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Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

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Payroll Announcement from Xero, should I consider changing my Payroll provider

Written by Anthony McIlroy on February 27th, 2015.      0 comments

Earlier this week Xero announced that they will be releasing a Payroll offering to the NZ market as well as going live with a similar offering in the UK. You can read more about that here.

The Australians and American’s already have a Payroll offering from Xero, so this is welcome news that it’s finally reached the home of Xero – the land of the long white cloud.

New Zealand already has an established add-on offering of Payroll providers. The one that we use regularly use with clients at Alliott NZ is Smart Payroll.
 

So what's the difference?

Now you might think that Payroll is Payroll and that’s it. But, like much in life, nothing is ever as clear cut as it first seems.
 
Firstly, Smart Payroll can act as an intermediary between your business and the Inland Revenue.
This means they take care of the tax payments and lodging the necessary forms with the department each month.
Xero’s offering is not an intermediary meaning that payments to the Inland Revenue are still made by yourself before the required date each month and the Xero Payroll system doesn't automatically file the necessary forms with the Inland Revenue. Xero have noted that this is something that they will address in future upgrades, but it isn’t available in the first version to be released.
 
Secondly, there 's the Pricing Model.
Xero Payroll comes free for one employee on a standard plan, but for 2-10 employees the additional cost is $25 per month. Not much in the scheme of things, particularly if you are closer to the higher end of those employee figures. There is no additional charging for the frequency of your pay runs.

Smart Payroll takes a different approach. A first off initial setup fee of $50. A standard monthly fee of $18.50 and then 99c per pay run for 1-5 employees. So for 2 employees with a weekly pay run the total cost is $27.08, or $39.95 for 5 employees.
 

Comparison - Xero vs. Smart Payroll

 
Xero
Smart Payroll
Calculates Pay
yes tick yes tick
Automatically current with Payroll tax legislation
yes tick yes tick
Accessible anywhere
yes tick yes tick
Files Payroll forms with Inland Revenue
btn icon bin yes tick
Automatically facilitates payments to your employees & Inland Revenue
btn icon bin yes tick
Pricing
Setup fee
n/a $50
Monthly pay runs (x2 employees)
$25 $20.48
Weekly pay runs (x2 employees)
$25 $27.08
Monthly pay runs (x7 employees)
$25 $26.75
Weekly pay runs (x7 employees)
$25 $54.25
 

Conclusion

As a business owner you need to balance the costs versus the benefits. Smart Payroll on balance is more expensive, but it is “set and forget”, leaving you as a business owner to focus on running the business and generating further sales, it is for this reason we think add on providers like Smart Payroll will be around for years to come.
 

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