Xero payroll in Malaysia: how to run payroll and track payroll cost by project
Xero doesn't calculate Malaysian payroll on its own. This guide explains the setup most Malaysian Xero users end up with, what to post to Xero each month, and how to see staff cost per project.
If you keep your books in Xero, sooner or later you'll ask the same question every Malaysian Xero user asks: where does payroll go? Xero's own payroll product is available in countries such as Australia, New Zealand, the UK and the US, but not for Malaysia. Xero points Malaysian businesses to connected payroll apps in the Xero App Store instead.
Used Xero's Global Pay Run?
Some Malaysian Xero users produced basic payslips with Xero's Global Pay Run. Xero made it read-only on 23 July 2025 and scheduled it for full retirement after April 2026, so it can no longer be used to run payroll. If that's you, you'll need a Malaysian payroll app — and it's a good moment to set up EPF, SOCSO, EIS and PCB properly rather than recreate the old workaround.
That's not a bad thing. Malaysian payroll has its own rules — EPF, SOCSO, EIS, PCB, HRDF, Form EA, CP8D — and they're better handled by software built for them. The question is how to connect that software to Xero so your accounts stay right without double entry.
How Malaysian payroll and Xero fit together
A typical setup has three layers:
| Layer | What it does | Where it lives |
|---|---|---|
| Payroll and HR | Salaries, allowances, overtime, unpaid leave, EPF, SOCSO, EIS, PCB, HRDF, payslips, bank files, Form EA | Malaysian payroll software (e.g. altomateHR) |
| Expense claims | Employee claims, receipts, approvals, reimbursement | Payroll/HR software or a claims app |
| Accounting | Salary expense, statutory liabilities, bank payments, project P&L | Xero |
Each month, the payroll software produces a payroll journal (or bills) that posts the month's costs and liabilities into Xero. You don't re-type payslips into Xero; you post one clean, summarised entry per run.
What to post to Xero every month
A Malaysian payroll journal usually contains:
- Expenses (debits): gross salaries and wages, allowances, overtime, bonuses, employer EPF, employer SOCSO, employer EIS, HRDF levy, and any PCB the company bears on the employee's behalf.
- Liabilities (credits): EPF payable (employee + employer), SOCSO payable, EIS payable, PCB payable to LHDN, HRDF payable, other deductions (loans, zakat, CP38) and net wages payable.
- Reimbursed claims: approved expense claims paid through payroll, coded to the right expense accounts.
When you pay salaries and statutory bodies from the bank, those payments clear the liabilities in Xero.
altomateHR tip
In altomateHR you map each pay item and statutory amount to your Xero accounts once, under Payroll → Settings → Xero sync. There's even an optional "PCB borne by employer" account — leave it blank and that cost posts to Salary. Posting stops and names the problem if a reimbursed claim's account isn't linked, so nothing lands under the wrong code.
Track payroll cost by project with tracking categories
Xero tracking categories let you tag transactions — by project, site, department or branch — and run a Profit & Loss report filtered by that tag. For contractors, agencies, construction and services businesses, that's the difference between "we made money this year" and "Tower A made money, Tower B didn't".
The catch: payroll is usually the biggest cost on a project, and most payroll integrations post it as one lump sum. To get real project P&L, payroll must arrive in Xero already split by tracking category.
How it works in altomateHR:
- Sync tracking categories from Xero, so altomateHR uses the same project list.
- Assign employees to projects. Each pay run, their payroll cost posts to the matching Xero tracking category.
- Tag expense claims to projects too, so approved claims land in the same category.
- Run Xero's Profit & Loss by tracking category to see revenue, staff cost and expenses per project.
Example: one project, one report
Tower A · Site Works — revenue RM 420,000; staff cost from payroll RM 168,400; expenses from claims RM 96,250; project profit RM 155,350. All three figures come from Xero, with payroll and claims posted by altomateHR.
Keep claim receipts in Xero
Auditors and accountants want to see the receipt behind every claim. When altomateHR syncs an approved claim to Xero, its receipt and supporting documents are attached to the bill or spend-money transaction, so the evidence sits next to the entry in Xero. AI reads the receipt to suggest the expense type, and mileage claims can start from a Google Maps or Waze route screenshot.
Several companies, several Xero organisations
Groups often run one Xero organisation per Sdn Bhd. With altomateHR, each company in your group connects to its own Xero organisation; if your Xero login has several, altomateHR asks "Which Xero organisation is this company?" the first time, and keeps that link when you reconnect. One altomateHR login still manages payroll for every company. See our guide to multi-company payroll.
Checklist: choosing payroll software for Xero in Malaysia
- Calculates EPF, SOCSO, EIS and PCB to the official schedules, including employees aged 60+ and foreign workers.
- Produces Form EA, CP8D and PCB 2(II) in LHDN's formats.
- Posts to Xero as a journal or bills mapped to your own accounts — not a single "payroll" line.
- Supports Xero tracking categories if you cost by project, branch or department.
- Handles multiple companies and inter-company transfers if you run a group.
- Lets employees submit claims with receipts that reach Xero with the attachment.
- Exports bank files for your payroll bank.
FAQ
Does Xero have payroll for Malaysia?+
No. Xero's own payroll isn't available for Malaysia. Malaysian businesses use a connected payroll app that calculates EPF, SOCSO, EIS and PCB and posts the results to Xero.
How do I post Malaysian payroll to Xero?+
Post a monthly payroll journal (or bills) from your payroll software that debits salary and employer statutory costs and credits EPF, SOCSO, EIS, PCB, HRDF and net wages payable. altomateHR does this automatically from each approved run.
Can I see payroll cost per project in Xero?+
Yes, if payroll is posted by tracking category. altomateHR syncs Xero tracking categories and posts each employee's payroll cost to their project, so Profit and Loss by tracking category shows staff cost per project.
Do I have to use Xero to use altomateHR?+
No. Xero integration is optional; altomateHR works as standalone payroll and HR software.
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