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EOFY Payroll is easy right – I mean your accounting software does it for you so what have you got to worry about?

A few clicks of a button and payment summaries are issued to staff.  Done, feet up and champagne cracked open.  But wait….

“If you don’t understand payroll and accounting terminology chances are your payroll is incorrect – FACT.”

I know what you are thinking….my accounting data file is correct. I have been coding things all year and it is all sweet.  But just because you are coding things “somewhere” in your data file does not mean that “somewhere” is the right place for them to go.

So before you put your feet up, pour the bubbles and issue payment summaries to your staff, why don’t you read about the EOFY payroll errors I have encountered in people’s Xero data files in the first 6 days of July:

1.Superannuation salary sacrifice was setup in Xero as a deduction and not a superannuation item.  This means it is reported incorrectly on the payment summary.  Not to mention this super salary sacrifice was never actually paid to the super funds – meaning for disgruntled staff.

2. Annual leave is not accruing for full time or part time staff so 12 months of weekly payrolls had to be redone to ensure going forward the annual leave balance was correct for each employee.  All leave taken then had to be re-entered in Xero correctly as leave and not as ordinary hours.

3. Purchase leave accrual for staff who were made redundant was not deducted from their final pay (costing the business close to $1500 it now can’t recover). Leave items that are “abnormal” need to be reconciled each month to ensure you are on track.

4. Staff were paid and no pay runs were setup in Xero and timesheets were then thrown away so payroll now cant be accurately reconstructed.  This is a time consuming (not to mention costly) fuck up to fix.

5. Staff were paid and no tax file number declarations were received so the wrong tax was withheld (and in some cases no tax was withheld and the wages now needs to be grossed up costing the business a lot of money it was not expecting).  These forms need to be checked and received when staff start.

6. June payroll which was paid on 1st July was dated 30th June in Xero meaning it was recorded on the payment summary when it should appear in the next financial year.  Payment summaries were issued without checking this, and the client had to go and amend them and distribute amended payment summaries to staff.  Embarrassing.

7. The wages and tax amounts on the payment summaries were never reconciled back to the BAS’s/IAS’s lodged nor reconciled back to the Profit and Loss.  So now lodging the June BAS we need to do a full years reconciliation before we know what are the “right” numbers to complete on the BAS.

So do you still think your accounting system is accurate and reliable?  Do you still think EOFY payroll is a piece of cake?

Now of course I don’t mean to stress anyone out….the 14th July deadline to get payment summaries to your staff is fast approaching.  So to help you out we have developed our EOFY Payroll Checklist for you.  A simple list of things to think about before hitting “send” on those payment summaries.

You can download our free checklist here.

If you are unsure about EOFY payroll or if this is your first time – don’t be scared to ask for help.  Getting payroll wrong has huge implications – and it is simply not worth the risk.