Payroll is the one part of running a business where getting it wrong has a regulator attached. Every pay run in Australia reports to the ATO through Single Touch Payroll, superannuation has to be calculated and paid on time, and award rates shift with overtime, penalty hours, and allowances. Good payroll software turns all of that into a few clicks and keeps you compliant without a bookkeeping degree. This guide compares the leading payroll systems for Australian small businesses in 2026 on real pricing and the features that actually matter. To line the options up side by side, use our payroll software comparison. Short answers sit in the FAQ at the end.
Why payroll software matters in Australia
Paying staff in Australia is not just a bank transfer. Four compliance jobs sit behind every pay run, and modern payroll software handles all of them automatically.
- Single Touch Payroll (STP). Since 2022, employers have had to report wages, tax, and super to the ATO every time they run payroll, under the expanded STP Phase 2 rules. Compliant software files this in the background, so there is no separate lodgement to remember.
- Fair Work awards. More than 120 modern awards set minimum pay, penalty rates, overtime, casual loading, and allowances. Working these out by hand is where most payroll mistakes happen, especially in hospitality, retail, and healthcare.
- Superannuation. The super guarantee rate reached 12% on 1 July 2025, and contributions must be paid through SuperStream. From 1 July 2026, payday super will require employers to pay super at the same time as wages, not quarterly, which makes automated super inside your payroll system close to essential.
- Penalties for errors. Underpaying staff or paying super late carries real cost, including the super guarantee charge and back-pay obligations. Software that calculates correctly is cheaper than getting it wrong once.
The takeaway is simple. The right payroll system is not a luxury for a growing team, it is the cleanest way to stay on the right side of the ATO and Fair Work while spending less time on admin.
What to look for in payroll software
Before you compare prices, work out which of these capabilities your business actually needs. A sole trader with one casual and a cafe rostering twenty staff across penalty hours have very different requirements.
- STP Phase 2 compliance. Non-negotiable. Every option in this guide files STP, but always confirm it covers Phase 2, not just the original rules.
- Award interpretation. The system reads an employee's award and roster and applies the correct rates, penalties, and allowances automatically. This is the single biggest time-saver for award-heavy industries.
- Superannuation automation. Calculating super, lodging through SuperStream, and supporting payday super from July 2026 without manual steps.
- Leave management. Tracking annual, personal, and long service leave, with employees requesting time off and accruals updating themselves.
- Employee self-service. A mobile app where staff view payslips, update bank and tax details, and submit leave. It cuts the questions that land on your desk every payday.
- Accounting integration. Payroll figures flowing into your books so wages, tax, and super reconcile without re-keying.
Write down which of these matter, then compare the systems below against that list rather than on headline price alone.
The best payroll software for Australian small businesses in 2026
The table below compares the leading systems on the numbers that matter, verified against live provider data in May 2026. Run the same providers through our payroll software comparison to filter by team size and features.
| Payroll software | Base cost | Per employee | Best for |
|---|---|---|---|
| Xero Payroll | From $35/mo (Xero Ignite plan) | Included | Businesses already on Xero |
| Employment Hero | $200/mo minimum | $20/mo (Lite) | Award-heavy industries, HR plus payroll |
| KeyPay | $0 | $4/mo | Automation, APIs, accountants and bookkeepers |
| MYOB | $12/mo (first 4 staff) | $2/mo after the first 4 | Businesses already on MYOB |
| QuickBooks Payroll | From $33/mo (QuickBooks plan) | $6/mo | QuickBooks users |
| Payroller | $10/mo | Free for your first employee | Micro-businesses and sole traders |
| Deel | $0 | From $41/mo | Global and remote teams |
Xero Payroll: the default for businesses already on Xero
Xero is the most widely used accounting platform in Australia, and payroll is now included at no extra per-employee cost on its plans, which start at $35 a month for the Ignite tier. If you already run your books in Xero, turning on payroll is the path of least resistance: pay runs, STP filing, super, and leave all live in the software you use every day, and the data flows straight into your accounts. Xero handles standard awards well, though very complex penalty and allowance scenarios can need manual setup. For most service businesses and offices with straightforward rosters, it is the easiest choice to live with.
Employment Hero: the pick for award-heavy teams
Employment Hero is the market leader for award interpretation and the strongest option when payroll and HR need to live together. Pricing starts at $20 per employee a month on the Lite plan, with a minimum spend of $200 a month, so it suits teams of roughly ten or more rather than a handful of staff. What you get for that is a full HR suite alongside payroll: onboarding, contracts, policies, performance reviews, and an employee app. For hospitality, retail, and construction, where awards are complex and staff turnover is high, the combination is hard to beat.
KeyPay: the automation and API specialist
KeyPay, now part of Employment Hero and sometimes badged Employment Hero Payroll, is a payroll-only engine built for automation. At $4 per employee a month on the Standard plan with no base fee, it is the most affordable per-head option here for a growing team. Its award interpretation engine is close to Employment Hero's, it has the strongest API on this list, and it integrates with both Xero and MYOB. That mix makes it a favourite with accountants and bookkeepers running payroll for multiple clients, and with tech-minded businesses that want pay runs to look after themselves.
MYOB: the choice if your books are already in MYOB
MYOB is the natural fit if you already run MYOB for accounting, particularly in retail and trades. Payroll runs from $12 a month covering your first four employees, then $2 per employee a month beyond that, so small teams start cheaply. You get STP Phase 2, super automation, leave tracking, and an employee self-service portal. As with Xero, keeping payroll and accounting under one roof means wages and super reconcile without double entry, which is the main reason to pick it over a standalone tool.
QuickBooks Payroll: built on Employment Hero
QuickBooks Online runs payroll through an Employment Hero powered module, charged at $6 per employee a month on top of a QuickBooks plan that starts at $33 a month (Simple Start). It covers the essentials cleanly: STP, super, leave, and the same employee app Employment Hero uses. It is the obvious option if you already keep your accounts in QuickBooks and want one login for both, though businesses with heavy award requirements will get more from Employment Hero or KeyPay directly.
Payroller: the simplest option for micro-businesses
Payroller is the lightest-touch choice for sole traders and very small teams. It is free for your first employee and runs from $10 a month after that, with STP filing and super included. It does not try to be an HR platform or interpret complex awards, but for a business with one or two staff on simple pay, it covers the compliance basics at the lowest cost. As your team grows past a couple of people, you will likely outgrow it and move to one of the systems above.
Award interpretation, explained
Award interpretation is the feature that separates basic payroll from payroll that keeps you out of trouble. An award is the legal minimum set of pay rules for an industry or job, and it changes with the day, the hour, the employee's age and classification, and whether they are casual or permanent. A Saturday afternoon shift, a public holiday, a late finish, and a first aid allowance can all apply different rates to the same person in the same week.
Software with award interpretation reads the roster and the employee's award, then applies the correct base rate, penalties, overtime, and allowances automatically. Employment Hero leads here, with KeyPay close behind, which is why both dominate the conversation in hospitality, retail, and healthcare. Xero and MYOB handle common awards but can need manual configuration for the trickier combinations. If your team works penalty hours, treat award interpretation as the first thing you test, not the last.
How payroll connects to your accounting software
Payroll and accounting work best when they are the same system or talk to each other automatically. Every pay run creates wages, PAYG withholding, and super liabilities that have to land in your books, and re-keying those by hand is slow and error-prone.
The cleanest setups keep both together: Xero Payroll inside Xero, MYOB payroll inside MYOB, QuickBooks Payroll inside QuickBooks. If you prefer a specialist payroll engine, KeyPay integrates with both Xero and MYOB, and Employment Hero connects to Xero, MYOB, and QuickBooks. Before you commit, confirm the integration pushes the detail your accountant needs, not just a single wages total. If you are choosing accounting software at the same time, our accounting software comparison lines those options up the same way this guide does for payroll.
Earned wage access: a payroll feature worth knowing
A growing number of payroll platforms now offer earned wage access, which lets staff draw a portion of pay they have already earned before payday. Employment Hero builds this in, and it is increasingly used as a retention perk in industries with younger workforces. It is not a substitute for choosing the right payroll system, but if staff financial wellbeing matters to you, it is worth weighing. Our guide to on-demand pay explains how earned wage access works, what it costs, and how it fits alongside your normal pay cycle.
Hiring overseas: when domestic payroll is not enough
If your business has employees or contractors outside Australia, domestic payroll tools will not cover you. They are built for the ATO, Fair Work, and Australian super, not for tax and employment law in another country. This is where global employment platforms come in.
Deel is the best-known option for distributed teams. It acts as an Employer of Record (EOR), letting you hire staff in more than 150 countries without setting up a local entity, and it handles contractor payments and multi-country payroll compliance from one platform. Its per-employee fee works out to around $41 a month with no base fee, and contractor payments are included for up to 200 contractors. Deel bills natively in US dollars, so that Australian-dollar figure shifts a little with the exchange rate. Remote is a close alternative covering 180-plus countries, and Rippling offers global payroll on a quote basis for businesses that want it bundled with IT and device management. For an Australian business taking on its first overseas hire, a platform like Deel is usually the natural next step beyond your local payroll system.
Frequently asked questions
What is the best payroll software for a small business in Australia?
For most small businesses already using Xero, Xero Payroll is the easiest choice because it is included on your plan and keeps everything in one place. Employment Hero is the strongest pick for award-heavy industries like hospitality and retail, while KeyPay suits businesses and bookkeepers wanting low per-employee pricing and automation. The right system depends on your team size and how complex your awards are.
How much does payroll software cost in Australia?
Payroll pricing usually combines a base fee with a per-employee charge. KeyPay is among the lowest at $4 per employee a month with no base fee, MYOB runs from $12 a month for up to four staff, and QuickBooks adds $6 per employee to a plan from $33 a month. Xero includes payroll on plans from $35 a month, and Employment Hero starts at $20 per employee with a $200 monthly minimum.
Is payroll software included with Xero and MYOB?
Yes. Xero includes payroll on its plans at no extra per-employee cost, so businesses already on Xero can run payroll without a separate product. MYOB includes payroll too, priced from $12 a month for your first four employees and $2 per employee a month after that. Keeping payroll inside your accounting software means wages and super reconcile automatically.
What is STP Phase 2 and does my payroll software need it?
Single Touch Payroll Phase 2 is the ATO's expanded reporting standard, requiring more detail about each employee's pay, income type, and tax with every pay run. Any payroll software you use in Australia must support STP Phase 2, and every option in this guide does. Compliant software files the report automatically each time you pay staff, so there is nothing extra to lodge.
Which payroll software is best for award interpretation?
Employment Hero leads the market on award interpretation, with KeyPay a close second. Both read an employee's award and roster and apply the correct penalty rates, overtime, and allowances automatically, which makes them the popular choice in hospitality, retail, and healthcare. Xero and MYOB handle common awards but may need manual setup for complex penalty and allowance scenarios.
What payroll software handles international employees from Australia?
Australian payroll tools like Xero, MYOB, and KeyPay are built for local compliance and do not cover overseas staff. For international employees and contractors, a global employment platform such as Deel acts as an Employer of Record in 150-plus countries, manages contractor payments, and handles multi-country payroll compliance. Remote and Rippling offer similar global coverage and are worth comparing if you hire across borders.
The bottom line
The best payroll software is the one that fits how you pay your team and keeps you compliant with the least effort. Xero Payroll is the easiest pick for businesses already on Xero, Employment Hero and KeyPay lead on award interpretation for hospitality and retail, MYOB suits established MYOB users, and Deel steps in once you hire overseas. With payday super arriving in July 2026 and STP Phase 2 already in force, automated, compliant payroll matters more than ever. Compare the leading payroll systems side by side, read how we compare providers, or talk to our services team if you want a hand matching one to your business.
