Gross pay is the total amount of wages earned by an employee before any deductions for tax, superannuation, insurance or other withholdings.
Gross pay is the starting point for payroll calculations. It includes the base salary or hourly wage for the period, plus overtime, commissions, bonuses, allowances, penalties and any other remuneration. From gross pay, various deductions are made: income tax withholding (PAYG in Australia, PAYE in the UK), employee superannuation or pension contributions (if salary-sacrificed), health insurance deductions, union dues and any other agreed deductions. The remaining amount is the employee's net pay (take-home pay). Separately, the employer calculates their obligations: employer superannuation/pension contributions, payroll tax (in some jurisdictions) and workers compensation premiums. From a bookkeeping perspective, the full gross pay is the expense to the business. SortBooks ensures payroll transactions are correctly broken down in Xero, separating gross pay, tax withholdings, super contributions and net payments into the appropriate accounts.
SortBooks helps with the bookkeeping behind gross pay by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing gross pay by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
Payroll is the process of calculating and distributing wages, withholding taxes, managing super/pension contributions and complying with employment tax obligations.
Wages are payments made to employees for work performed, typically calculated on an hourly or weekly basis. They are a major operating expense for most businesses.
PAYG (Pay As You Go) withholding is an Australian system where employers withhold tax from employee wages and remit it to the ATO on their behalf.
Superannuation (super) is Australia's mandatory retirement savings system. Employers must contribute a percentage of each eligible employee's earnings to a compliant super fund.
Net pay (take-home pay) is the amount an employee receives after all deductions for tax, superannuation, insurance and other withholdings are subtracted from gross pay.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.