7 Payroll Reports Every SME Should Track in Xero

Why Payroll Reporting Matters for SMEs

Small business owners juggle multiple tasks — managing clients, projects, and staff. Amid all this, payroll can easily become a hidden stress point.

Jenna, who runs a boutique marketing agency, once realized her superannuation contributions were off for several months. Fixing the issue was stressful and time-consuming, and she worried about compliance penalties.

Accurate payroll reporting is more than a task — it safeguards staff trust, financial health, and compliance. The Australian Taxation Office (ATO) emphasizes the importance of accurate payroll records to avoid penalties and maintain employee trust.

Read more: Xero Payroll Setup & Guides

• The Ultimate Guide to Xero Payroll for Small Businesses
• How to Set Up Xero Payroll for Your Small Business
• Running Your First Payroll in Xero: Tips for Accuracy
• Automating Payroll Calculations in Xero: Step-by-Step
• Processing Employee Leave, Overtime, and Bonuses in Xero Payroll

For SMEs, tracking the right reports in Xero ensures payroll runs smoothly, risks are minimized, and growth stays on track.

1. Pay Run Summary Report

The pay run summary provides an overview of each pay cycle — total hours, gross pay, deductions, and net pay for all employees.

Regularly reviewing this report allows owners to spot errors in hours, rates, or deductions before finalizing pay. Mistakes can lead to underpayments, overpayments, or unhappy employees.

Jenna started reviewing the pay run summary every cycle and caught a mis-entered overtime rate before it impacted her team.

2. Employee Earnings Summary

This report details how much each employee has earned over a selected period, including overtime, bonuses, and allowances.

It helps support performance reviews, tax reporting, and financial planning. Without it, inaccurate earnings data can affect taxation, super contributions, and employee trust.

A creative agency used this report to identify underreported overtime, ensuring staff were paid fairly and boosting morale.

3. Leave Accrual Report

Tracking leave balances is essential for managing holidays, sick leave, and long-term entitlements.

This report prevents overpaying leave, ensures compliance with labor laws, and helps plan staffing needs. Mismanaged leave can create payroll errors, scheduling conflicts, or compliance penalties.

A small café owner avoided end-of-year disputes by regularly reviewing leave accruals in Xero.

4. Superannuation Contribution Report

This report tracks employer superannuation contributions for each employee.

It ensures contributions are correct and statutory obligations are met. Ignoring this can trigger ATO penalties and damage employee trust.

Jenna used the super contribution report to verify monthly payments, preventing errors that once caused a stressful review with her accountant.

5. Payroll Tax Report

For SMEs subject to payroll tax, this report summarizes taxable wages and employer obligations.

It provides a clear view of payroll tax liability, reducing the risk of late payment fines. Missing this report can result in fines or cash flow surprises.

A local retailer used it to plan monthly cash flow and avoid unexpected tax liabilities.

6. Payroll Activity Report

This report shows detailed payroll events, including adjustments, pay run edits, and historical changes.

It ensures transparency, supports audits, and helps reconcile discrepancies. Ignoring it may lead to errors, compliance issues, or audit complications.

A small consultancy identified a duplicated bonus entry by reviewing the payroll activity report before payday.

7. Employee Leave and Payroll History Report

This combines leave records, historical pay, and adjustments in one view.

It is useful for performance discussions, employee queries, and year-end reconciliation. Without it, small discrepancies can escalate into disputes or compliance risks.

By regularly checking historical payroll data, a digital agency avoided an end-of-year leave payout miscalculation.

Best Practices for SMEs Using Xero

• Schedule regular reporting: weekly, monthly, and quarterly reviews.
• Cross-check totals: compare pay run summaries with accounting ledgers.
• Document corrections: keep a clear record of payroll adjustments.
• Use automation: automate recurring pay and deduction entries to reduce manual errors.
• Train staff: ensure team members handling payroll understand reports and compliance requirements.

FAQs

Which reports are mandatory for compliance?

Superannuation and payroll tax reports are essential for statutory compliance. Other reports support accuracy and internal oversight.

Can Xero generate custom date ranges?

Yes. Reports can be filtered by week, month, quarter, or financial year.

How often should I review these reports?

Monthly reviews are recommended, with additional weekly checks for active pay cycles.

Are these reports accessible to employees?

Xero allows controlled access — employees can view their payslips but not sensitive company-wide data.

Do these reports help during audits?

Yes. They provide a transparent record of all payroll activities, adjustments, and compliance checks.

Read more: Payroll Management & Optimization

• Cash Flow Risks from Poor Payroll Management and How to Fix Them
• Employee Payment Errors: Why They Happen and How Xero Fixes Them
• Xero Payroll vs Other Payroll Software: Which is Best for SMEs?
• In-House Payroll vs Outsourced Payroll: Pros, Cons, and Xero Benefits
• Cost of Payroll Errors vs Investing in Payroll Services
• Why SMEs Choose Xero Payroll Over Manual Accounting
• Monthly Payroll Checklist for Small Businesses Using Xero
• 7 Payroll Reports Every SME Should Track in Xero
• Automated Payroll Tasks You Can Implement in 30 Minutes

Conclusion

Tracking payroll reports in Xero is a proactive step for SMEs. It ensures compliance, maintains employee trust, and frees owners to focus on business growth. Regularly reviewing these seven reports gives clarity, prevents errors, and protects both staff and financial stability.

Start reviewing your payroll reports in Xero today. Gain insights, reduce risk, and make payroll management simple, accurate, and stress-free.