Process pay runs in Xero and these pay runs can be reported in an STP compliant way. If this is elected there is additional work needed so that the PAYG figures are not duplicated in Xero. Please see below:
Recreating individual Payruns in Xero:
If you prefer to see each individual pay run in the Xero file you will need to complete the following steps in the Xero organisation.
This will enable you to refer to the Payroll Activity Summary for the payroll figures for each quarter.
Please pay particular attention to the notes.
STEP 1: For each employee remove the 'Employee Opening' balances in the Employee set up
STEP 2: For permanent employees amend each employee's Annual Leave and Sick Leave balance to be the balance as at the pay run prior to entries you are about to make
STEP 3: Remove & re-do all of the 'Payments' and 'Bills' In Xero associated with Payroll
- Note 1 - By removing the payments and bill will impact the following:
- The bank account balance from which the wages are paid from
- The profit and loss figures associated with Wages expense
- The PAYG Payable, Superannuation Payable and the Wages Payable
- Any other accounts typically used by your organisation in regards to payroll
- Note 2 - To bring some of the information from the source file to Xero we have to use clearing accounts during the conversion. These accounts are called:
- Conversion Clearing Account (199)
- Conversion Clearing Bank Account (198)
- GST Clearing Account (standard MYOB code)
These accounts enable us to reproduce the data from your old accounting package as accurately as possible. When you receive the Xero Subscription these accounts are balanced to 0 and archived. If you have to delete any transactions, make sure you also delete any of the associated clearing transactions. Each transaction in the conversion clearing account has a Debit amount and corresponding Credit amount.
Once you have deleted the Payments and the Bills as required if you have a balance in the conversion clearing account this usually indicates that you have deleted, voided or amended a transaction that has direct reference to the conversion clearing account - however, you have not deleted the corresponding amount.
- Note 3 - To identify all of the 'Bills' associated with payroll please complete the following:
- Select Accounts > Purchases > See All > Use the search function and enter 'Payroll'
STEP 4: Re-create each pay run in the Xero organisation
- Note 1 - In most instances, Xero will not allow you to select a date/payment date prior to 90 days so you may need to contact Xero support to see if they can offer a workaround for this issue.
- Note 2 - It is important to keep in mind that due to software differences between MYOB/Reckon and Xero there is no way to guarantee that over this period of time the pay run totals between the two systems will match. That is why we prefer to bring in the Employee's opening balances to avoid such discrepancies. To ensure that the payrun data in Xero will match the source file you may need to complete manual adjustments to ensure each line associated with the Payrun is correct for example: Ordinary hours, PAYG, Superannuation, Deductions, Reimbursements and Leave Accruals.
STEP 5: Allocate Payment from the bank account to the correct liability account. In Xero, the Wages Payable will sit as a liability on the balance sheet until the payment has been coded from the bank account. The liability account is usually the 804 - Wages Payable account. However, if you are unsure please check the 'Payroll settings'.
STEP 6: Complete a bank reconciliation for the bank account that you usually pay wages from to ensure that the bank reconciles as per your paper form bank statement.