Xero Adds Integrated Payroll System to Cloud Accounting Program

Cloud accounting software maker Xero has launched a new integrated payroll system designed to help small businesses manage payroll preparation and reporting requirements.

Initially, the payroll system supports only the three top employer states in the U.S.: California, Florida, and Texas, providing integrated payroll for electronic filing and payment for state and federal payroll taxes in these states. Xero intends to roll out payroll support to small businesses in all 50 states by the end of 2015.

There are approximately 5.1 million small business employer firms in the US with fewer than 20 employees. More than a third of all small businesses are regularly fined for payroll-related mistakes. Last year, the IRS issued nearly 7 million penalties, totaling $4.5 billion, to U.S. businesses for making payroll errors. Electronic preparation, management and reporting of payroll processes can help small business employers meet their tax obligations while decreasing the potential of missing key deadlines and incurring costly fines.

“Switching to Payroll in Xero from manual payroll processing has already saved me over 45 hours in time a month. The launch of electronic filing and payment will add even further savings as it means that I’ll never need to worry about costly state or federal penalties again,” said Xero customer, Steve Chaney, CPA, Managing Partner, Chaney & Associate

This launch follows Xero’s success in offering payroll in other countries where it processes billions of dollars each month for tens of thousands of businesses. According to the company, more than 40 percent of Xero’s customers already use Xero’s payroll software in countries where it is available.

Unlike some add-ons or third-party services, Xero is offering accounting and payroll as one solution starting at $30 a month. Small businesses in the supported states, along with their accountants and bookkeepers, can now access payroll from their Xero homepage.

“Xero’s global platform and approach allow us to develop and learn from other countries and we’re excited to launch these innovations in the vast US market. We’re building on our success in Australia where we process over AU $1.5 billion of payroll transactions monthly to over 375,000 employees. Plus we’re building on the recent acquisition of Monchilla in the US and the scaling of our development teams globally. This is the start of a wave of product innovations launching early this year. These innovations will deliver on our vision of a fully integrated platform for small businesses to work and collaborate on,” said Rod Drury, Xero CEO.

With the integration of its online accounting platform with payroll, Xero is unique in the market for its ability to track employee’s vacation balances on the balance sheet as a liability. This means that when small businesses run payroll, Xero’s accounting dashboard automatically updates to show a true real-time view of their cashflow balance minus employee salaries and wages and allowing for vacation balances. Payroll in Xero also includes integrated timesheets, full Paid Time Off (PTO) management, a self-service portal and flexible payroll schedules.