Process a pay run

Create a scheduled pay run then if you need to, adjust your employees’ pay. When you're ready to pay your employees, complete the pay run to pay them in Xero and calculate your taxes. You can't delete the pay run once it's complete.

Before you start

  • Set up payroll, add employees and their opening balances.
  • Add a pay calendar and create employee pay templates. Pay schedules let you add a pay run to a period in the pay period cycle. Pay templates contain the employee's base pay details. Without a template, you’ll need to add the employee’s pay details manually.
  • Decide how you'll pay your employees if you're paying your employees with BACS.
  • Approve all employee time off requests and timesheets so they're included in the pay run.

Create a draft pay run

  1. In the Payroll menu, select Pay Runs.
  2. From New Pay Run, select a pay period.
  3. Click Process Pay Run.
  4. (Optional) In the Payslip Message field, enter a message to show at the bottom of all payslips.

Adjust an employee's pay and post a pay run

Adjust an employee's earnings, deductions, taxes, reimbursements, superannuation or leave before posting a pay run. For example, you can add to an employee's earnings by giving them a bonus or you can manually adjust their employee taxes.

If an employee's start date falls part way through a pay period, then Xero will pro rata their pay automatically based on the number of working days.
  1. From a draft pay run, click the employee who needs a pay adjustment.
  2. Click Add [pay item] for the adjustment type you want.
  3. Enter an amount to add or deduct for the adjustment.

    To see how much you contribute to each employee's pension scheme and how much you'll need to pay your pension provider, view and print a Pension Contribution Report.

  4. (Optional) Manually adjust tax for an employee's pay.
  5. Click Save & Close.
  6. (Optional) Click the Memo button Image of the Memo button. to add a personal message on the employee's payslip.
  7. Click Post.
  8. If you've set up automatic enrolment for your pension scheme, we'll post an alert to let you know if you should enrol any employees before you complete the pay run. You can either:
    • Choose to postpone their enrolment for up to 3 months, by selecting a date in the Postponement Date field. Then click Save & Review.
    • Choose to enrol the listed employees, by leaving the Postponement Date field blank. Then click Save & Review. This will apply default pay items to the employees and a whole period pension deduction will be calculated for both employee and employer in this pay run.

      Alert that appears if there are employees elligible for auto enrolment.

  9. Click Post to confirm your pay run.

Posting a pay run automatically submits RTI filings to report your employees' pay to the government. You can also post a pay run without employees in it to submit your filings to the HMRC.

Transfer funds to your employees' bank accounts

If you've set up your organisation to process payments by BACS and entered each employee’s bank account information, download the BACS file in Xero and import it with online banking to pay your employees.

If you're not paying your employees by bank transfer, you’ll need to pay them another way.
  1. In the Payroll menu, select Pay Runs.
  2. Click the posted pay run period to download the payment file.
  3. Click Options and select Download BACS File.
  4. Save the file and import it to your online banking account.

After your bank makes the payments, you'll need to code the transaction to the wages payable account you selected during set up.

Now you're ready to send payslips to employees.