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.
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 set up so that you 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 | Description | Amount |
|---|---|---|
| Salaries: Admin | Admin Salaries for November | Debit R10 000.00 |
| Salaries: Production | Production Salaries for November | Debit R20 000.00 |
| Salaries: Directors | Directors' Salaries for November | Debit R20 000.00 |
| Pension Fund | November Contribution to Pension Fund | Debit R2 500.00 |
| UIF Expense | Company Contribution to UIF | Debit R500.00 |
| Payroll Liabilities | November Salaries | Credit R53 000.00 |
Entering information in detail:
| Account | Description | Amount |
|---|---|---|
| Salaries: Admin | Sally's Salary | Debit R7 850.00 |
| Salaries: Admin | Sally's UIF | Debit R80.00 |
| Salaries: Admin | Sally's PAYE | Debit R70.00 |
| Expenses Pension: Admin | Sally's Pension Company Contribution | Debit R100.00 |
| Expenses UIF: Admin | Sally's Company Contribution | Debit R80.00 |
| Payroll Liabilities | Sally's Total Cost to Company | 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 set up so that you can select the bank account, but the debit account is always Payroll Accruals (a current liability account).
In summary format:
| Account | Description | Amount |
|---|---|---|
| Payroll Liabilities | Payments to Staff | debit R44 500.00 |
| Payroll Liabilities | Payment to Pension Fund | debit R2 500.00 |
| Payroll Liabilities | Payment to SARS (Tax Authorities) for PAYE | debit R5 000.00 |
| Payroll Liabilities | Payment to SARS for UIF | debit R1 000.00 |
| Bank Account | November Payments | credit R53 000.00 |
Entering information in detail:
| Account | Description | Amount |
|---|---|---|
| Payroll Liabilities | Sally's Salary | debit R7 850.00 |
| Payroll Liabilities | Payment to SARS for Sally's UIF | debit R160.00 |
| Payroll Liabilities | Payment to SARS for Sally's PAYE | debit R70.00 |
| Payroll Liabilities | Payment to Pension Fund Company | debit R100.00 |
| Bank Account | Total Payments for Sally | 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.