Xero announces native payroll solution

Small business accounting platform Xero launched Xero Payroll, completing the trifecta of accounting, payments and payroll that is key to the company's 3x3 strategy. Built directly into Xero, the new solution unites payroll with accounting, payments and analytics into one platform. 

Using Xero's integration with payroll provider Gusto, the solution lets users run payroll and manage their books without leaving the platform. Among other things, the product includes unlimited payroll runs, direct deposit, multiple pay rates and schedules, W-2 support, 1099-NEC contractor payments, benefits calculations, paid time off management and employee self-service options, and automated federal, state and local tax calculations and filings.

"Payroll is one of the most important jobs a business owner has, but it shouldn't be one of the most stressful," said Matan Bar, US CEO at Xero, in a statement. "Small businesses increasingly expect the tools they use to work together, not operate in silos. Xero Payroll, powered by Gusto, brings payroll, accounting and payments into one connected system, so customers get greater clarity into their cash flow and more time back to focus on growing their business."

To make switching easier, Xero is offering free historical payroll data transfer and access to payroll specialists for onboarding support. Existing Gusto customers can migrate their payroll records directly into Xero Payroll to keep their data connected in one place. 

Xero Payroll costs $36 per month, plus $6 per employee or contractor. The first 2 months are free, and there is free white-glove transfer on request. Gusto customers do not need separate Gusto login details — people can just log in to Xero, and then migrate over. 

Xero partnered with Gusto in 2018 to provide full-service payroll to its accounting software users in all 50 states (see previous story), but this new offering is native to Xero's platform. 

The announcement comes about a month after Xero announced a bevy of new features and upgrades, many of them connected with Xero's proprietary JAX AI (see previous story.) Specifically, Xero Partner Hub was upgraded with transaction matching and anomaly detection features as well as new insights. The company also released XeroForce, a natural language custom AI agent builder powered by Xero OS that, without writing code, lets people use simple prompts to build custom AI agents that connect Xero to the third-party apps they already use. Xero payments has also been updated. JAX can now analyze a customer's unique payment history and automatically execute tailored collection plans; automatically inspect every bill before payment, flag unusual amounts, altered bank details or unfamiliar suppliers; actively build preventative plans and suggest delaying non-critical bills, protecting payroll, and bridging any remaining gaps.