Ledger Management - Payroll Transactions
Overview
Payroll encompass the steps and processes involved in compensating employees, including calculating earnings, applying deductions, and distributing net pay. Payroll calculations are essential for ensuring employees are paid accurately and on time, while also meeting legal obligations for reporting and deductions.
These tutorials explain how to enter payroll transactions from a payroll report where confidentiality is required, and where confidentially is not required. It uses transaction types that were created to debit or credit specific accounts.
Navigation Example: Main Menu > Accounting > Ledger
Table of Contents
How to Enter Payroll Expenses
This process is to enter the payroll expenses in your accounting records. It assumes you receive a summary sheet from the Payroll Department. You can enter as much or as little detail as you wish.
The Transaction Type was setup that users can select the expense account, but the credit account is always Payroll Accruals (a current liability account).
Below are two examples:
Entering information in summary format:
Account: Salaries: Admin
Description: Admin Salaries for November
Amount: Debit R10 000.00
Account: Salaries: Production
Description: Production Salaries for November
Amount: Debit R20 000.00
Account: Salaries: Directors
Description: Directors' Salaries for November
Amount: Debit R20 000.00
Account: Pension Fund
Description: November Contribution to Pension Fund
Amount: Debit R2 500.00
Account: UIF Expense
Description: Company Contribution to UIF
Amount: Debit R500.00
Account: Payroll Liabilities
Description: November Salaries
Amount: Credit R53 000.00
Entering information in detail:
Account: Salaries: Admin
Description: Sally's Salary
Amount: Debit R7 850.00
Account: Salaries: Admin
Description: Sally's UIF
Amount: Debit R80.00
Account: Salaries: Admin
Description: Sally's PAYE
Amount: Debit R70.00
Account: Expenses Pension: Admin
Description: Sally's Pension Company Contribution
Amount: Debit R100.00
Account: Expenses UIF: Admin
Description: Sally's Company Contribution
Amount: Debit R80.00
Account: Payroll Liabilities
Description: Sally's Total Cost to Company
Amount: Credit R8 180.00
- Navigate to the Ledger.
- Click New (button) > Payroll Expenses - (PR-EXP).
- Enter the Date and Period.
- Expenses = Select an account from the dropdown list.
- Enter the Amount and select No VAT.
- Enter a Reference and Note.
- Click Add Item (button) to add another line (a new line will open below the previous entry).
- Select the Expense Account to Debit and fill in the Amount (leave the VAT as zero).
- Repeat Step 7 as often as needed.
- Change the Status to Complete.
- Click Save (button).
- Note: The credit side of the entry is automatically created based on the Transaction Type's setup.
- Note: For more flexibility, Payroll Expenses can also be entered as a General Journal.
How to Enter Payroll Payments
This process is to capture the cheques or EFT payments made to staff and other departments.
The Transaction Type was setup that users can select the bank account, but the debit account is always Payroll Accruals (a current liability account).
In summary format:
Account: Payroll Liabilities
Description: Payments to Staff
Amount: debit R44 500.00
Account: Payroll Liabilities
Description: Payment to Pension Fund
Amount: debit R2 500.00
Account: Payroll Liabilities
Description: Payment to SARS (Tax Authorities) for PAYE
Amount: debit R5 000.00
Account: Payroll Liabilities
Description: Payment to SARS for UIF
Amount: debit R1 000.00
Account: Bank Account
Description: November Payments
Amount: credit R53 000.00
Entering information in detail:
Account: Payroll Liabilities
Description: Sally's Salary
Amount: debit R7 850.00
Account: Payroll Liabilities
Description: Payment to SARS for Sally's UIF
Amount: debit R160.00
Account: Payroll Liabilities
Description: Payment to SARS for Sally's PAYE
Amount: debit R70.00
Account: Payroll Liabilities
Description: Payment to Pension Fund Company
Amount: debit R100.00
Account: Bank Account
Description: Total Payments for Sally
Amount: credit R8 180.00
- Navigate to the Ledger.
- Click the arrow on New (button) > Payroll Payments - (PR-PMT).
- Enter the Date and Period.
- Bank = Select the bank from which the payments were made
- Enter the Amount that was paid.
- Enter a Reference and Note.
- Click Add Item (button) to add another line (a new line will open below the previous entry).
- Select the Bank Account to Credit and fill in the Amount (leave the VAT as zero).
- Repeat Step 7 as often as needed.
- Change the Status to Complete.
- Click Save (button).
- Note: Payroll Payments can also be captured when doing a Bank Import.