Reconciling Wages & Super
Each week or fortnight when you process your wages Xero calculates how much tax you need to withhold from each employee as well as how much Super you need to pay. You then pay to your employees the 'net' amount owing to them (ie wages less tax). Xero automagically posts the correct amounts to your profit and loss and then posts what you need to pay to an account called Wages Payable and Superannuation Payable.
We see so many people when they click the reconcile button allocating the amounts to Wages and Super instead of the Wages Payable and Superannuation Payable accounts. This means if you are looking at your profit and loss (which you should be) your wages costs will be double what they really are!
The best thing to do is setup some bank rules so each time you pay wages the rule automatically allocates the transactions.
Transferring money between accounts
Both the tax and super figure from your wages each week should be transferred to your savings account along with the GST. Any other transfers between accounts or to your loan account are classed as transfers as well. Xero has a great little button that you can click for the transfer. It means when you go to reconcile the savings account or loan account you just click ok to the transaction.
When clients pay more than 1 Invoice at a time
Sometimes clients will pay multiple invoices at once or maybe you have a merchant terminal that takes multiple payments in a day. A few years back Xero released a great feature called Batch Deposits. They work in a similar manner to Batch Payments.
Head on over to the accounts menu and select Sales. Click on Awaiting Payment then start selecting the invoices that have been paid as part of the batch deposit. Don't forget if it's 1 customer you can use the search menu to find just that customer and select all. Then click Deposit. Ensure you have the correct account the money goes into selected and click Deposit.
Xero have a really handy video and help section
Bill vs Reconcile
If you are entering Bills to pay into Xero in the Purchases section (or using Shoeboxed or Receipt Bank) you need to ensure you are marking these bills off as paid rather than entering the bills then entering the expense again in the reconciliation section.
This is a common mistake we see all too often. Bills to pay are entered in when they are received. Payments are made manually from your bank account or the bill is automatically direct debited from your bank or credit card. Then when reconciling the bill isn't being marked as paid. Instead a new transaction is being created.
Keep in mind you should be on the Match page if you are paying a Bill already in Xero. Create page is only for expenses you haven't already entered into Xero as a bill.
Employees taking leave
When your employees have leave either Annual or Personal (sick) you need to ensure this is recorded in Xero correctly. This means you need to record this leave before you process the payrun.
Ideally you want your employees to apply for their own leave via the awesome Xero Me app (for employees). Alternatively just click Payroll > Leave > New Leave Request. Select the Employee, Leave type and hours taken.
Xero will then automatically keep track of how much leave your employees have.
Two Step Authentication
We all take security seriously, so it was great to see Xero introduce Two-Step Authentication nearly 12 months ago. You may be familiar with how this works with your bank.
Xero has a great blog post on how it works, how to turn it on and why it's a great idea.
Billable Expenses
If you buy things on behalf of your customers then you certainly should be using billable expenses in Xero. It's a great way to ensure you never miss billing anyone!
Turning a Quote into an Invoice
For those of you who have to prepare Quotes for your clients Xero has a great feature that saves so much time. You can prepare all of your quotes, clients can accept, decline or comment online and you can easily turn a quote into an invoice in an instant.
We put together some tips on using Quotes in Xero
New Reports
Xero is doing a lot of work on the reports side of things at the moment so we can all manipulate the information we want to see. Take a look at what's available now. We'd love to know what other reports or things you would like to see in Xero.
Questions
We love helping our clients with Xero. From answering your everyday processing questions to ensuring you are getting the most out of Xero. So keep those questions coming :)
