Payroll end of financial year - the sweetest one yet!

It’s that time of year again - only this year’s a little bit sweeter. Whether you need to finalise your Single Touch Payroll (STP) data or you still need to produce payment summaries (for the last time ever hopefully!),  Xero’s got you covered. Have a look at our easy-to-follow steps to make this end of financial year the sweetest one yet.

Finish any pay runs for the financial year

First things first: make sure all of your pay runs for the financial year have been posted. If you’re needing pay runs reported within the financial year, you’ll need to check that the payment date falls either on or before 30 June of that year 

Reconcile your accounts, comparing the Payroll Activity Summary report and the General Ledger.

Let’s now make sure your reporting is up to scratch! The best way to do this is to run the Payroll Activity Summary report, and compare this against the General Ledger report. You can run both reports by a custom date range, to help identify any discrepancies.

Check out our support article here for more details on reviewing your payroll transactions.

If you’ve found a mistake, don’t freak out! You can simply edit the transaction, use the remove and redo feature, or find and recode the transactions to the correct accounts.

💡Hot tips

  • If multiple expense accounts were used for earnings and superannuation, make sure the totals are added together and compared against the Payroll Activity Summary report.

  • Check for any transactions incorrectly reconciled against your expense accounts. You can check this by running the Account Transactions report.

  • There may be some manual journals throwing your totals off! Check these amounts by running the Journal report, and then click Manual Journals.

It’s also worth noting that if you’ve started with Xero part way through the financial year, make sure your employee’s Opening Balances match your Conversion Balances.

For those still needing to produce payment summaries, start by matching the Payroll Activity Summary report against the Payment Summary Details report.

Don’t let the report names fool you - you’ll still need to compare this information if you’re completing a STP finalisation. Again, you can run these reports for a customised date range, and make sure that the information balances.

💡Hot tips

  • The key thing to remember here, is that the Payroll Activity Summary shows gross earnings, whereas the Payment Summary Details report shows taxable earnings.

  • If any salary sacrifice or pre-tax deductions have been processed, they will need to be deducted from the gross wages that show in the Payroll Activity Summary report. The total should then match the Payment Summary Details report.

Remember, the Payment Summary Details report shows truncated values - the cents aren’t reported.

Identify and amend any mistakes

Any errors made throughout the financial year can be corrected using an unscheduled pay run. Simply create the pay run for the required period and enter the adjustment amounts. You can even enter negative values if you need to.

Check that the payment date of the unscheduled pay run falls within the correct financial year to ensure it’s reported correctly.

 

Claiming a deduction for superannuation payments

If you’re using Xero’s Automatic Superannuation feature, and are wanting to claim a deduction on contributions for the financial year, make sure you’ve allowed enough time for the contributions to reach the employees’ super funds. We recommend submitting your contributions two weeks prior to the deadlines listed by the ATO website. Details on how to process superannuation payments are here.

If you’re not registered for Automatic Superannuation, it’s not too late - check out this link for details. Alternatively, the payments would need to be made manually outside of Xero.

And you’re all done!

That’s it! There’s nothing else you need to do to finalise payroll year end. Any pay runs with a payment date after 01 July will fall within the next financial year and any new tax rates will be applied automatically. If there are any changes to the minimum wage that impact your organisation, this will need to be updated manually in your employees’ pay templates - you can find information here. To check if these changes impact you, please check out this link to the Fair Work Ombudsman.

Now it’s time to put your feet up, and treat yo’ self!

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