Add a benefit for an employee

Add a benefit pay item for an employee then add it to their pay template. Xero then calculates the employer contribution for reporting.

Please check the IRS website for Small Business Employee Benefits or talk to your accountant for more information on setting up pay items

Publication 15-B (2017), Employer's Tax Guide to Fringe Benefits (IRS website)

  1. From Settings, select General Settings.
  2. Under Features, click Payroll Settings.
  3. Click the Pay Items tab and click Benefits.
  4. From Add, select the type of benefit.
  5. Enter a unique name for the pay item (this will show on the employee's paystub).
  6. Enter the other benefit details including the expense and liability accounts.
  7. Select the Show Balance to Employee checkbox to show it on the employee's paystub.
  8. Click Add.

You'll need to add the benefit pay item to the employee's pay template.

Depending on the benefit type, you can add a deduction for the employee’s contribution.

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