How should I reconcile wages on Xero?

Wages on Xero should be reconciled to ‘Wages Payable’.

Commonly wages are reconciled to ‘Salaries’ but this is incorrect. Gross Wages (before deductions of NI and Tax) are posted to Salaries via a payroll journal, these are balanced by amounts owed to HMRC (PAYE Payable) and amounts owed to staff which are the Wages Payable.

Wages Payable sit as a liability on the balance sheet and it is here therefore that payments should be reconciled.