Setting Up Owners Wages in Xero

This article explains how to set up xero accounting software so that owners wages and super are calculated properly

Step-by-step guide

For the owners wages:

1. Log into your xero account
2. go to settings >> payroll settings
3. go to the 'pay items' tab
4. set up a new pay item called 'ordinary hours owners' . Set this in the same way as the ordinary hours rate on the same screen.
5. map this pay item to the correct account 'wages and salaries associated persons' in the same section
6. save this item
7. then go to xero main menu >> payroll >> employees
8. You must do this step now not later: select the employee >> employment tab >> ordinary earnings rate >> set this to  'ordinary hours owners' 
9. select the employee/business owner >> pay template >> and set their primary earnings rate to 'ordinary hours owners'

This will now post the owners wage to this account each time you do a payrun. This is the account Profitdiagnostix uses to work out owners wages and their adjustments. 

Please note that account names and pay items are customisable, so the above is an example of how most accountants name the accounts and pay items, but they may be named slightly differently.

For the owners superannuation:

1. Stay in the pay template for the employee: manu >> payroll >> employees >> pay template
2. Click on the name of the super fund
3. change the expense account to 'superannuation associated persons'
4. Save the changes