Xero Acquires Monchilla to Expand Payroll Services in the U.S.

Online accounting software maker Xero has acquired Seattle-based online payroll company, Monchilla Inc. The move shows Xero’s continued commitment to the U.S. market to provide small businesses with an innovative cloud-based financial platform with the simple-to-use accounting and payroll tools they need to save time and make money.

The acquisition of Monchilla’s payroll expertise and technology helps Xero rapidly accelerate the extension of its payroll offering to serve small businesses in more U.S. states. Currently, Xero’s Payroll service supports seven states, accounting for about 60 percent of small businesses.

Integrating Monchilla’s advanced technology with Payroll in Xero will offer Xero’s small business customers improved business-to-government connectivity with the ability to electronically file, calculate and pay payroll taxes in U.S. states in 2015.

“We like the Monchilla team’s straightforward approach to filing and paying payroll taxes,” said Jamie Sutherland, Xero’s president of North America. “Combining this capability with the work our team is doing will enable Xero to develop a superior payroll experience for the U.S. Ultimately, this makes it easier for our small business customers to pay their employees and file payroll taxes without the worry of complying with new tax codes or missing filing deadlines.”

With the acquisition, the Monchilla team will join Xero. Monchilla’s two co-founders, Jack Couch and Nanjuan Shi, will take leadership positions within Xero’s payroll team. Their continued involvement will complement Xero’s U.S. product development team and support Xero’s payroll strategy to drive further growth.

“It was an obvious choice for us to join Xero and our combined expertise will ultimately help us build a more rounded out, intuitive payroll solution to fuel our customers’ growth,” said Monchilla co-founder and CEO, Jack Couch. “No other company is building an elegant and full-featured accounting and payroll app. And when more business owners experience what it’s like to set up payroll in just a few minutes directly within their Xero accounting app it will be a permanent game-changer.”

Monchilla, as an early stage start-up, was in the initial stages of building a customer base. With the acquisition, Xero will continue to support Monchilla’s current customers. Once Payroll in Xero is available with full electronic filing and payments of payroll taxes, Xero will work with existing Monchilla customers to move them to the Xero platform.

Xero purchased Monchilla from founders, Jack Couch and Nanjuan Shi. The total purchase price for Monchilla is comprised of US $4,127,688 in cash together with 238,490 Xero Limited ordinary shares to be issued to the founders at closing.

In the U.S., there are approximately 5.3 million small business employers with fewer than 19 employees. Many of them waste precious time navigating complicated tax tables, which leads to errors and costly fines. Others use payroll software that’s not seamlessly integrated with their accounting software. Payroll in Xero simplifies how small businesses do payroll by calculating payroll, paying employees and filing payroll taxes all within the Xero accounting software – now a company’s books are up to date without needing to download files or re-enter data.