Select your payroll accounts

Set the bank account and Xero accounts you’ll use to pay your employees. Use the default Xero accounts or choose your own. If you're unsure about which account to select, speak with your accountant or bookkeeper.

What’s the difference between my bank account and my Xero accounts?

Your bank account is where you pay your employees from. It records the payroll transactions in your actual bank account and aligns with your bank statements. To keep track of your payroll finances and provide accurate reporting, Xero records your payroll transactions in general ledger (GL) accounts. For example, employee pay, payroll tax, and superannuation.

Once you’ve processed the pay run and paid the amounts from your bank account, you’ll reconcile your bank account to your Xero accounts to make sure they balance.

Change bank and account defaults

  1. In the Settings menu, select General Settings.
  2. Under Features, click Payroll Settings.
  3. From the Organisation tab, click Bank Account and select the bank account to pay your employees from.

    Image of the Bank Account list.

  4. (Optional) Select different Xero accounts for your payroll from the default wages, PAYG and superannuation accounts. For example, you could select a custom account in the Wages Expenses Account field.

    Image of the Payroll Settings accounts.

    If the account you need isn't there, add it to your chart of accounts.
  5. Click Save.

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