If you subscribe to both Accounting Start and Payroll, you can automatically create journals in Accounting Accounting Start with details of wages, each time you complete a pay run.
If you have previously migrated your data from Sage 50 or another provider, you can now integrate Payroll and Accounting.
Here we'll tell you:
- How to set up the integration with Payroll
- How your salary details, wage payment, and pension payment are recorded
How the integration with Payroll works
The journal is always recorded using the default ledger accounts set up in Accounting.
If you want to record the journal using your own ledger accounts, then you may need to continue creating the journal manually. You may need to do this if you want to run more detailed reporting or if you want to use a different set of ledger accounts.
Switching from manual to automatic journals
Before you set up the integration make sure you have completed manual journals for your previous pay periods.
Once the integration is set up, a journal is automatically created each time you complete a pay run. Make sure you don't complete a manual journal for the same pay period.
Before we can record the automatic journal, we need to set up the default ledger accounts used to create the journal. Once you allow the integration with Payroll and complete a pay run, we will create the required ledger accounts for you.
If any of your ledger accounts already use the same code, we'll create a ledger account with the next available code number. For example, if you already have a ledger account that uses 2214, we'll create a ledger account for Student Loans using 2215.
- From More, then Business Settings, select Payroll & Accounting Integration Settings.
- Select Allow Payroll to create journals in Accounting.
- Choose whether to record your net wages as bank payment or to your net wages liability account.
- Save your changes.
Record net wages as bank payment
If you choose to record employee net wages as a bank account, a bank transaction will be created every time you complete a pay run.
The bank transaction will show all your wages in a single payment.
If you pay your employees in separate groups or from more than one bank account, this may not suit you so consider recording your net wages as a liability and creating your bank payment separately.
The bank transaction will be created for the amount you need to pay to HMRC when you select Record Payment / EPS from the Summary page in Payroll.
Don't forget, you still need to send the money to HMRC.
If you use a bank feed, then the bank payments for both your wages and HMRC payments will also be imported via your bank feed.
To avoid creating duplicates, either:
- Delete the transactions imported through the bank feed, or
- Match the imported transactions to the bank payments created by Payroll
Record net wages in a liability ledger account
If you don't want to automatically record the bank payment, then your total net wages are recorded against the 2220 - Net Wages ledger account. Just choose Post employee net wages to your liability account.
You will also need to
- Create a bank transaction to show that you have paid your employees
- Create a bank transaction to show that you have paid HMRC
When you turn on the integration and complete your pay run in Payroll, a journal is automatically created.
Each time you complete a pay run, the following journals are created in Accounting Start.
|Bank account specified in the||Total value of your net wages.||Credit|
Total tax deducted.
If you’re due a tax refund, it's recorded as a debit and is included in the credit for net wages.
Other taxes to pay HMRC
Total employee and employer National Insurance contributions.
If you’re due a National Insurance refund, the value posts as a debit and is included in the credit for net wages.
|Student Loan||Total value of student loan deductions made.||Credit|
|Attachments||Total value of attachments deducted from employees’ net pay.||Credit|
Total value of the employees' take-home pay.
|Net Wages||When the bank payment is created, the net wages ledger account is debited for exactly the same value as the credit, to show that your wages have been paid.||Debit|
The total employee and employer pension contributions.
If you use more than one pension scheme, separate entries are shown for each scheme.
|Total gross wages for all employees, not including statutory payments.||Debit|
|Employer's NI Contribution||Total employer National Insurance contributions.||Debit|
Total employer pension contributions.
|Other Deductions||Total of any remaining employee deductions, excluding attachments and student loans.||Credit|
|Statutory Sick Pay||Total Statutory Sick Pay paid.||Debit|
|Statutory Maternity Pay||Total Statutory Maternity Pay paid.||Debit|
|Statutory Paternity Pay||Total Statutory Paternity Pay paid .||Debit|
|Statutory Adoption Pay||Total Statutory Adoption Pay paid.||Debit|
If you've previously created manual payroll journals, when you allow payroll integration, additional categories will be created in Accounting Start.
On your reports, you'll see values in the old and the new ledger accounts, so to report on the total wages over the year, add up the totals of both ledger accounts.
You can keep both sets of ledger accounts or move the values from the old to the new ledger accounts using a journal.
If you keep both sets of ledger accounts, we recommend that you hide the old ledger accounts so they cannot be selected when new transactions are created.
- From More, then Business Settings, select Chart of Accounts.
- Open each category and clear the Visibility check boxes.
You can manage the connection between your Payroll and Accounting subscriptions at any time by going to Payroll & Accounting Integration Settings in Accounting.