Xero has just launched Xero Payroll, powered by Gusto, bringing payroll directly into its U.S. accounting platform.
The launch completes Xero’s U.S. platform strategy, giving small businesses and their accountants a more connected way to manage their finances.
Built directly into Xero and sitting with the AI-native Xero OS, the new solution unites payroll with accounting, payments and analytics into one platform, enabling small businesses to run payroll, manage their books, pay bills and stay on top of their finances without switching between systems.
For many U.S. small businesses, payroll remains one of the most complex and time-consuming operational responsibilities. Managing it separately from accounting and payments creates additional administrative work, raises the risk of errors and makes it harder to maintain an accurate view of business performance. Those stakes are rising: according to data from Gusto, the share of small businesses that missed payroll altogether rose from approximately 1.5% in 2019 to approximately 2.3% in 2025, equating to nearly 3.4 million workers affected by missed payrolls in 2024.
Xero Payroll was built to turn payroll from an administrative burden into a connected, more efficient part of running a business.
“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. “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.”
Payroll built for small businesses
Xero Payroll brings best-in-class small business payroll from Gusto directly into Xero, allowing business owners to run payroll and manage their books without leaving the platform. The solution includes: unlimited payroll runs, automated federal, state and local tax calculations and filings, 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.
Because payroll data flows directly into Xero's general ledger, businesses get cleaner financial records and a clearer view of how payroll affects cash flow and overall performance. To make switching easier, Xero offers 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.
"Small business owners didn’t start their businesses to become experts in payroll taxes and compliance. They started them to follow their dreams and serve their customers," said Tomer London, Co-founder at Gusto. "At Gusto, we’ve spent over a decade supporting hundreds of thousands of small businesses with payroll, compliance, and tax filing. Now, with Xero Payroll, powered by Gusto, business owners can run payroll alongside the rest of their finances, with peace of mind that they’re paying their teams quickly and compliantly."
Connecting more of what small businesses need
As connected financial systems become essential infrastructure for small businesses, Xero is extending its platform to give business owners a unified, real-time view of their business and a stronger foundation for faster, more confident decisions.
The integration also creates new opportunities for accountants and bookkeepers who support small business clients: by bringing payroll and accounting data together, advisors can benefit from cleaner financial records, improved visibility and less time spent reconciling information from separate systems. This is the experience Xero, together with Gusto's payroll expertise and Melio's payments infrastructure, is building for U.S. small businesses and their advisors.
Xero Payroll is now available to eligible U.S. customers. Learn more HERE.
Disclosures:
This feature was adapted from Xero furnished press content via Pepper Communications (peppercomm.com). Source materials were adapted by Insightful Accountant solely for informational and educational purposes. This is an editorial feature, not paid content.
Xero is a global small business platform that helps customers supercharge their business by bringing together the most important small business tools, including accounting, payroll and payments — on one platform. Xero’s powerful platform helps customers automate routine tasks, get timely insights, and connects them with their data, their apps, and their accountant or bookkeeper so they can focus on what really matters. Trusted by millions of small businesses and accountants and bookkeepers globally, Xero makes life better for people in small business, their advisors, and communities around the world. For further information, please visit xero.com.
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