlessly with your logged financial data.
Payroll information automatically flows into your general ledger, minimizing errors and eliminating the need for manual data entry.
This integration ultimately gives you a unified view of your finances, simplifying both payroll and accounting processes.
Is Xero Payroll The Best Payroll Software For You?
If you’re a small-medium business with fewer than 50 employees, Xero Payroll is likely the best payroll solution for you.
Particularly if you already use Xero’s accounting software!
This dynamic and integrated approach means you get payroll and accounting tools in one subscription.
That’s right, you don’t need to pay for a pricey dedicated payroll software!
With automated calculations and various useful features, including an employee self-service app and customizable reporting, Xero Payroll is a valuable tool for managing payroll.
And look, Xero Payroll may not be the most suitable choice for businesses with over 50 employees or those with complex needs.
However, its ease of use, affordability, and integration with Xero accounting software make it an attractive solution for all growing small businesses!
Read more: Xero vs QuickBooks.
Stews Final Thoughts
And that’s it! That brings me to the end of this Xero Payroll review.
Ultimately, Xero Payroll is an excellent choice for small, growing businesses seeking a streamlined, cost-effective solution.
With automated features and user-friendly tools that integrate seamlessly with Xero’s other features and tools, Xero Payroll makes managing your payroll simpler and more efficient.
While it’s particularly suited for businesses with fewer than 50 employees, Xero is a solid choice for those seeking a robust, all-in-one payroll and accounting platform.
Xero Payroll is an effective, accessible, and reliable option for small business owners focused on growth.
Do you use Xero Payroll? What do you think?
