Managing payroll in Australia can feel like a full time job, especially with compliance rules constantly evolving. Thankfully, the right payroll software can turn this complex task into a streamlined, automated process. Whether you’re a solo operator with your first employee or a scaling business with a growing team, finding the right tool is essential.

This guide breaks down everything you need to know about choosing the best payroll software Australia has to offer. For a broader market view, see our best software for payroll guide. We’ll cover how it works, what to look for, and compare the top options on the market.

What Is Payroll Software?

At its core, payroll software is a digital tool that automates the entire process of paying your employees. This includes calculating wages, withholding the correct amount of tax, managing superannuation contributions, and keeping detailed records of every pay run. These systems are crucial for modern businesses because they drastically save time and reduce the risk of human error.

The shift to digital is undeniable. The adoption of cloud based solutions like online payroll systems has been a major driver of efficiency for small businesses, second only to the smartphone. With Single Touch Payroll (STP) reporting becoming mandatory for all Australian businesses back in July 2019, having reliable software is no longer a luxury, it’s a necessity. As a result, the market for payroll software Australia continues to grow as more businesses ditch manual spreadsheets for smarter, compliant tools.

How Payroll Software Works in Australia

Australian payroll has its own unique set of rules, and good software is built to handle them seamlessly. Here are the key compliance areas your software needs to manage:

• Single Touch Payroll (STP): This is the big one. STP is the Australian Taxation Office’s (ATO) system for real time payroll reporting. Each time you pay your employees, your software must automatically send a report to the ATO detailing wages, taxes, and super contributions. Modern systems are built to handle the latest STP Phase 2 rules, which require more detailed data reporting.
• Superannuation Guarantee: Your software must correctly calculate the superannuation guarantee for each eligible employee. As of 1 July 2025, the minimum super rate is 12% of an employee’s ordinary time earnings. A good platform will automatically apply the current rate and any future increases.
• Modern Awards: Australia has a complex system of modern awards that set out minimum pay rates and conditions for different industries. Quality payroll platforms can interpret these complex award rates, including overtime and penalty rules, to ensure you’re paying people correctly.

Navigating these rules manually is a huge challenge. A recent survey found that 43% of small businesses struggled to comply with the new STP Phase 2 requirements, often only discovering mistakes after getting a notice from the ATO. The right payroll software Australia handles all these moving parts in one simple workflow. If you’re planning to hire beyond Australia, read our complete guide to global payroll processing.

The Key Benefits of Using Payroll Software

Adopting a quality payroll system offers some serious advantages that save you time, money, and headaches.

• Fewer Errors and Costly Fines: Automation significantly reduces the chance of manual mistakes. The ATO noted that in 2023, 10% of payroll audits found errors that cost businesses an average of $5,000 in corrections and fines.
• Built in Compliance: Payroll laws change frequently. Since 2023, payroll compliance costs for small businesses have surged by 40% due to increasing complexity. Good software updates automatically to reflect new tax rates and super rules, keeping you compliant without you needing to be a legal expert.
• Massive Time Savings: Cloud based payroll systems automate calculations, tax filings, and payslip distribution, turning hours of manual work into minutes. This frees you up to focus on growing your business.
• Enhanced Data Security: Payroll data is highly sensitive. Storing it in spreadsheets is a major risk. A 2024 report found that 18% of data breaches involved payroll information. Reputable platforms use encryption and secure cloud storage to protect your data.
• Employee Self Service: Most modern systems include an employee portal where staff can view payslips, track leave balances, and submit timesheets. This empowers your team and reduces administrative queries for managers.
• Seamless Integrations: The best payroll tools connect with your accounting software, like Xero or QuickBooks. This eliminates double data entry and ensures your financial records are always accurate and up to date.

Choosing Payroll Software for Your Business Size

The right solution depends heavily on the size and complexity of your business.

Payroll Software for Small Business

If you run a small business, you need a solution that is affordable, user friendly, and covers all your compliance basics. For adjacent tools you’ll likely need as you grow, check out our HR software for small business guide. Simplicity is key, as payroll duties often fall to the owner or an office manager, not a dedicated HR professional.

Even as a micro employer, you are still required to report through STP and pay super correctly. While free payroll apps exist for very small teams (for instance, some allow you to lodge STP for a single employee at no cost), it’s important to choose a reliable system. Mistakes in payroll can lead to ATO penalties.

Many small businesses start with the payroll module built into their accounting software. For example, MYOB’s basic payroll add on starts at just $9 AUD per month, making it a budget friendly option.

Payroll Software for Medium to Large Business

As your business grows, your payroll needs become more complex. Medium to large businesses should look for scalable solutions that can handle a larger workforce and integrate with other HR systems.

For example, if your total wages exceed certain state thresholds (like the $1.2 million threshold in NSW), you’ll need to pay state payroll tax. A robust system can handle these multi state calculations. As companies grow, manual processes often fail, with 65% of scaling businesses reporting they struggled with their in house payroll processes.

Platforms like ELMO and Humanforce are designed for larger organisations. ELMO offers an all in one HR and payroll solution for mid sized businesses in Australia and New Zealand, while Humanforce is tailored for enterprises with large, shift based workforces.

A Comparison of the Best Payroll Software in Australia

With so many options on the market, choosing the right one can be tough. Here’s a look at some of the top names in payroll software Australia.

Xero Payroll

Xero is one of Australia’s most popular accounting platforms, and its payroll module is a natural fit for the thousands of businesses already using it for bookkeeping.

• Best for: Small businesses that already use Xero for accounting.
• Why it’s great: Its user friendly design and seamless integration are its biggest strengths. Business owners and their accountants can collaborate in real time, and all payroll data flows directly into financial reports. Xero is fully STP Phase 2 compliant and automates superannuation payments.
• Things to consider: It’s most cost effective when bundled with a Xero accounting plan. For very complex award interpretations, a more specialized tool might be a better fit.

Employment Hero Payroll

Employment Hero is a comprehensive Australian platform that combines payroll with a full suite of HR tools, from onboarding to performance management.

• Best for: Businesses wanting an all in one HR and payroll system with strong compliance automation.
• Why it’s great: Its standout feature is its library of built in modern awards, which automates the interpretation of complex pay rates and penalties. This is a massive advantage for industries like hospitality and retail. The company recently acquired KeyPay, the powerful payroll engine it was already using, cementing its focus on robust, compliant payroll.
• Things to consider: It might be more than you need if you’re just looking for a simple payroll calculator. The real value comes from using its integrated HR features.

KeyPay

KeyPay is a highly respected and powerful payroll engine known for its automation and compliance features. It was built in Australia specifically to handle local payroll complexities.

• Best for: Small to medium businesses that need robust award automation and for accountants managing multiple clients.
• Why it’s great: KeyPay excels at automatically applying correct award rates, penalties, and loadings, which removes a huge manual burden. It integrates smoothly with major accounting platforms like Xero, MYOB, and QuickBooks.
• Things to consider: Now that it’s part of Employment Hero, it functions as the engine behind that platform, but it remains a strong standalone choice for those who need pure payroll firepower without the full HR suite.

QuickBooks Payroll Australia

QuickBooks Payroll is the integrated payroll solution within QuickBooks Online, tailored for the Australian market.

• Best for: Small businesses that use QuickBooks Online for their accounting and have straightforward payroll needs.
• Why it’s great: The seamless integration is the main draw. All your payroll data automatically flows into your general ledger, saving time and preventing errors. It covers all the basics like PAYG tax, super, leave, and STP reporting effectively.
• Things to consider: Its capabilities for interpreting complex modern awards are more limited compared to specialized Australian providers. It’s perfect for standard salaried or hourly employees but may require manual workarounds for complex penalty rates.

Payroller

Payroller has quickly become a favourite among micro businesses and sole traders thanks to its simplicity and attractive pricing.

• Best for: Very small businesses (1 to 5 employees) looking for a simple, free, or low cost mobile solution.
• Why it’s great: It’s a mobile first app that lets you run payroll, send payslips, and lodge STP reports directly from your phone. Its free plan for a single employee is a huge draw, and its paid plans are extremely affordable, costing just a few dollars per additional employee per month. With over 180,000 small businesses using it, Payroller has proven its value in the market.
• Things to consider: It is not designed to scale. Once your team grows or your needs become more complex, you will likely need to migrate to a more comprehensive system.

Handling Global Teams with EOR and Payroll Solutions

If your hiring plans extend beyond Australia, you’ll need a different kind of tool. This is where global payroll and Employer of Record (EOR) services come into play. Start with our Employer of Record Australia hiring guide.

Deel Payroll

Deel is a global leader that helps companies hire and pay workers in over 100 countries. An EOR like Deel acts as the legal employer in a foreign country on your behalf, handling local contracts, taxes, benefits, and payroll compliance. This allows you to hire top talent anywhere without the massive cost and complexity of setting up a local legal entity.

For startups and scaling companies looking to hire the best engineers globally, a unified platform can be a game changer. See how to hire engineers fast with Bolto’s recruiting platform. An all in one solution like Bolto combines AI powered recruiting with domestic US payroll and global EOR services, letting you find, hire, and pay a global team from a single dashboard.

Factoring in the Cost of Payroll Software in Australia

The cost of payroll software Australia varies, but there are options for every budget. Pricing is typically a flat monthly fee or a per employee per month model.

• For micro businesses: You can start for free. Payroller offers a free plan for one employee, with additional employees costing around $2.99 each per month.
• For small businesses: Integrated accounting and payroll plans offer great value. MYOB has payroll add ons starting from $9 AUD per month, while Xero includes payroll in plans that cost around $35 AUD per month.
• For larger businesses: More comprehensive platforms like ELMO have plans starting around $35 AUD per month for their base package, with costs scaling based on features and employee count.

When comparing prices, consider the value. A slightly more expensive system that saves you hours of admin time or prevents a single costly error can easily pay for itself.

DIY Payroll vs. Using an Accountant

Do you need an accountant to run your payroll? Not necessarily. Modern payroll software Australia is designed to be user friendly enough for business owners to manage themselves.

However, accountants still play a vital role. If you advise multiple clients, our roundup of the best payroll software for accountants can help you pick the right stack. About 85% of Australian businesses with revenue over $100K use an accountant’s services in some capacity. Many businesses adopt a hybrid approach: they use software for the day to day pay runs, and consult their accountant for initial setup, end of year reconciliation, and complex situations. The collaborative nature of cloud platforms like Xero makes this easy, as you and your accountant can access the same data in real time.

Can You Do Payroll for Free?

Yes, it is possible to do payroll for free in Australia, especially if you have a very small team.

• Freemium Apps: Services like Payroller offer a free plan for one employee, which includes STP reporting and payslips. Another option, e PayDay FREEPAY, allows you to pay up to 3 employees for free.
• Limitations: Free software typically comes with limitations. You can expect minimal customer support and a lack of advanced features. These tools are a great starting point, but you should plan to upgrade to a paid solution as your business grows.

Payroll Software Australia FAQs

What should I look for when choosing payroll software in Australia?
Look for a system that is fully STP enabled, automates tax and superannuation calculations, and offers features like leave management and an employee self service portal. These core features ensure compliance and save you significant admin time.

Can payroll software manage leave and superannuation?
Yes, absolutely. Most modern platforms track all types of leave, allow employees to submit requests, and automatically calculate superannuation on each payslip. They centralize many routine HR tasks.

What’s the difference between standalone and integrated payroll software?
Integrated payroll is part of a larger accounting system like Xero or QuickBooks, which keeps all your financial data in one place. Standalone payroll software focuses solely on payroll and may offer more specialized features, but it will need to be connected to your accounting software.

Is free payroll software good enough?
Free payroll software can be a great starting point for micro businesses with one or two employees. However, it often lacks advanced features and support. Think of it as a temporary solution before you graduate to a more robust, paid platform that can grow with your business.

Final Thoughts

Choosing the right payroll software Australia is a critical decision for any business. By automating compliance, reducing errors, and saving precious time, the right payroll software Australia lets you focus on what you do best: running your business. From simple, free apps to comprehensive HR platforms, there’s a solution out there that fits your needs perfectly.

For startups and high growth companies building a world class team, the challenges go beyond just local payroll. If you need a single, unified platform to handle recruiting, US payroll, and global hiring, explore how an all in one solution like Bolto can help you hire faster and scale smarter, and see customer stories from teams like yours.