Integrating with Xero Chart of Accounts
- Go to 'Payroll Settings' > 'Business Management' > 'Integrations'.
- Go to 'Xero' and click 'Add'.
Once you have selected 'Xero', Click the 'Connect to Xero' button:
You will then be transferred to the Xero website in order to choose an organisation and go through the Xero authorisation process to enable access to your data.
Accounting Integration
In order to continue using Xero as the accounting system for your payroll data, you’ll need to complete a couple more steps.
Once you are connected you need to select which business you want to send your payroll journal to.
Then you need to choose whether you want to export your pay run data as a manual journal or accounts payable invoice.
Additionally, you can also specify if you would like either of these options to posted as a draft journal.
Once you have configured your pay run option, the next step is to set up your chart of accounts by going the payroll settings tab on the payroll dashboard, click on 'Chart of accounts' under the business settings heading.
Importing your accounts from Xero
You can import your payroll accounts directly from Xero for use in payroll. Navigate to the Payroll settings > Chart of accounts page and select the 'import accounts' button. As you are already connected to Xero a list of accounts will show and you can then enable the accounts that you would like to use in the chart of accounts mapping. You can enable the required accounts by clicking on the toggle button as shown below:
Click the 'Save' button on the bottom of the page in order to save the configuration.
Configuring your accounts
Once you have imported and saved the required Xero accounts, you can map them within the Chart of accounts page. This article details the mapping process.
NB: When you map your default GL accounts, you'll notice that there is an option to "Split by location". This allows you to write a transaction line per location to the journal for the same account. This is particularly useful if you're using locations, classes or tracking categories within Xero. You can learn how to set up a tracking category in this article.
N.B. If you are using a nominal account from your chart of accounts which has a default tax option other than “No GST”, then this is that tax what will be applied to all expenses if that nominal account is mapped to the Employee Expense Account.
NB: The Xero API doesn’t allow us to write transactions to bank account. As such you have 2 options:
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You can post your payroll info to Xero as a purchase invoice much like the inbuilt Xero payroll does now. When you do this, the purchase invoice is reconciled against the bank account transaction and as such, doesn’t need a transaction line written to the bank account
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You can post to Xero using a journal. If you do this, you’ll need to create a payroll clearing account that we can post to which you can then use to reconcile against the bank account.
Once you have setup your chart of accounts, the pay run toolbar will have the 'Export to Xero' button available from within the pay runs. Simply click this when your pay run is finalised and your journal items will be exported directly to Xero:
Import employee payroll data from Xero
Go to 'Add Employees' and select 'Import Employee':
Click on the down arrow next to 'Import employees from', select Xero from the list of available services.
This process will import as much of your Xero data as possible, including:
- payroll calendars
- earnings rates
- deduction types
- leave types
- employee details (including their bank accounts [doesn't look like it imports bank details], super funds, start date, employment type).
If the import has been partially successful, the system will detail what data is incomplete. In the example below, the employee's Tax File Declaration is incomplete, however, it has not prevented the rest of the employee details from being imported:
In the above case, the employee is imported as an incomplete employee, and a user with access is able to go in and complete the rest of the details.
NB: Depending on your Xero settings, it is not always possible to import accurate and complete data for all employees. Please check the details of the employees listed above are correct, paying particular attention to the following:
- Opening Balances are not included in this import and will need to be manually entered for these employees;
- Employee leave allowances and accrual rates should be checked for accuracy;
- As of February 2018, tax file numbers may have to be manually added for imported employees