Why is there sometimes a rounding row in Xero that isn't in Lightyear?

Why is there sometimes a rounding row in Xero that isn't in Lightyear?

Xero calculates tax on a per line basis, rounding to two decimal places, and then sums the tax totals of each line to calculate the total invoice tax. Other systems may total lines and then calculate the tax amount, which can lead to a slight variance. Let's use the example below of a bill from a New Zealand company to a New Zealand company, where GST/VAT is applied at 15%.

Invoice line 1: Product A @ $25.06, tax at 15%: $3.76 line total: $28.82
Invoice line 2: Product B @ $25.61, tax at 15%: $3.84 line total: $29.45
Invoice line 3: Product C @ $25.63, tax at 15%: $3.84 line total: $29.47
Xero totals: Subtotal: $76.30, Tax: $11.44 
Xero document total: $87.74

 


Another system total: Subtotal: $76.30 + Tax @ 15%: 11.45
This can be illustrated below in Xero as the approach is the equivalent of just having one line in Xero:



To compensate for this, Lightyear will send into Xero an extra rounding row, in this occasion of -$0.01 (not taxed).  To this GL Code we will assign the default Rounding GL that's set up in your Xero account. Note, we know that this will not fix the GST/VAT amount, but it will balance the total of the bill, meaning you will be paying the supplier the correct amount of money.

What if you are NOT getting a rounding row in Xero?

In Xero, head to your Chart of Accounts and search for the Rounding GL Code. Ensure this is set up as Code: 860 and Description: Rounding. If it isn't, your export may fail.


Back in Lightyear, go to Accountancy > GL Codes and make sure this same GL Code matches with what's set up in Xero, and ensure the code is Active.



      

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