To post your payroll journal in Xero or any accounting software you will need a report to show your finalised payroll. This could be from your payroll software or a report given to you by your payroll provider or accountant.
Most payroll providers and payroll software such as bright pay will have integrations set to your accounting software that will be able to post the journal for you.
To post the journal in Xero you will need to access Xero > Accounting > Manual Journals, below is an example of where you need to be on Xero:
In this section of Xero, you can see all journals that have been previously posted and you have the ability to either set up a new journal, import a journal or produce a repeating journal.
For your payroll journal you can either add a manual journal, which will be more useful if your wages are different every week/month and the figures will need to be amended each time.
Importing a journal can be easy to use if you use a payroll facility that can produce journal integrations.
A repeating journal would be appropriate for when the payroll figure do not change on a week by week or month by month basis and stay the same all year round.
Once you have decided which type of journal is most appropriate to use you can select and taking the figures from your payroll report or information provided by your accountant or payroll provider, you can enter them into Xero as below:
Here the first thing you will fill out is the description of your journal so you can refer back to the journal and find what the journal entry relates to.
Secondly you can enter the date of the journal, which in this case will be the period relating to the wages, in the example above I have used the 30th of September 2020.
In this example the wages journal only consists of gross pay and net pay. Gross pay is posted to an expense nominal in the profit and loss and the net pay is posted to a liability account to sit in the balance sheet until the amount is paid to the employee.
If the journal you are completing is more complex than the journal above please do not hesitate to call Northern accountants and someone will be happy to go through this in detail.
Robyn Jones is a Cloud Accountancy Specialist at Northern Accountants. Her role is to maximise our clients’ experience by utilising her technical accounting knowledge and being able to advise on the best practice to enhance business growth and stability.
Northern Accountants (Leeds), Olympus House, 2 Howley Park Business Village, Pullan Way, Leeds, LS27 0BZ