Almost half of all NZ businesses use an online payroll software package.

Knowing that their accounts and payroll are up to date, compliant, and secure is helping thousands of small business owners sleep soundly at night.

Xero, the Kiwi-born company whose cloud-based accounting software is used around the world, has been widely adopted by companies across New Zealand – with more businesses moving across to the platform every day.

Xero also has an add on payroll software solution that helps employers pay staff and organise their employee details, leave requests and timesheets in one place.

Joanne Stanyer, Xero's New Zealand Product Director, says using any type of online payroll software, particularly with the ability to meet Inland Revenue's new payday filing requirements, is helping almost half of all business owners in New Zealand comply with tax rules and reduce the risk of human error.

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Take, for example, something an employer will do every pay-run: send the payday report to Inland Revenue. Xero has crunched the time-and-motion numbers and estimates that using its software could save business owners at least 16 hours a year in admin time, by automatically passing through details to Inland Revenue when the pay run is done.

"Payroll in Xero automates so many of the routine tasks that it makes life a lot easier for owners of SMBs," says Stanyer. Users can set up and pay employees and contractors, manage leave and send payslips and calculate taxes automatically. Users access Xero with a web browser or smartphone app and, once securely logged in, the system auto-saves entries and constantly backs up data. There's little risk of losing work due to freezing apps, computer crashes, power cuts or dropped connections. Employees get their own app to apply for leave, submit timesheets and view their payslips.

"And because the software is securely stored in the cloud, our engineers can routinely update it without the hassle of additional downloads or updates," says Stanyer.

Xero is not like having old-style software installed on your computer and having to cross your fingers while installing an update when tax rules change, or your hand is forced due to a newer operating system on your PC.

Most firms will likely opt for the standard Xero $60-a-month package, with additional options for payroll, job management and employee expenses.

"Xero makes the business of keeping accounts, sending invoices, recording purchases and checking up on sales easy," says Stanyer. "New customers tell us they will never go back to what they were using before."

She concedes some business owners are reluctant to change and puts this down to people being comfortable with what they use. Once people start using an online system they quickly realise how much time they could be saving - payroll is just the start!

Xero and its Xero-certified accountants and bookkeepers can do a lot to make the transition as painless as possible. There's also a free trial option if you just want to familiarise yourself with the package before jumping in feet first.

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"Customers can sign up and trial Xero in tandem with their current system, to do some test runs. Once the data is transferred, users quickly see why they wouldn't want to go back to paper, a calculator, and fussy spreadsheets," she says.

"What some people find is when they set up their payroll properly with the software, they pick up mistakes that may have been happening for quite some time – because payroll is a complex issue, difficult to get right.

"Why would you use pieces of paper and spreadsheets that may be hard to share and keep up to date?"

It's that access to information which helps give Xero an edge; authorised people can log in to check transactions and take the pulse of the business, any time, anywhere. All that's needed is a smartphone and an internet connection. It's so much easier and more secure than having spreadsheets flying around the internet or relying on manual systems.

"Because small businesses are dealing with their important financial and employee information on Xero, our platform is certified to a globally recognised high security standard," says Stanyer. "We are compliant with latest information security standards and our systems are independently audited."