If you use Xero to process your payroll, you can set up Single Touch Payroll in a few clicks. STP works by sending tax and superannuation information from your payroll or accounting software to the ATO as you run your payroll.
All you need to provide are your billing and payment details. It’s easy to upgrade from a trial to a subscription with just a few clicks from within your Xero account. You don’t need an accountant to use Xero, however we recommend working with an accountant or bookkeeper as they can help your business succeed. If you don’t have an advisor, take a look at our directory to find advisors who are trained and ready to help you use Xero. With payment services like Stripe or GoCardless, customers can pay you directly. Include a ‘pay now’ button in your invoice to get paid even faster.
Important Things To Remember When Setting Up Xero Accou
Although Xero is savvy, it won’t automatically pay your invoices online by default. To do this, you’re going to need to accept online payment, which isn’t anything more than a 5-minute job. We believe that Xero is best used alongside an accountant or financial advisor.
In July, 2017 HMRC announced that all businesses and individuals will eventually have to file their accounts digitally. Xero does run on an accrual basis, but you can run reports on a cash basis by going into report settings and selecting ‘cash basis’. Cash accounting is the method of recording transactions in the accounting system as and when the transfer of cash occurs. Accrual accounting, on the other hand, records the transaction when the transaction happens. The Chart of Accounts is a vital component to properly utilising the best of Xero.
I also don’t follow how I would then “use” that PAYE figure sitting in 825 when it comes time to actually pay the tax. What I can’t work out is how I should be coding these DED transactions. What accounts should these payments be going against? I had originally put the PAYE against the “PAYE Payable” account, but that’s a Liability account.
As Xero automatically matches your accounting record with statement lines, a lot of small business owners mistakenly think they can skip this particular step in both the initial step up and daily use. But reconciling your bank is vital to ensuring an accurate account, allowing you to pick up on any missing or duplicated transactions. This can be easily solved through having a PayPal account set up in Xero for each currency. If you accept GBP and USD, connect your PayPal up to Xero with 2 accounts so all your data is accurately transferred. Dependent on your reporting needs, you may not have to bring in every transaction from your Payment Gateway and can instead use a shortcut, but it’s best to discuss your requirements with your accountant. With Stripe, the paid funds are transferred into your bank account as daily batches, instead of individual transactions. This can result in an inaccurate reporting where your individual sales and processing fees aren’t fully accounted for.
Step 5: Review Your Employees Tax Codes For The New Year
On a cloud accounting system like Xero, the data is always live. Small businesses often begin reporting on a cash basis, as it allows you to stay on top of your cash flow and is generally what makes more sense. Accrual accounting, whilst more advanced, does offer an important insight into whether your sales function is performing, and can be used to match expenses with revenues to determine your margins. It’s good practice to use the accounts space wisely, conglomerating reporting unless it is necessary for separate items like key expenses. Make sure you set these up using the correct names so they are later coded accurately, to ensure you get a clear view of how your business is running. We understand that most business owners don’t have the time to take care of the intricacies of the world and accounting and taxation.
Then, if you still have questions, use the ‘Get in touch’ button at the bottom of any support article. Do it yourself following our easy step-by-step guides in Xero Central, or use a data migration service such as Movemybooks. We ask for a phone number so that we can get in touch with you directly to help you get started on Xero.
Single Touch Payroll reporting is currently available through payroll, accounting and business management software. Xero is STP ready and available for anyone who wants to report salaries and wages, PAYG withholding and superannuation directly to the ATO with confidence and security. As a firm of Chartered Accountants, we help UK business owners with their HMRC and Companies House filing duties leaving them time to concentrate on running their business. Obviously, we correct such errors when preparing the final accounts and tax return each year – but it is better for all parties involved if the the payroll is posted correctly from the outset.
When you are ready, get in touch by calling or email us today to discuss how we can help. Secondly, insert the liability amounts that will show up in the balance sheet report on Xero. These are amounts that the company owes to other parties . “Xero” and “Beautiful business” are trademarks of Xero Limited. Access all Xero features for 30 days, then decide which plan best suits your business. We have a dedicated support team who can assist with this, please get in touch contact them via these steps.
You’ll need to map certain fields, but this is easy to do. Once imported you can check the statement balance in Xero to the current bank account balance and the proceed with coding the transactions. hi this is probably a stupid question but I’ve set up the bank feed for the RBS and it has refreshed from 21st July to current date.
- They will also update any Week1/Month1 indicators to Cumulative.
- There’s no business downtime or costs associated with upgrades.
- Check your eligibility for JobKeeper support, pay employees a wage subsidy, and file required reports to the tax office.
- With Xero you get free, unlimited support 24/7 from our customer support team.
- Single Touch Payroll is an initiative from the ATO to encourage frequent digital salary reporting – and it’s changing the way employers operate.
But there are no default liability accounts for Kiwisaver (either Employee/Employer), only an expense account for the Employer part. I can’t seem to find much about Kiwisaver in the Help area. I want this back-pay processed together with their normal pay instead of an unscheduled one. Other Community Managers, and I will usually change a thread’s title to make it easier for others viewing the forums to get a quick idea of the content of the discussion. All official connected apps are in our Marketplace, take a look at the different Payroll apps we have in the UK, and you can view reviews people have left for each.
Not because the software is lacking, but an accountant is best placed to help advise on best use, translate your findings into actionable strategies, and, moreover, do all that boring reconciling for you. You cannot recover more than the amount of National Insurance the employee owes in a month . Carry over the difference to later months – you can only make deductions in the tax year when you made the mistake and the year after. If you deducted too little National Insurance, pay HMRC the underpayment straight away. You can then recover the amount from your employee by making deductions from their pay. You can correct a mistake with an employee’s pay or deductions by updating the year-to-date figures in your next regular Full Payment Submission .
Payment summaries previously reported additional superannuation contributions only. This has now changed with STP, so all superannuation liabilities are now reported. If you’ve joined Xero part way through the financial year and need to report Opening Balances through STP, see the steps here.
While archived, data held within the subscription cannot be accessed by anyone. If you prefer, you can request for the data to be deleted. Similar to many SaaS providers, we use a top-tier, third-party data hosting provider with servers located in the U.S. to host our online and mobile services.
You’ll still need to pay all relevant subscription fees up to and including the day of termination. Our beautiful software is designed to be user-friendly even if you do not have an accounting background. The JobKeeper stimulus program just announced by the Australian government will help small businesses retain staff amid the COVID-19 slowdown. You can read our update (published 31/3/20) to find out whether your business qualifies, what steps to take, and when you’ll see payment. If you’re not registered for Automatic Superannuation, it’s not too late – check out this link for details.
Can I Backdate A Payroll?
Comprising of a list of all the accounts that are synced with your Xero account, this is how you can allocate and track your transactions, such as business expenses. Let’s run with Stripe as the example external payment gateway.