Ballbar testing of rotary axes in 5-axis machine tools can be time-consuming and requires high levels of operator expertise; especially in the setup process. Faster tests reduce down-time and encourage frequent updates to compensation parameters to reflect the current state of the machine. A virtual machine tool (VMT) is developed to emulate the machine tool, its geometric errors and the testing procedures. This was used to develop a new single setup testing method to identify all rotary axis locations errors, whilst remaining robust in the presence of setup error and linear axis squareness errors. New testing and data processing techniques remove the requirement for fine adjustment of the tool-cup and permit full automation of necessary toolpaths, including transitions. Using the VMT, error identification residuals were found to be 2.7% or less. Experiments and statistical analysis then showed that all errors can be measured using a single setup , and values are sufficiently close to the values measured using conventional multi-setup procedures to be used in error compensation. This method will significantly reduce setup durations and removes the need for any modified testing hardware.