Why do you have to do the Pay run?
To "run a pay run", really just means that you are processing the payroll on your accounting software. This is a process required before you can actually make the payment as it calculates both the gross payment (before tax) , tax withheld, superannuation payment and the net (after tax) amount payable.
Now due to the ATO's Single Touch Payroll system, it's not only important, but also a legal obligation, that if you hire employees you need to FILE each pay run with the ATO on or before the day that you make the payment to your employee.
It's simple!
Steps to follow when logged into Xero (Remember: Not the app)
Click on the word Payroll in the blue banner at the top
Tap Pay employees in the drop-down menu
Click the button that says Add pay Run
Select the pay period for this pay run
Tap Next
Double Click on the employee's name to open up their individual pay
Enter total hours worked
Add any necessary adjustments such as adding an earnings line for any overtime worked by clicking the add earnings line button
Tap Save (Green button at the bottom)
Repeat this process for all employees
When you have checked every employee
Review reports
Tap Post Pay run
If you use ABA files to make batch payments through your bank, click on Pay Run Options to download the ABA file.
If you don't use ABA files and make payments individually on your internet banking, you can still click on Pay Run Options to send the employee their payslip
The final step is very important. You now need to File the payrun.
Click the green button that reads FILE
A declaration will appear. After reading, tick the box, tap Submit to ATO
To Watch TV.Xero to assist you click here : TV.Xero how to run a payrun
What does filing the pay run mean?
With the exception of closely held payees (eg: one director, who is the employee) who only have to lodge and report through STP from the 1st July 2021, it is now mandatory that all other small businesses lodge and report payments to employees through STP (Single Touch Payroll). Filing a pay run simply means 'reporting your pay run'.
What is Single Touch Payroll?
Single Touch Payroll (STP) is an Australian Government initiative that streamlines the reporting of tax and superannuation information to the ATO. Using STP-enabled software, you send your employees' salary and wage, tax withheld and super information to the ATO each time you pay them. This is Mandatory.