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Xerocon USA 2013 – a great debut!

From the Xero blog we read the Xero Update:  Xerocon USA 2013 – a great debut!

What a fantastic couple of days at our first US Xerocon! Great to host over 400 partners and Xero fans in San Francisco and share our story, vision and what’s coming up in the product, partner program and Xero ecosystem. This was the biggest Xerocon debut for a region yet so we’re feeling pretty excited for the future here.

Welcome!

Jamie, President US Operations kicked things off and set the scene for the great partnerships we’re building with accountants, bookkeepers and add-on partners on our journey into the future of accounting.

First up, Rod talked about the space we’re in, the small business market and the huge part our Partners, trusted advisors for small business owners play in this market. Technology plays a main role in the lives of small business owners – mobile technology, social technology and small business are all mixed in – it changes how they do business, their opportunities and their expectations. Rod shared the Xero journey, the frustration felt by himself and co-founder Hamish using desktop software … “there’s got to be a better way!” So they set about building something that would work and that’s become our vision – connecting small businesses and their financial advisors and building that connection to be successful and fun! If the right things are recorded, measured and improved then businesses can become more productive. We’re not just building software and shoving it on shelves, we’re building connections.

Our biggest challenge is transforming the profession – building connections, scaling in this connected world, taking proactive action to make small business more productive and keep hold of a lifestyle, charging for value and services, not time. We’ve built something that’s online from the get go, not desktop that’s being converted so it’s truly online and part of the transformation to take business and accounting practices online.

Rod showed the Xero platform – the best of breed approach to online business apps and add-on partners. The single ledger and our full open API brings about such productivity gains when advisors, small business owners, banks and other online services can share data once.

Xero’s Head of Design Philip took the stage to explain that beautiful accounting software is not just making software look pretty, it’s about how we’re changing the way people use their accounting software – would you rather get a root canal or do your bank rec? Let’s make bank rec actually fun! (Real life story!!) We’re seeing now that customers using bank rec are doing it more often – 20% are reconciling 3 times a week or more. We want to make people smile!

Online accounting & payroll

Tokes told us about his first trip to San Francisco – Alcatraz, bought new jeans, wandered through the Tenderloin … all the tourist stops. And amused the crowd with his attempt at pronouncing ‘oregano’ in an American accent! He talked about his role managing the Xero Business product development around the globe, mixing local requirements with all the parts of accounting software that do the same thing. We get our first look at purchase orders, quotes, inventory – some great audience participation and a bit of a debate about what to call a ‘stock take’.

Our CTO Craig wowed the crowd with a live demo of Xero files – uploading documents anywhere in Xero or emailing them into your Xero inbox.

We don’t see Mark (“The Reporting Guy”) up on stage very often and his demo of the new reporting framework, showcasing fancy columns, filters and formulas for customized reports, was well received. The topic of US Report Packs was also discussed and promised for delivery within the next 12 months. The challenges of building powerful browser-based reports that meet the needs of everyone are not small but there’s some great stuff coming up!

Big news for Xero in the US is the launch of fully integrated payroll later this year – Stuart (GM Payroll) showed us through what his team is working on and what will be released this year – you’ll be able to get a closer look at a US roadshow coming soon – keep an eye out for details!

What can you expect built into Xero? Seamless accounting and payroll, automatic tax calculations, direct deposit and checks, employee payday app, electronic tax filing and payment, open payroll API platform.

Practice Studio

Ian (VP Product Marketing) popped up for a brief visit playing a new Xero Partner video to introduce the Partner Program, training program and the suite of Xero products in Partner Edition – Workflowmax and Workpapers.

A familiar face (or at least voice) to many of our partners is Carla, our US Training Manager who showed us new public profiles for Xero partners, driven from the Xero Business Community where partners can promote themselves and their business. Online training, introducing learning at your own pace – a show of hands in the room showed that just about everyone has done some Xero training.

Gavin showed the changes coming to Workflowmax as it becomes fully integrated into the Xero Partner Edition as Practice Manager (free for partners silver and up!)

Richard shared his Spotlight – Xero Workpapers story and let us know that US Workpapers is bubbling on the stove and we’re putting together a group of Xero Partners to get input into any changes needed for this market. Please get in touch if you’d like to be part of that.

Xero ecosystem

In the Xero Ecosystem session after a delicious food truck lunch (of course, in San Francisco what else would be offered for lunch?!) we had a deep dive into 3 of our add-on partners.

Ronan gave background on Xero’s growing group of Add-on providers and how these folks are instrumental in helping partners better run their practice with Xero.

Rene Lacerte opened with pictures of his grandparents and discussed lessons learned from his dinner table MBA. This experience is what led him to understand “Cashflow is King”, and ultimately form Bill.com. After hearing about the product history, we had a live demo of the Bill.com integration with Xero and how the two help establish a paperless office.

David Barrett gets the award for fastest speaker during the day (and you thought New Zealanders spoke quickly!) with his entertaining arm-waving demo of Expensify – expense reports that don’t suck! Explaining how Expensify originally started as a trojan horse for banking buy-in, earned David several chuckles; but as he as he continued, he showed how being at the right place, at the right time with the right product makes all the difference.

David Watson and his able assistant Daniel, wrapped up the ecosystem chat with a detailed look at the Fathom and Xero partnership. Running through a live program demo, David showed how Fathom focuses on targeted KPIs to produce deep reports that give a better view of small business performance – ultimately helping accountants better advise their clients.

Partner journey

The afternoon sessions were dedicated to the partner journey – complete with inside opinions and advice from real Xero Partners.

As a chartered accountant, Greg challenged the crowd with hard-hitting questions: Are you growing your business? If not, how do you expect clients to trust you to grow theirs? Greg is CEO of RightWay, one of the fastest growing accounting firms in New Zealand, he started his firm by putting the customer at the center and worked to answer key questions like: what does the customer need from their accountant? how do you keep customers happy and avoid surprises? is there a solid way to scale success? A common theme in all these questions revolved around using the cloud – so RightWay went 100% online, not just with Xero, but everything. Greg knows he has some crazy ideas, like starting an accounting business in a coffee shop – complete with a menu of services – but why not? And that’s one of the best questions yet.

To close out the event we hosted a panel discussion with 3 Xero Gold Partners: Steve Chaney, Bruce Phillips and the director of small business services for the largest privately owned accounting firm in California, Todd Peterson from Armanino McKenna.

(Todd, Bruce, Steve)

These gents openly shared their stories on how they made the decision to switch to the cloud and how they found Xero – Steve chose a memo “I’m turning off that server on July 1st”, Bruce chose to start with new clients, Todd’s staff thought he was nuts when he told the firm they were getting rid of Quickbooks – but the clients love it and he set up a specialist implementation team to help with the switch. On the question of how to choose an Add-on partner from the Xero ecosystem, Bruce said he has someone in-house who researches and tries out add-ons and sometimes clients even request one by name. Todd explained he has a small select set of applications that his staff are all familiar with. A big take-away from the panel was if you want to change your practice and become a CFO expert in a vertical, make sure you know your stuff! Else clients will quickly know you’re just faking it.

Thank you!

Great to see a packed house of next generation accountants and bookkeepers. We’ve talked a lot and shown you a lot of stuff – keep in touch and let us know what you think – any feedback about Xero or Xerocon please let us know.

Thanks for the awesome feedback so far! Jamie shared these quotes from attendees with the team today and we’re humbled:

“I’m speechless. Literally blown away by what you guys are doing”

“I flew here for the day from North Carolina and it was completely worth the trip…thank you, thank you for this”

“I’m over 70 clients since December and they are basically all coming from your web site…we’ve had to stop accepting clients until we hire”

See you at Xerocon again next year!

Is Orthodontic Treatment Tax Deductible?

Speilberg Orthodontics writes: Recently, Apex NC orthodontic doctor Dr. Alena Spielberg addressed the question of how much braces cost, the factors that affect the cost and ways to finance the purchase of orthodontic treatment. If you or your child need to start wearing braces, however, don’t overlook the fact that you can get a tax break to help cover the expense. Some charges are tax deductible when you file your federal income tax return.

Medical and Dental Category

The Internal Revenue Service (IRS) category of Medical and Dental Expenses is fairly broad. All costs incurred to prevent, diagnose, treat, cure or prevent a medical condition or an illness are tax deductible under this category. In terms of orthodontic treatment, the costs that you can claim include:

·       Professional fees paid to either the orthodontist or any other dental practitioner

·       Cost of dental supplies including equipment, anesthesia, medications and other diagnostic services

You can also claim the costs of transportation to and from your orthodontic appointments as medical expenses. This includes expenditure such as gas and oil, the cost of tolls and parking fees or the standard rate for medical travel expenses.

Itemize Your Deductions

When you file your taxes you can choose between the standard deduction or an itemized one. In most cases, it’s useful to calculate it both ways and choose the option that offers you the best saving on tax. In the case of orthodontic treatment, however, it’s mandatory to itemize the deductions if you want to claim the expenses. Then add the total to all your other eligible medical and dental expenses and enter it on Line 1 of Schedule A, on the IRS Form 1040.

Timing is Crucial

Orthodontic patients are only permitted to deduct the expenses for your treatment during the applicable tax year. You can claim expenses for yourself, your spouse and any dependents, but if your dental insurance contributes to the cost then the amount of the company’s contribution must be deducted from the overall total for the year. Keep all receipts for the payments you’re claiming; in case you are assessed for tax purposes, you may need to prove the value of your treatment and the fact that you underwent it during the year of assessment.

What’s Allowed?

You are only allowed to submit your medical tax deduction for eligible orthodontic expenses once your total medical costs exceed 7.5% of your adjusted gross income. You can deduct the portion that is paid towards your deductible or co-pay portion, or any amount that is paid out of pocket without reimbursement. You are not permitted to deduct any payments that have been reimbursed by an insurance plan, flexible spending account or healthcare savings account, although you can deduct premiums for dental insurance that covers orthodontic treatment.

Cosmetic Treatment

While early orthodontic treatment for children is usually not questioned by the IRS, braces for an adult will not be tax deductible if they are for purely cosmetic reasons. So if you’re the one wearing the braces and undergoing treatment, you may need to ask your dentist or orthodontic doctor for a letter to submit to the IRS along with your tax return. The letter should state the medical reason why you need braces, such as malocclusion or other dental problems.

Orthodontic treatment such as wearing braces can be a costly process, but it’s highly successful and makes a significant difference to a patient’s overall health and well-being, confidence and dental hygiene. These tax breaks may make the difference between whether you can afford the treatment of not. For more information about how to finance braces, schedule an appointment with Dr. Spielberg to discuss your needs. 

CFO Tips / 2013 Year-End Tax Strategy / List of Expiring Federal Tax Provision 2013-2023 (01.11.2013), there are 55 provisions that will expire, of which 24 would be categorized as business provisions.

Regis Quirin writes: With four months remaining in the year, a sound approach would be to review expiring business tax provisions and plan accordingly.  Are there tax benefits today that you would like to take advantage of before the opportunity passes?

According to the Joint Committee on Taxation, List of Expiring Federal Tax Provision 2013-2023 (01.11.2013), there are 55 provisions that will expire, of which 24 would be categorized as business provisions.  While many of these provisions have been extended previously; it is unlikely they will be extended again, based on the current tax policy environment.

Are there activities that you are considering implementing in 2014 that if you moved to 2013 would allow you to take advantage of tax benefits?  Some of the more general provisions include -

15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements (secs. 168(e)(3)(E)(iv), (v),(ix), 168(e)(7)(A)(i) and (e)(8)) – In 2014, the straight-line recovery period will revert back to 39-years.

Increase in expensing to $500,000/$2,000,000 and expansion of definition of section 179 property (secs. 179(b)(1) and (2) and 179(f)) – In 2014, deduction and qualifying property limits will be $25,000 and $200,000, respectively.  Additionally, off-the shelf computer software qualifies for Section 179 expensing in 2013, but not in 2014.

Tax credit for research and experimentation expenses (sec. 41(h)(1)(B))

To understand what expiring provisions will impact your specific situation, it is recommended that you consult with your tax advisor.

To review the full listing of expring provisions, please see -https://www.jct.gov/publications.html?func=startdown&id=4499

When do U.S. contractors owe taxes on Canadian construction projects? / American construction contractors and subcontractors should be aware that a Canadian tax may be payable related to projects undertaken in Canada

JEREMY VEILLEUX AND STUART LYONS  for nhbr write: U.S. construction contractors and subcontractors performing large or small construction projects or specialized services should be aware that a Canadian tax may be payable related to projects undertaken in Canada. If so, a Canadian tax return must be filed and tax must be paid on any earnings generated in the country.

While the tax will apply only if a party is deemed to have created a “permanent establishment,” the rules and definitions governing taxation of Canadian projects make it clear that a P.E. may exist even in the absence of a true permanent office. (Thus, “permanent” really means temporary.)

“Permanent establishment” is an international term very similar in concept to U.S. states’ use of the term “nexus.” Both terms describe a connection sufficient to allow the assessment of tax. Two primary factors impact the creation of a permanent establishment in Canada: The distinction between construction activities and service activities, and the duration of the project.

According to the U.S./Canada income tax treaty, “a building site or construction or installation project constitutes a permanent establishment if, but only if, it lasts more than 12 months.”

The test applies to each individual site or project, allowing more than 12 months of activity if no project exceeds that limit. The measurement includes preparatory work, such as installation of a planning office. Also, seasonal interruptions due to bad weather and temporary interruption caused by shortage of material or labor difficulties generally are included in determining the length of a construction project.

Even if a general contractor provides only intermittent general oversight, its subcontractors’ activities can be attributable to the U.S. general contractor, thereby requiring income tax filings in Canada if such subcontractor activities in Canada last longer than a year. For this purpose, the general contractor’s control is relevant. If the general contractor has effective power and control to use the construction site as stipulated in the general contract, the activities of the subcontractor will be attributed to the general contractor.

Services and activities

The tax rules make an important distinction between services and construction activities.

Generally, an entity that performs services in Canada for 183 days or more in a 12-month period will be deemed to have a permanent establishment in the country. Because a permanent establishment is established for services at a much lower threshold than for construction, it is important to correctly make the distinction between the two.

For example, will a U.S. contractor providing construction management services or oversight of a project escape Canadian taxation if the project lasts for 10 months? Generally permanent establishment will not exist in that case, because the treaty language allows it to qualify as construction, and the duration did not exceed a year.

By contrast, a U.S. contractor providing repair and maintenance services for an electrical generating plant or performing janitorial duties at a work site for over six months will be deemed to have a permanent establishment because its efforts do not qualify as construction.

While a construction company may be exempt from paying Canadian income taxes on its profits due to the 12-month rule, this does not necessarily alleviate some filing requirements.

Form T2, the corporation income tax return, is filed by entities that have a permanent establishment, but it also should be filed by some entities that are exempt under the rules described above, because it serves as the mechanism by which companies claim the exemption.

In summary, because Canadian tax filing requirements vary based on the type of activity undertaken and its duration, it is very important for contractors to be familiar with the rules and monitor and plan the duration of their stay and that of their subcontractors.

Service providers that support the construction industry should pay special attention to the distinction between construction and other services, because the lower threshold applicable to services may create filing requirements that otherwise may not be expected.

How Mom and Dad Can Gift a Piece of the House / Gifts of home equity are one way parents can provide financial assistance while keeping a high-price home within the family.

• ANYA MARTIN for the Wall St Journal writes:   
One way to keep adult children closer to home: gift them a piece of the house.

Most of the time, down-payment assistance from parents comes in the form of cash. But gifts of home equity are another option to provide financial assistance while keeping a high-priced home within the family.

Gifting equity in the family home "can be a nice way for a parent to help a child afford something larger in a better neighborhood," said Katherine Dean, head of wealth planning for Wells Fargo Private Bank, which has seen a recent rise in higher-net-worth clients gifting equity.

Typically, downsizing parents gift a percentage of their home's equity to their child, who then uses a mortgage, cash or other resources to cover the rest of the purchase price, explained Edward J. Achtner, regional sales executive and senior vice president in Northern California and Oregon for Bank of America.

In another scenario, the parents can gift a portion of their home's equity to a child while remaining in the house.

For tax purposes, the Internal Revenue Service considers a gift of equity the same as a cash gift, subject to maximum allowable annual tax-exemption limits. That amounts to $14,000 a person in 2013, but each parent can give $14,000 to both a husband and wife, for a nontaxable sum of $56,000. These annual gifts are not counted toward the parents' lifetime federal estate-tax exemption, which in 2013 is $5.25 million per person, or $10.5 million for a couple.

Parents who want to give more than the $56,000 allowed under the annual gift-tax exemption may prefer to claim the gift under the lifetime estate-tax exemption instead. When filing taxes, they must report the amount above the limit, but no taxes will be due as long as the amount does not exceed the lifetime estate-tax exemption.

Parents can gift any amount of equity up to the residence's full value, and with home values in some areas still below peak, now could be a good time to maximize real-estate gifts, said Adam von Politz, head of estate planning for Citi Private Bank, North America. For example, a $5.25 million piece of property gifted today as part of the estate-tax exemption won't be subject to any federal gift tax. But a parent who waits five years to gift a home, which has grown in value to $7 million, will have to pay federal gift tax on the amount above whatever tax limits are in effect at that date.

"You will have lost the opportunity to have passed the post-gift appreciation free of gift tax," Mr. von Politz said. Parents also should consider whether that home, versus a stock portfolio or another asset, is likely to accrue more value and gift the asset that has the greatest appreciation potential, he said.

Equity-gift transactions have their own complications. Parents need to prove to the IRS that they are selling the home to a child at its fair-market value, and any difference between the fair-market price and the sales price also will be considered by the IRS as a gift, said Amir Mossanen, a Beverly Hills, Calif.-based wealth adviser for Wells Fargo Private Bank.

In cases where parents retain part-ownership, that often means two appraisals, one for the full home and one to determine the value of the gifted portion for the exemption, he added.

A second "minority" appraisal may cost more than a whole-house appraisal because of the complexities involved, Mr. Mossanen said. Also, the value of the share typically isn't a straight-out percentage of the total value. In other words, the appraiser will value 40% of a $10 million home as worth less than $4 million, he added.

"Unless you have a controlling interest in an asset, a portion is worth a lot less," Mr. Mossanen said. The reason is a minority holder typically can't make the decision to sell the asset, he added.

Of course, annual and lifetime gift limits can be changed by Congress. Other factors to consider:

• No existing mortgage. The entire mortgage on the parents' home must be paid off before a gift of equity can be made against the property.

• Capital-gains taxes. A luxury-home sale may trigger capital-gains taxes if the sales price is more than $500,000 greater than the parents paid to purchase it. If the child inherits the house and sells it the next day, the cost basis will be set at current market value.

• Possible higher property taxes. In California, for example, if a home is sold, property taxes can be reassessed to the home's current fair-market value. But the state has a parent-child exemption for reassessment if the property is inherited.

Huge tax savings on capital gains by using Section 1031 Tax Deferred Exchange (Real Estate Investment)

Patricia Flowers for NEREJ writes: The lazy, hazy days of summer may be in full swing but there's no "just hanging around" happening here in the §1031 exchange division. The investment real estate market has been quite active, with many multi-housing properties listed in the area on the market for less than 24 hours (yes, true!).

Subsequently, many are taking advantage of the huge tax savings on capital gains and recapture tax by participating in a Section 1031 Tax Deferred Exchange. Strategy and timing are more important than ever. When investors are analyzing property, determining the right time to sell, a number of factors are taken into consideration.

For example:
If an investor bought an apartment building for $100,000 in 1975 and it is now valued at $1.8 million, the property has appreciated significantly and is now worth eighteen times what it was in 1975. Clearly, this was a great investment. But, like all investments, one should analyze whether it is now better to hold or to divest the asset.

The apartment building is currently owned free and clear of debt. It has been owned for more than 27.5 years so it is fully depreciated and no longer eligible for annual depreciation deductions on the investor's tax return.

Reviewing the cash-flow, after property taxes, maintenance, and insurance, it produces net rental income of about $3,000 per month. $36,000 per year on an investment property worth $1.8 million amounts to 2% annual income on the investment. However, the original $100,000 investment has grown by 1800% and there is now $1.8 million worth of equity tied up in one asset. Since interest rates are at historic lows, what better time than now to unlock some of that equity and exchange, tax deferred, into one or more properties with greater income and long-term appreciation potential?

Through an I.R.C. §1031 exchange, this real estate investor can sell his investment property and accomplish a number of tax and investment goals.

A §1031 tax deferred exchange permits the investor to defer federal and state capital gains and depreciation recapture taxes. The investor can buy property with improved cash-flow, and if encumbered, with an interest deduction to be claimed. If the replacement property is greater in value than the relinquished apartment building, then depreciation deductions will also be available for the increased basis (the difference between the purchase cost of the new property, less the gain deferred on the exchange of the old property). Additionally, because multiple properties can be acquired through a single exchange, the investor can diversify the real estate portfolio, thereby hedging the investment risk inherent in a single property.

Appreciation, depreciation, cash-flow, diversification and tax deferral are important drivers for doing a §1031 exchange. Investors should examine their real estate holdings and do the 5 point analysis suggested in this article. If repositioning a real estate portfolio is in order, the valuable tax benefits of a §1031 exchange should be considered.

Two taxpayers lose income tax deductions for spousal support payments

• Loeb & Loeb LLP write:

Two recent Tax Court cases serve as a reminder that the income tax deduction for the payment of spousal support is subject to some very specific rules. In John D. Nye and Rose M. Nye (July 15, 2013), John Nye was divorced from his first wife Alice Nye in 1990. An agreement between them that was incorporated by the judge in his order required John to pay Alice spousal support in the amount of $3,600 per month.

In 2006, Alice went back to court and sought an increase in the monthly spousal support payments. Subsequently, the parties agreed that John would pay Alice a single lump-sum payment of $350,000 in exchange for which Alice would waive her right to any further spousal support. John paid the $350,000 in 2008 and took an income tax deduction for spousal support, which the IRS disallowed upon audit. The Tax Court agreed with the IRS and upheld the denial of the deduction.

The fact that the alimony was settled through a lump sum payment was not the problem. The Internal Revenue Code does contain rules prohibiting lump sum spousal support payments, but they only apply to the first three post-separation years. Since the Nyes were divorced in 1990, those rules were not applicable.

One of the requirements for spousal support payments to be deductible is that the payments must terminate upon the death of the payee spouse. In this case, it was possible that Alice could have died between the time the agreement was signed on December 7, 2007, and the time that John paid her on January 28, 2008. There was nothing in their agreement that would have cancelled the payment had Alice died, and the Tax Court determined there was also no provision of state law (Florida) that would have cancelled the payment. Therefore, the payment did not qualify as deductible spousal support.

The second spousal support case is James J. Faylor (June 5, 2013). In this case, another of the requirements for deductible spousal support payments was violated. While the attorneys for the taxpayer and his wife were negotiating a support and property settlement agreement, the taxpayer paid his spouse $20,000 in payments for temporary support. The agreement under negotiation was never finalized, but the court eventually issued an order dissolving the marriage and requiring prospective spousal support payments.

James claimed a deduction for the $20,000 he had paid as temporary support before the court order was issued. The IRS denied his deduction on the basis that deductible spousal support must be paid pursuant to “a divorce or separation instrument.” The court’s order did not cover the $20,000 paid as temporary support, and the agreement under which it was paid was never finalized and signed by the parties. Therefore the Tax Court agreed with the IRS that the payment had not been made pursuant to a divorce or separation instrument.

This case may serve as a reminder of the old saying “no good turn goes unpunished.” In any event, it does, along with the Nye case, serve as a reminder that very specific rules must be followed in order for payments of spousal support to be tax deductible. The Tax Court showed in both cases that it requires strict compliance with these rules.

Upcoming Xero Launch Integrates Full U.S. Payroll with Accounting Apps

TAIJA JENKINS, for CPA Practice advisor writes: Xero, developer of online accounting software, announced plans to roll out an integrated payroll feature in the U.S. The announcement was made at the company’s inaugural U.S. Xerocon in San Francisco.

The new Xero payroll will seamlessly integrate with Xero’s accounting software. The offering will feature automatic tax calculations, direct deposit and checks, a mobile employee payday app, electronic tax filings and payments and an open API platform.  Xero’s payroll solution will help streamline workflow between accountants and their small businesses clients.

"With Xero’s payroll solution, small businesses get a general ledger that is updated in real time with all their payroll information. At the same time, employees can use the employee portal or mobile app to submit time sheets, request time off and access pay stubs - anywhere, anytime,” said Jamie Sutherland, Xero US President.

Xero payroll is designed to make it easy to collaborate and maximize efficiency by removing manual data entry and external exporting and importing of client payroll data. Small business owners will be able to manage payroll from anywhere, giving them true mobility. Xero payroll will support all the accounting functions Xero currently supports plus direct deposit, check printing and federal and state filing. State filing will initially be available in California before rolling out to other states. In addition, employees can use the app to submit time sheets and schedule time off right from their mobile device.

"Now small businesses and their financial advisors can calculate payroll, pay staff, file tax returns and make payments electronically with Xero. Because this system was built from the ground up, our payroll solution syncs seamlessly so your books are updated automatically,” said Stuart Mcleod, Xero VP of Global Payroll.

Xero payroll is scheduled for release in early December. To help customers prepare for the launch, Xero is embarking on a 20-city road show starting October 21 and hosting a series of webinars and how-to videos.

“The addition of payroll strengthens Xero's comprehensive, seamless accounting platform and eliminates the need for time consuming, manual entry processes for small businesses,” said Sutherland. “No company has done this before. It is an absolute game changer that brings total transparency to the financial spectrum.”