Payroll Software FAQs

Payroll software automates the calculation, processing, and payment of employee wages while ensuring compliance with NZ employment and tax laws. It manages PAYE tax calculations, KiwiSaver contributions, student loan deductions, ACC levies, leave accruals (annual, sick, bereavement), public holiday payments, and generates payslips and IRD filings. NZ businesses need payroll software because: manual payroll is time-consuming (3-8 hours per pay period for 10 employees), errors are costly (incorrect tax deductions can result in IRD penalties and employee grievances), compliance is complex (Holidays Act calculations are notoriously difficult), and it provides audit trails for legal protection. Even businesses with one employee benefit from payroll software to ensure accurate PAYE and leave calculations. Cost ranges from $5-25 per employee monthly, far less than the cost of payroll mistakes or time spent on manual calculations.

NZ payroll software pricing varies by features and employee count. Entry-level solutions cost $5-10 per employee per month (minimum $20-50/month) covering basic payroll, PAYE, and leave. Mid-tier options cost $10-20 per employee monthly ($100-300/month for 10-15 employees) with advanced features like KiwiSaver, timesheets, and HR integration. Enterprise solutions cost $20-40+ per employee monthly with comprehensive features, multiple pay rates, complex allowances, and dedicated support. Popular pricing examples: PayHero $5-8/employee, SmartPayroll $7-15/employee, Xero Payroll $10/month base + $2/employee, MYOB Payroll $10-20/employee. Additional costs include setup fees ($100-500), training ($200-1,000), and integration costs. Total annual cost for a 10-employee business typically runs $1,200-3,600. Compare this to accountant-managed payroll at $50-150 per pay run ($1,200-7,800 annually for fortnightly pay) or payroll errors potentially costing thousands in penalties and corrections.

Essential payroll software features for NZ businesses include: PAYE Compliance (accurate tax calculations for all tax codes including M, ME, SB, S, SH, ST), KiwiSaver Administration (automatic employee and employer contributions, IRD filing), Leave Management (annual leave, sick leave, bereavement, public holidays compliant with Holidays Act 2003), Pay Run Processing (multiple pay frequencies, different pay rates, allowances, deductions), Payslip Generation (digital payslips, employee self-service access), IRD Filing (automatic employment information filing, year-end IR348 forms), Reporting (wage reports, leave liability, employee summaries, costing reports), Time & Attendance (timesheet integration, overtime calculations), Direct Bank Payments (batch payment files for banks), and Employee Records (emergency contacts, tax codes, bank details, employment agreements). For NZ-specific needs, ensure software correctly handles: public holidays (11 days + provincial anniversary days), otherwise working days, alternative holidays, and average weekly earnings calculations for leave.

Yes, most modern payroll software integrates with popular accounting platforms. Common integrations include: Xero (integrates with PayHero, SmartPayroll, iPayroll, or built-in Xero Payroll), MYOB (integrates with SmartPayroll, iPayroll, or uses MYOB Payroll), QuickBooks Online (integrates with PayHero, Employment Hero, or QuickBooks Payroll), and Sage (integrates with various third-party payroll providers). Integration benefits include automatic journal entry posting (wages expense, PAYE liability, KiwiSaver liability sync directly to accounting), elimination of double entry, accurate financial reporting, streamlined reconciliation, and real-time financial visibility. Integration types vary: native (built by same provider, seamless sync), API-based (two-way real-time sync), or file-based (export/import CSV files). When choosing payroll software, verify: does it integrate with your accounting software? Is integration two-way or one-way? What data syncs automatically? Are there additional integration costs? Quality integrations save 3-5 hours monthly on data entry and reconciliation.

Reputable NZ payroll software providers maintain compliance with current employment and tax legislation including: Holidays Act 2003 (complex leave calculations, public holidays, otherwise working days), Employment Relations Act (minimum wage compliance, record-keeping requirements), Income Tax Act (PAYE schedules, tax codes, student loans, KiwiSaver), Privacy Act (secure employee data handling), and Minimum Wage Act (regular updates when minimum wage changes). However, compliance is shared responsibility - software provides tools but you must: set up correctly (accurate employee details, tax codes, pay rates), update when legislation changes (most software auto-updates), verify calculations (spot-check payslips), maintain proper records, and ensure employment agreements match payroll settings. Choose software that: updates automatically for legislative changes, is certified or recognized by IRD, provides NZ-specific support, and maintains documentation. Penalties for non-compliance include IRD penalties (interest and fines on incorrect PAYE), employment disputes ($5,000-30,000+), and ACC penalties for incorrect levies.

Setup difficulty varies by software complexity and business needs. Basic setup (2-5 hours for small business under 10 employees) involves: creating company account, entering business details (IRD number, NZBN), adding employees (personal details, tax codes, pay rates, bank accounts), configuring pay schedule (weekly, fortnightly, monthly), setting up leave policies, and connecting bank account. Complex setup (10-30 hours for larger or complex businesses) additionally requires: multiple pay rates and allowances, various employment types (salary, hourly, contractor), timesheet integration, custom leave policies, multiple departments/cost centers, and historical data migration. Most modern cloud payroll software is designed for non-payroll experts - interfaces are intuitive, with step-by-step wizards. Learning curve is typically 1-2 pay runs to feel comfortable. Most providers offer: video tutorials, knowledge bases, onboarding support (included or $200-1,000 fee), and customer support via phone/email. Consider professional setup ($500-2,000) if you have: complex pay structures, large employee count, historical data to migrate, or limited time for learning.

Cloud-based payroll (like PayHero, SmartPayroll, Xero Payroll) operates online via web browser with benefits: access from anywhere (home, office, mobile), automatic updates (tax rates, legislation changes), automatic backups (no data loss risk), multi-user access (accountant, bookkeeper, HR can access), lower upfront cost (subscription vs purchase), and easier setup (no installation). Desktop payroll (like MYOB Classic) installs on your computer with benefits: works without internet, one-time purchase option (though updates require subscription), perceived greater data control, and comprehensive features for complex payroll. In 2025, cloud payroll is recommended for most NZ businesses because: 90% of payroll providers focus on cloud, automatic compliance updates are critical, remote work requires anywhere access, data security is typically better (enterprise-grade servers vs local computer), and cost is lower long-term. Choose desktop only if: you have unreliable internet, specific advanced features unavailable in cloud, or strong preference for local data storage. Most new NZ payroll software is cloud-only - desktop options are diminishing.

Yes, quality payroll software manages multiple employment types. Capabilities include: Full-time Salary (fixed annual salary, divided by pay periods, with leave entitlements), Part-time Hourly (hourly rates, varying hours, pro-rata leave), Casual Workers (hourly rates, no leave accrual, 8% holiday pay option), Contractors (invoiced amounts, no PAYE/KiwiSaver unless schedular payment), Commission-based (base salary plus commission calculations), and Multiple Jobs (different tax codes for second jobs - typically SB). Advanced features support: different pay rates for different roles/times, allowances (vehicle, uniform, tools), overtime rates (time and a half, double time), bonuses and one-off payments, and piece rates. For contractors, most software can track payments but doesn't deduct PAYE (unless they're schedular payments requiring tax deduction). Setup involves: defining employment type, setting pay structure, configuring leave entitlements, and assigning correct tax codes. Ensure your chosen software supports your specific pay structures - test during free trial with real scenarios.

Payroll software automates KiwiSaver administration including: employee deductions (automatically calculating 3%, 4%, 6%, 8%, or 10% based on employee choice from gross salary), employer contributions (minimum 3% of gross earnings, can be higher if company chooses), opt-out handling (tracking opt-out periods, suspending deductions), automatic enrollment (identifying employees requiring enrollment after 3 months), KiwiSaver contribution tax (ESCT calculation on employer contributions), IRD filing (monthly employer deductions filing), and year-end reporting (annual KiwiSaver statements). The software tracks who's enrolled, who's opted out, contribution rates, ESCT rates (based on employee salary), and generates files for IRD filing. Benefits include accurate calculations (complex ESCT rates calculated automatically), compliance assurance (mandatory contributions made on time), employee transparency (KiwiSaver shown on payslips), and simplified administration (automatic IRD submissions). Employers must: ensure correct employee choices recorded, contribute minimum 3%, file and pay to IRD by 20th of following month, and provide KiwiSaver details to new employees. Penalties for non-compliance can reach $50,000.

Payroll mistakes require prompt correction. Common errors and remedies: Underpayment (pay shortfall immediately, provide corrected payslip, apologize to employee, if pattern occurs may face employment dispute), Overpayment (discuss with employee before recovery, agreement required for deductions over one pay period, cannot deduct more than 10% of gross per pay without agreement), Incorrect PAYE (correct through IR344 form to IRD, amend employee year-end information, may incur interest charges from IRD), Wrong Leave Balances (correct in system, adjust future pay if needed, document changes), and Missed KiwiSaver (pay overdue contributions plus interest to IRD, file amended returns). Prevention strategies: double-check pay runs before finalizing, review payslips for anomalies, reconcile to previous periods, maintain accurate employee records, and provide payroll training. Most payroll software allows corrections before finalizing, reversal of finalized pay runs (within limits), and adjustment entries. Serious or systematic errors can result in: employment disputes ($5,000-30,000+ penalties), IRD investigations and penalties, employee trust erosion, and legal costs. If unsure, consult payroll specialist or employment lawyer ($200-500/hour).

Not necessarily - options include: integrated solutions (single platform handling timesheets and payroll like Deputy, Tanda, Employment Hero), separate but connected systems (timesheet software integrating with payroll like Timely + Xero Payroll), or standalone with manual entry (timesheet system, manually enter hours to payroll). Integrated benefits include: no double entry (hours flow directly to pay), reduced errors (manual entry mistakes eliminated), faster processing (payroll ready when timesheets approved), real-time costing (labor costs visible immediately), and simplified management (one system to learn). Separate systems suit businesses with: existing payroll they're happy with, industry-specific timesheet needs (job costing, project tracking), or desire for best-of-breed in each category. For most NZ businesses with hourly workers, integrated or connected systems (via API) are recommended - time savings of 2-5 hours per pay period and reduced errors justify any additional cost. Industries benefiting most from timesheet integration: hospitality, retail, construction, healthcare, and professional services with billable hours.

NZ payroll software must correctly calculate the complex public holiday entitlements under the Holidays Act. Key calculations include: 11 National Public Holidays (New Year's Day, Day after New Year, Waitangi Day, Good Friday, Easter Monday, ANZAC Day, Queen's Birthday, Matataiki, Labour Day, Christmas Day, Boxing Day) plus Provincial Anniversary Days (varies by region), Otherwise Working Day determination (would employee normally work this day?), Payment calculation (if employee works: time and a half for hours worked plus alternative holiday if otherwise working day; if employee doesn't work but it's otherwise working day: relevant daily pay or average daily pay), Alternative Holiday (full day off to be taken later when employee works on public holiday that's otherwise working day), and Mondayisation (when public holiday falls on weekend, observed on following Monday for most workers). Software should: automatically load NZ public holidays (including regional variations), prompt you to confirm otherwise working days for each employee, calculate correct pay rates automatically, generate alternative holidays, and track alternative holiday balances. These calculations are among NZ's most complex employment requirements - quality software is essential to avoid costly mistakes.

Most modern cloud payroll software offers mobile access through: dedicated mobile apps (iOS and Android apps with payroll functions like PayHero, Employment Hero, Deputy), responsive web interfaces (websites that work on mobile browsers), or limited mobile functionality (view-only or specific features). Mobile capabilities typically include: employee self-service (viewing payslips, leave balances, requesting leave), manager functions (approving timesheets and leave requests), basic payroll processing (running pay, reviewing payslips), and notifications (alerts for timesheet approvals, payroll reminders). Employee mobile access is particularly valuable - 70% of employees prefer mobile payslip access over email/paper. Benefits include: anywhere approval (managers approve on-go), employee convenience (access payslips anytime), faster responses (push notifications), and reduced admin (self-service reduces HR queries). Limitations on mobile: complex setup and configuration better on desktop, detailed reporting easier on large screens, and bulk data entry impractical on mobile. Choose software with strong mobile app if you have: remote workers, managers on-the-go, field employees, or distributed teams.

Comprehensive payroll software provides essential reports including: Payroll Summary (total wages, PAYE, KiwiSaver, deductions per pay period), Employee Earnings (individual or grouped by department, pay period, or custom dates), Leave Reports (leave balances, leave liability, leave taken), PAYE Reports (tax deducted, IRD payments due), KiwiSaver Reports (contributions by employee, employer, total), Cost Center Reports (labor costs by department, project, location), Year-to-Date Reports (cumulative earnings, tax, deductions per employee), IRD Filing Reports (IR348, employer deductions), Payment Files (bank payment summaries), and Custom Reports (depending on software capabilities). These reports support: financial planning (labor cost analysis, budgeting), compliance (audit trails, IRD submissions), decision-making (overtime trends, department costs), and year-end processing (employee annual summaries, tax reconciliation). Advanced software offers: customizable reports, scheduled automated reports (email weekly summaries), and data export (CSV, Excel for further analysis). When evaluating software, verify it produces reports you need - request demo showing your specific reporting requirements.

Compare in-house payroll software vs outsourced payroll services based on cost, control, and complexity. In-house with software: pros include lower cost for larger teams ($1,500-4,000 annually for 10-20 employees), complete control and flexibility, immediate access to information, easy adjustments, and develops internal expertise. Cons include time investment (2-4 hours per pay period), compliance responsibility, setup and learning required, and staying current with legislation. Outsourced payroll: pros include time saving (zero time spent on processing), expert compliance management, reduced error risk, professional support, and scalable service. Cons include higher cost ($50-150 per pay run = $2,600-7,800 annually fortnightly for 10-20 employees), less control and flexibility, dependency on provider, and communication delays. Choose in-house software if: you have 10+ employees (better value), need frequent pay adjustments, want complete control, have time to learn and manage, or have bookkeeper/admin who can handle it. Outsource if: you have under 10 employees, limited time for payroll, complex payroll needs requiring expertise, or prefer to focus on core business. Hybrid option: use software but engage bookkeeper/accountant for monthly reconciliation and IRD filings.