Best Payroll Software for NZ Businesses in 2025
Payroll in New Zealand is complex. Between PAYE calculations, KiwiSaver contributions, Holidays Act compliance, and regular IRD reporting, getting it wrong can cost your business thousands in penalties. This comprehensive guide compares the best payroll software for NZ businesses in 2025.
Quick Recommendation
For most small businesses (1-20 employees): PaySauce ($8-$12 per employee/month) offers the best balance of features, compliance, and price. For larger teams (20+), SmartPayroll ($6-$10 per employee/month) provides enterprise features at scale.
Why NZ Businesses Need Payroll Software
Processing payroll manually or with spreadsheets might seem cost-effective for very small businesses, but the risk far outweighs the savings. Here's why payroll software is essential:
Compliance Confidence
NZ payroll legislation changes regularly. The Holidays Act 2003 alone has caused millions in remediation costs for businesses. Payroll software automatically updates calculations to reflect current legislation, protecting you from costly errors.
Time Savings
Automated PAYE calculations, KiwiSaver deductions, automatic IRD filing, and employee self-service save 3-5 hours per pay run. That's 6-10 hours per month for fortnightly payroll.
Error Reduction
Manual payroll calculations are prone to errors. Incorrect PAYE, KiwiSaver, or student loan deductions can result in IRD penalties of up to $50,000 plus interest. Software eliminates calculation errors.
Employee Satisfaction
Modern payroll software offers employee portals where staff can access payslips, request leave, update details, and view their KiwiSaver balance. This reduces admin queries and empowers employees.
Real Cost of Non-Compliance: In 2020-2023, many NZ businesses discovered Holidays Act calculation errors going back years. Some faced remediation bills exceeding $100,000. Proper payroll software prevents these issues.
NZ Payroll Compliance Requirements
New Zealand payroll software must handle these mandatory compliance requirements:
PAYE (Pay As You Earn)
Automatic calculation of income tax based on IRD tax codes (M, ME, SB, S, SH, ST, etc.). Must handle secondary employment tax rates, extra pay periods, and tax code changes mid-year. Filing to IRD required after each pay run.
KiwiSaver Contributions
Employee contributions (3%, 4%, 6%, 8%, or 10%), employer contributions (minimum 3%), and automatic enrolment for new employees. Must handle opt-outs, contribution holidays, and provider transfers.
Holidays Act 2003 Compliance
Complex leave calculations including annual leave (4 weeks), sick leave (10 days after 6 months), bereavement leave (3 days), public holidays, alternative holidays, and leave entitlements for varying hours/pay. This is where most businesses make expensive errors.
Student Loan Deductions
Automatic deductions when employee earnings exceed threshold ($24,128 for 2024-25). Rates vary: 12% standard, different rates for borrowers overseas. Must track threshold annually.
ACC Levies (Employer Portion)
While not deducted from employee pay, payroll software should track ACC levy liability based on industry classification and payroll totals for accurate financial planning.
Employment Standards
Minimum wage compliance ($23.15/hour for adults as of April 2024), accurate record-keeping for 7 years, and proper classification of employees vs contractors.
Top Payroll Software Options in NZ 2025
1. PaySauce
Best for Small to Medium Businesses
$8-$12
per employee/month
100% NZ-owned and operated, PaySauce is designed specifically for New Zealand payroll compliance. Modern interface, excellent mobile app, and comprehensive Holidays Act calculations. Strong focus on small to medium businesses (1-100 employees).
Strengths
- • Holidays Act 2003 fully compliant (verified)
- • User-friendly mobile app for employees
- • Automatic PAYE, KiwiSaver, student loan calculations
- • Direct IRD integration for payday filing
- • Leave management with approval workflows
- • Integrates with Xero and MYOB
- • Geofenced timesheets (staff clock in via location)
- • Excellent NZ-based support
Limitations
- • Higher per-employee cost than competitors
- • Not ideal for very large enterprises (100+ staff)
- • Reporting less customizable than SmartPayroll
- • No built-in rostering (requires integration)
Best for: Service businesses, retail, hospitality, trades, professional services with 1-100 employees who need strong Holidays Act compliance and mobile access.
2. SmartPayroll
Best for Medium to Large Businesses
$6-$10
per employee/month
NZ's largest payroll provider, owned by MYOB. Processes payroll for over 100,000 NZ employees. Comprehensive features, excellent for businesses with 20+ employees, and strong reporting capabilities. More complex interface but very powerful.
Strengths
- • Most cost-effective at scale (100+ employees)
- • Advanced reporting and customization
- • Multi-company payroll management
- • Excellent Holidays Act compliance
- • Seamless MYOB integration (owned by MYOB)
- • Strong audit trails and compliance documentation
- • Handles complex pay structures (allowances, deductions)
- • Dedicated account managers for larger clients
Limitations
- • Steeper learning curve than PaySauce
- • Interface feels dated compared to newer platforms
- • Employee self-service less intuitive
- • Setup can be complex for small businesses
Best for: Medium to large businesses (20-500+ employees), companies with multiple entities, businesses using MYOB accounting, complex pay structures with many allowances.
3. iPayroll
Best for Accountants & Multi-Client Management
$7-$11
per employee/month
Popular with accounting firms and bookkeepers who manage payroll for multiple clients. Strong compliance features, excellent Xero integration, and flexible enough to handle diverse client needs. Good middle ground between PaySauce simplicity and SmartPayroll complexity.
Strengths
- • Excellent for accountants managing multiple clients
- • Strong Xero integration (two-way sync)
- • Holidays Act 2003 compliant
- • Flexible pay structures and custom pay items
- • Good employee self-service portal
- • Reasonable pricing for mid-size businesses
- • Comprehensive leave management
Limitations
- • Less intuitive than PaySauce for end-users
- • Mobile app not as polished
- • Not as cost-effective at large scale (100+)
- • Reporting less comprehensive than SmartPayroll
Best for: Accounting firms, bookkeepers managing client payrolls, businesses using Xero, 5-50 employee businesses wanting flexibility without complexity.
4. Xero Payroll
Best for Xero Users on a Budget
$5-$10
per employee/month
Built into Xero accounting software as an add-on module. Convenient if you're already using Xero, but more limited than dedicated payroll platforms. Good for very small teams (1-10 employees) with simple pay structures.
Strengths
- • Seamless Xero integration (native)
- • Lowest cost option ($5 per employee)
- • Simple for basic payroll needs
- • Automatic PAYE filing to IRD
- • All payroll data in one system (with accounting)
Limitations
- • Limited Holidays Act calculations (basic only)
- • No mobile app for employees
- • Basic leave management (not suitable for complex needs)
- • Less comprehensive than dedicated payroll software
- • Not recommended for hospitality/retail (variable hours)
Best for: Very small businesses (1-10 employees), simple pay structures (salaried staff, consistent hours), businesses already using Xero accounting who want convenience.
Detailed Feature Comparison
| Feature | PaySauce | SmartPayroll | iPayroll | Xero Payroll |
|---|---|---|---|---|
| Holidays Act Compliance | Excellent | Excellent | Very Good | Basic |
| Employee Self-Service | Excellent (Mobile App) | Good (Web Portal) | Good (Web Portal) | Limited |
| Xero Integration | Yes (Two-way) | Yes (One-way) | Excellent (Two-way) | Native |
| MYOB Integration | Yes (One-way) | Excellent (Owned by MYOB) | Yes (One-way) | No |
| Timesheet/Rostering | Geofenced Timesheets | Via Integration | Via Integration | No |
| Leave Management | Excellent (Mobile Requests) | Very Good | Very Good | Basic |
| Reporting | Good (Standard Reports) | Excellent (Custom Reports) | Good | Basic |
| Multi-Company | Yes | Excellent | Yes | Limited |
| Ease of Use | Excellent (Very Intuitive) | Good (Complex Features) | Good | Very Good (Simple) |
| Best For Team Size | 1-100 employees | 20-500+ employees | 5-100 employees | 1-10 employees |
Pricing Comparison 2025
Payroll software pricing in New Zealand is typically per-employee per-month. Here's what you can expect to pay:
PaySauce
$8-$12 Starter: $8 per employee/month (up to 10 employees)
Standard: $10 per employee/month (11-50 employees)
Premium: $12 per employee/month (50+ employees)
Example: 15 employees = $150/month. Includes full Holidays Act compliance, mobile app, leave management, IRD filing.
SmartPayroll
$6-$10 Essentials: $10 per employee/month (1-20 employees)
Business: $8 per employee/month (21-100 employees)
Enterprise: $6 per employee/month (100+ employees)
Example: 50 employees = $400/month. Volume discounts make this most cost-effective at scale.
iPayroll
$7-$11 Small Business: $11 per employee/month (1-10 employees)
Medium Business: $9 per employee/month (11-50 employees)
Large Business: $7 per employee/month (50+ employees)
Example: 25 employees = $225/month. Good value for mid-sized businesses.
Xero Payroll
$5-$10 Payroll Add-on: $5 per employee/month (added to Xero subscription)
Note: Requires active Xero subscription ($25-$95/month)
Example: 5 employees = $25/month + Xero subscription. Most affordable for very small teams.
Cost Comparison for 20 Employees:
PaySauce: $200/month ($10 each)
SmartPayroll: $160/month ($8 each)
iPayroll: $180/month ($9 each)
Xero Payroll: $100/month + Xero subscription ($70) = $170/month total
Best Payroll Software by Business Size
1-5 Employees: Xero Payroll or PaySauce
Recommended: Xero Payroll if you use Xero accounting, otherwise PaySauce
At this size, cost and simplicity matter most. Xero Payroll ($25/month total) is hard to beat if you're already using Xero. PaySauce ($40-50/month) offers better features and Holidays Act protection if you have variable hours or casual staff.
6-20 Employees: PaySauce
Recommended: PaySauce ($80-200/month)
Sweet spot for PaySauce. You need robust Holidays Act compliance but don't want the complexity of SmartPayroll. The mobile app and employee self-service significantly reduce admin time. Excellent for retail, hospitality, and trades.
20-50 Employees: PaySauce or SmartPayroll
Recommended: PaySauce if you want ease of use, SmartPayroll if you need advanced reporting
At 20+ employees, both options are viable. Choose PaySauce ($200-500/month) if you value user experience and mobile access. Choose SmartPayroll ($160-400/month) if you need detailed reporting, audit trails, and have dedicated payroll staff.
50-100 Employees: SmartPayroll
Recommended: SmartPayroll ($400-600/month)
At this scale, SmartPayroll's volume pricing ($8 per employee) makes it more cost-effective than PaySauce ($12 per employee). You likely have dedicated payroll staff who can handle the steeper learning curve.
100+ Employees: SmartPayroll
Recommended: SmartPayroll Enterprise ($600+ month)
For large businesses, SmartPayroll's enterprise features (multi-company management, advanced reporting, dedicated support, volume discounts to $6 per employee) make it the clear choice. Also consider integrated HR software at this size.
Accounting Software Integration
Your payroll software should integrate seamlessly with your accounting software to avoid double data entry. Here's how the major payroll platforms integrate:
Xero Integration
Best Integration: Xero Payroll (native) and iPayroll (two-way sync)
- • Xero Payroll: Native integration, all data in one system, payroll journals automatically posted
- • iPayroll: Two-way sync, automatic journal posting, excellent data flow
- • PaySauce: Two-way sync, automatic posting, very reliable
- • SmartPayroll: One-way sync (payroll to Xero), manual journal posting sometimes required
MYOB Integration
Best Integration: SmartPayroll (owned by MYOB)
- • SmartPayroll: Excellent integration (owned by MYOB), seamless journal posting
- • PaySauce: One-way sync to MYOB, reliable data flow
- • iPayroll: One-way sync available
- • Xero Payroll: Not compatible with MYOB
Integration Tip: If you use Xero, consider iPayroll or PaySauce for the best two-way sync. If you use MYOB, SmartPayroll is the obvious choice. Proper integration saves 2-3 hours per pay run.
Implementation Guide: Setting Up Payroll Software
Implementing payroll software requires careful setup to ensure compliance from day one. Follow this checklist:
Pre-Implementation (2-4 Weeks Before)
- 1. Choose your start date (ideally start of pay period or financial year)
- 2. Gather employee information: IRD numbers, tax codes, KiwiSaver rates, bank accounts, employment agreements
- 3. Calculate leave balances as of start date (annual leave, sick leave, alternative holidays)
- 4. Document pay structures (rates, allowances, regular deductions)
- 5. Ensure IRD employer registration is current (employer IRD number)
Setup (Week 1)
- 1. Create company profile (business name, IRD number, address, pay frequency)
- 2. Configure pay calendar (pay dates, period end dates)
- 3. Set up pay items (salary, wages, allowances, deductions)
- 4. Import or manually enter employee records
- 5. Enter leave balances (critical for accurate accruals)
- 6. Connect accounting software integration
- 7. Set up IRD filing integration
Testing (Week 2)
- 1. Run a test payroll with dummy data
- 2. Verify PAYE calculations against IRD tax tables
- 3. Check KiwiSaver deductions (employee and employer portions)
- 4. Test leave calculations (annual leave, sick leave)
- 5. Review payslips for accuracy
- 6. Confirm accounting integration journals are correct
- 7. Have your accountant review the setup
DO: Run Parallel Payroll First Month
For your first 1-2 pay runs, process payroll in both your old system and new system. Compare outputs to catch any discrepancies before they affect employees. This gives you confidence in accuracy.
DO: Get Professional Help
Consider paying for implementation support from the software provider ($200-$500) or hiring a payroll specialist for initial setup ($500-$1,500). This prevents costly compliance errors and saves time.
DO: Communicate with Employees
Inform employees about the change 2-3 weeks in advance. Explain how to access payslips, use the self-service portal, and request leave. Provide training on the employee mobile app if applicable.
DON'T: Switch Mid-Year Without Reason
Avoid switching payroll software mid-financial year unless necessary. Year-to-date figures (PAYE, KiwiSaver, leave accruals) can be complex to transfer. Start of financial year (April 1) is ideal.
DON'T: Ignore Historical Leave Balances
Accurately entering leave balances is critical. Incorrect balances lead to incorrect leave pay and potential Holidays Act breaches. Double-check every employee's leave balance before going live.
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