ZenPayroll and Xero form cloud-based accounting partnership to rival the likes of ADP and QuickBooks

ZenPayroll, a cloud-based payroll management service, announced on Thursday that it has partnered with Xero, a small business accounting software, to take on the industry’s market leaders and give businesses an alternative when it comes to managing their finances.

With this new relationship, small businesses can now choose between traditional industry powerhouses ADP and Intuit/QuickBooks for their accounting needs, or this cloud-based accounting paradigm that ZenPayroll and Xero hope to offer them.

According to a Zogby survey commissioned by Xero, 72 percent of small business accountants said that having a real-time view of their client’s financials would allow them to offer sounder financial advice. Based on that, it probably wouldn’t surprise anyone that more of these businesses are seeking to move their financies into the cloud to offer ready access and greater visibility for those who need it.

For ZenPayroll, this is another step in its pursuit to make cloud accounting work for small businesses. Specializing in automated payroll services, this Y Combinator alumnus seeks to end the belief that a “one size fits all” model will work for everyone — it won’t. It’s probably why last week it unveiled ZenPayroll for Accountants, recognizing that small businesses are not fully staffed with in-house accountants, but rather outsourced to payroll specialists.

Joshua Reeves, ZenPayroll’s CEO, says that its customers can now not only manage their payroll, but also their accounting services right from the cloud. The partnership will help save time and money, resulting in “a winning combination.”

If it sounds like a story right from David versus Goliath, then you’re not that far off. Both Xero and ZenPayroll see themselves as services that cater towards the small to medium-sized businesses. The giant in the room obviously belongs to Intuit and payroll leader ADP, two companies that cater towards many different audiences.

But before you chastise QuickBooks too much, it’s critical that we not forget that it does offer a cloud-based solution — it’s called QuickBooks Online. In addition, it also offers mobile applications that have been been developed specifically for those in the small business space.

However, it’s completely understandable why some businesses might be a bit perturbed by what QuickBooks offers it. It remains to be seen whether any dissatisfaction with the company will result in more attention and paying customers for both ZenPayroll and Xero.

Photo credit: Peter Macdiarmid/Getty Images