Looking to add payroll to Xero but not sure where to start? You’re in the right place. Many business owners and accountants want to add payroll to Xero so they can handle everything in one place—wages, leave, and tax, all inside their accounting software. The problem? Figuring out the right steps, requirements, and options can be confusing, especially when you’re busy running a business.
This guide is here to make the process of add payroll to Xero straightforward. I’ll show you exactly how to enable payroll in Xero, what you need before setup, and how to avoid common mistakes. You’ll get clear steps for the Xero payroll setup, plus tips on features, integration, and compliance that save you time and headaches.
Whether you’re a small business, a bookkeeper, or just want to see if Xero payroll fits your needs, this article will walk you through every stage—from the initial setup to your first pay run. Ready to simplify your payroll and get the most out of your Xero account? Let’s dive in.
Why add payroll to Xero? (Benefits & overview)
Managing payroll can feel like a juggling act. That’s why more Kiwi businesses choose to add payroll to Xero and keep everything under one roof. Let’s see what makes Xero payroll so valuable.
- Centralized payroll and accounting: No need to switch between platforms.
- Real-time payroll reporting: Track costs as you go.
- Easier compliance: Stay on top of PAYE and tax obligations.
- Streamlined leave and timesheet management: Handle holidays, sick leave, and hours worked without spreadsheets.
- Less manual data entry: Reduce errors and admin headaches.
- Scalable for growth: Add more employees or contractors as your team expands.
To see a real-world comparison of Xero’s payroll with other options, check out our deep dive into Xero Payroll in New Zealand or compare Xero with Hnry and MYOB here.
Xero payroll setup: What you need before you start
Before you can add payroll to Xero, it’s smart to gather all the right details up front. This preparation step avoids roadblocks and makes the process smoother.
- Your business info, including IRD or ATO numbers (NZ/AU)
- Details for every employee: name, address, IRD number, bank account
- Payroll calendar: weekly, fortnightly, or monthly
- Up-to-date chart of accounts for accurate reporting
- Xero Payroll subscription enabled on your account
IMAGE: Checklist graphic or employee details entry screen (purpose: help users visualize what’s required to start).
If you’re not sure about your payroll obligations, the IRD provides a helpful payroll systems guide. For choosing the right accounting software, you can also read our in-depth comparison between Xero, MYOB, and QuickBooks.
How to add payroll to Xero: Step-by-step process
Enabling payroll in Xero is easier than you think. Here’s how you go from zero to running your first pay.
Step 1: Activate payroll in your Xero dashboard
To begin, log in to your Xero account. Under “Payroll,” select “Overview” and follow the prompt to add payroll. This unlocks all payroll features in your dashboard.
Step 2: Enter company and employee information
Next, fill in your business details and add each employee, making sure you enter personal, tax, and bank account information accurately. This step is crucial for correct payslips and payments.
Step 3: Configure pay calendars and payroll settings
Set up your pay schedule (weekly, fortnightly, monthly) and assign employees to the right calendar. Double-check your settings for leave types, superannuation/KiwiSaver, and tax.
Step 4: Set up leave, deductions, and payslips
Add any leave policies, regular deductions, and set up payslip templates so everything runs smoothly on payday.
Step 5: Process your first pay run
Once set up, you can create a pay run. Review all entries, approve the run, and send payslips directly to employees through Xero.
- Bullet points: Key reminders for each pay run
- Review employee hours and leave balances
- Double-check tax rates and deductions
- Approve and distribute payslips promptly
For a complete walkthrough, refer to the official Xero Payroll guide.
Xero payroll features & integration options
Xero isn’t just about getting employees paid. Let’s break down the features and how payroll integrates with other tools.
Xero payroll includes:
- Built-in timesheets for easy hour tracking
- Employee self-service portal for payslips and leave
- Direct tax filing (PAYE/ATO)
- Leave management tools
- Integration with accounting, projects, and HR add-ons
IMAGE: Visual comparison of Xero payroll integrations (purpose: highlight connections with other business tools).
Summary Table:
| Feature | Benefit | Integration Example |
|---|---|---|
| Timesheets | Auto-calculate pay | Xero Projects |
| Employee Portal | Staff manage own info | Xero Me App |
| Tax Filing | File PAYE/ATO returns online | IRD/ATO direct filing |
| Leave Management | Track and approve leave | Google Calendar, Xero Calendar |
| Third-party Add-ons | Extend payroll functions | Integrate with HR systems |
To learn more, read Business.govt.nz’s guide to payroll software and see the Xero app marketplace.
For more on using Xero Payroll efficiently, check out our full review and setup guide.
Common payroll issues and tips for small businesses in Xero
No payroll system is perfect. Here’s how to avoid common problems when you add payroll to Xero.
- Double-check all employee details before your first pay run
- Stay updated with tax rates and legislation (NZ/AU)
- Use Xero’s help centre for troubleshooting
- Set reminders for payroll deadlines
- Schedule regular payroll audits to catch mistakes early
IMAGE: Support portal or troubleshooting screen (purpose: reassure users they have help when stuck).
Practical tip: If you’re switching from another payroll system, review your migration steps and check your settings line by line. For a direct comparison of Xero vs other platforms, see our review here.
External link: For support, visit the Xero Help Centre or the IRD payroll page.
Bonus for add payroll to Xero
Want to get more out of your payroll setup? Here are extra tips to maximise Xero’s value:
- Integrate payroll with HR tools and rostering software for smoother workflows
- Use the Xero Me mobile app to manage payroll on the go
- Automate regular deductions and KiwiSaver/Super contributions
- Explore reporting features for insights into staff costs
- If moving from another payroll platform, consider a test run before going live
IMAGE: Mobile phone showing Xero Me app (purpose: highlight flexibility for users and staff).
For expert help, consider consulting a Xero-certified advisor or bookkeeper. You can find a local specialist or contact BH Accounting’s Xero specialists for tailored advice.
Conclusion: Simplify payroll by adding it to Xero
Adding payroll to Xero is one of the smartest moves you can make for your business. By centralizing payroll and accounting in one place, you reduce admin time, boost accuracy, and make compliance much simpler. With features like real-time reporting, easy leave management, and seamless integration, Xero payroll adapts to your needs whether you’re running a small team or growing fast. If you’re ready to streamline your payroll, take the first step and start your Xero payroll setup today. For help or a tailored solution, reach out to our team at BH Accounting or check out our Xero payroll resources.
FAQ about add payroll to Xero
How do I enable payroll in Xero?
You can enable payroll in Xero from your dashboard by selecting “Payroll” and following the guided setup prompts.
What information do I need before I add payroll to Xero?
You’ll need your business tax details, employee records, a payroll calendar, and a Xero payroll subscription.
Is Xero payroll suitable for small businesses?
Yes, Xero payroll is designed for small to medium businesses, offering scalable features and local compliance.
Can I integrate Xero payroll with other HR or accounting tools?
Absolutely. Xero payroll integrates with HR, timesheet, and accounting apps, making business management easier.
Where can I get support for Xero payroll setup?
Visit the Xero Help Centre or get in touch with BH Accounting for personalized assistance.