Chapter 1
Navigating Payroll Basics
In This Chapter
Gathering fundamental payroll information
Setting up contacts, accounts and tracking categories
Accessing payroll for the first time
A graphic design business has a dozen staff on its books. By using Xero Payroll, the business owner is able to not only pay his staff but also track the direct costs of staff directly involved in providing graphic design services versus the overhead costs of administrative staff. By doing this the manager can understand the gross profit of providing graphic design services, and therefore access information to assist him in planning and growing his business.
This chapter navigates the Xero Payroll basics. I cover gathering all the necessary information you need before you start, and take you through setting up accounts in Xero Payroll, as well as what to expect when accessing the function for the first time. Note: The Payroll system is built in to Xero’s small, medium and large packages for Australian businesses, as part of the subscription price.
The information in this guide is generic in nature. Payrolls are a highly specialised area, and the regulations governing this area change all the time. You should seek pay run specialist advice from your Xero advisory team to suit your specific circumstances.
Only users with Payroll Admin privileges can access the Payroll area in Xero, process payrolls, review payroll reports and see sensitive employee information. (Refer to Chapter 2 of Xero For Dummies for guidance on setting up users in Xero.)
If you’ve been using Xero for a few years, you may have started out using the original Payroll system. From the dashboard, it was accessed via Accounts
→Pay Run. If you’re still using this area, stop, ideally at the end of the month, and move across to using the Payroll system described in this book. If you can’t access Payroll via Accounts
→Payroll, don’t worry — it’s been ripped out of your system, never to be seen again!
Gathering Payroll Information
Before setting up Payroll in Xero, you need to gather some necessary information.
Payroll information
On a notepad, jot down the following:
Business logo for pay slip: You can use a .webp or .png file, and ideally the image should be 529 px wide by 139 px high. Make a note of where you file your logo. Sometimes locating these files is like looking for buried treasure!
Pay frequency: This can be weekly, fortnightly, four-weekly, monthly, twice-monthly and quarterly.
Pay period: When the pay period starts and ends.
Payment date: The actual date employees are paid.
Payment date of accrued employee superannuation funds. Payment date of taxes withheld from employees. Payroll Tracking Categories — Employee groups. Payroll Tracking Categories — Timesheet. Payroll Year: This can be 365 days or 52 weeks (364 days).
Employee information
Collect as much information about employees as possible before you set up their profile in Xero. Employees must complete a Tax file declaration (NAT 3092) and Superannuation Standard choice form (NAT 13080), which provides so...