It's simple to add employees to Payroll in Xero
. Just enter their personal details, and their tax and payroll information, and their pay will be calculated correctly and efficiently.
This video tutorial shows you how to add and set up employees in the US edition of Payroll in Xero.Video transcript
In Xero, adding employees for Payroll is simple. Enter their personal details, tax and payroll information, and their pay will be calculated correctly and efficiently. Under the 'Payroll' tab, you’ll find the 'Employees' menu.
Let’s add a new employee. Enter their name and click 'Next' to get started. Now add their personal details and be sure to include their email address as this will be used to invite them into the employee portal. Is this employee a manager who will be approving other employees’ timesheets? If so, you can enable those permissions here. Save and the employee is now created. You’ll now need to add their employment and pay details and work through these tabs to fill out the information needed to calculate their pay correctly.
Employment: all the important stuff goes here – employee number, start date, social security number. Select what payroll schedule they’re on. If the pay frequency you want isn’t in this list, then you’ll need to add that option in 'Pay Schedules', back in your 'Payroll Settings'. If we linked one of our tracking categories to employee group in 'Payroll Settings', I can choose a tracking option for this employee. This will help with filtering and reporting later on. Let’s set the employee basis as 'full time' and select the 'holiday group' they belong to.
Next, we move on to salary and wages. Choose their regular earnings type and specify if they are hourly or salary based. Then put in their hourly rate or annual salary as the case may be, and nominate what their standard hours will be. Of course the reality may differ. That’s okay, it’s just acting as a base. And next, add in their primary work location and any other locations they may be working from. Ensure you save what you’ve done before moving on to the nest tab, 'Taxes'.
Here we select their filing status and enter their total allowances from the employee’s W4 form they’ll have provided you with, and any additional amount that gets kept aside if applicable. Select their tax exemptions if any. Remember to save and move on to state tax. This may vary from state to state, but for the most part it’s very similar to federal tax options. Save your work and move along one tab to 'Time Off'.
Here’s where we can assign the types of time off we set up for the business to this employee. Select the time off type and choose the schedule of accrual, like from the beginning of the calendar year or from when the employee started with the company so it’s accrued on their anniversary start date. Enter the hours that get accrued according to the accrual schedule, which is annually from the anniversary date in our case, and if you’ve set a limit as to what the staff can accrue up to, enter that maximum figure here. If they’re starting out with a balance already, then be sure to enter that in too.
If you want to assign another time off type, you can do that here. Time off requested to this employee will feed through here and you can see a business-wide view of leave management from the 'Time Off' page under the 'Payroll' drop down. You can check out the video there all about managing leave requests.
Next we’ll select the payment method. If we select 'direct deposit', then we’ll be prompted to enter their bank details. Now pay template is especially important. This is where we can set up the default pay items that populate a payrun for this employee. This will save you from having to re-enter this information each payrun. Add any additional earning that the employee is to receive. Are there any deductions that you might need to pull from their pay like a membership fee for instance? In this business, staff get reimbursed for mileage through payroll, so we’ll add a reimbursement line for that too. And finally add in any benefits that are part of their employment package and remember to save.
If this is a new employee just starting, that should be it. You’re done. The only thing left to do is invite them into the employee portal which we’ll take a look at shortly.
However if you are migrating over to Xero from another payroll system, you will need to enter opening balances for your existing employees using reports from your previous system. The balances need to be from the beginning of a quarter, so your first quarterly reporting to the tax office from Xero is a complete quarter. If you started part way through a quarter, that’s okay, but still put in the balances as per the beginning of the quarter and just process backdated unscheduled payruns to bring the payroll to date. Refer to help for further instructions on opening balances.
Now that we’ve completed setting up the employee, we can invite them into My Payroll, Xero’s employee portal. Navigate back to the 'Employees' page, select the employee you’ve just set up and any other you would like to invite and click 'Invite to Portal'. Those employees will be sent an email with an invitation link so they can set up their login and start submitting timesheets, viewing their pay stubs, and applying for time off.