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Offset benefit liabilities in Xero

Because Gusto does not take any money for benefits or deductions, we include a mapping for a benefit or deduction expense and a benefit or deduction liability. This will create accounts within your accounting software that accrue an amount owed for the benefit or deduction over time.

When the benefit or deduction is then paid to the requesting party, you can offset your liability account and zero out the accrued amount owed.

Important: When money is pulled for an FSA or commuter benefit, before it is deducted through payroll make sure you don't create an expense but rather establish a receivable. It will be expensed in payroll when the amount is deducted. At that point with the deduction, then reduce the receivable.

Option 1: Create an entry from the bank debit (created by paying the benefit or deduction) and assigned that entry to the liability account to offset.

  1. Sign in to your Xero Account.
  2. Go to Accounts > Bank Accounts and open up Reconcile.
  3. Locate the debit that corresponds with the payment of your benefit or deduction
  4. Click Create from the right-hand column next to the debit.
  5. Enter in the details, selecting the liability account under What.
  6. Click Add Details to submit the entry.

Option 2: Create a Bill or Invoice and associate that item with the liability account.

  1. Sign in to your Xero Account.
  2. Go to the + in the upper right-hand corner and select Bill or Invoice under New.
  3. Manually enter or select the liability account from the drop-down menu under Accounts.
  4. Finishing creating the Bill or Invoice.
  5. Click Save or Approve.

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