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Payroll and Accounting integration

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Summary

How to integrate Sage Payroll with Accounting Start.

Description

  • How to turn on the integration with payroll
  • How to choose whether to create a bank payment for your net wages or enter this as a liability
  • How your salary details, wage payment and pension payment are recorded

If you don't subscribe to both Accounting and Payroll, then enter your payroll journal directly. Plesase see how to Create a manual payroll journal.

Resolution

How the integration with payroll works

Once set up, a journal is created every time you complete a pay run in Payroll.

The journal is always recorded using the default categories set up in Accounting Start.

If you want to record the journal using your own categories, 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 you want to use a different set of categories.

Set up the integration with Payroll

  1. From More, select Apps & Connections.
  2. Select Sage Payroll at the bottom of the page.
  3. Put a tick in Enable Journals from Payroll.
  4. Choose whether to record your net wages as bank payment or as a liability
  5. Click Save to enable the integration settings.

Record net wages as a bank payment

As you'll actually be paying money to your employees, save time by recording this bank payment automatically when you complete your pay run in Payroll.

Use this when you pay your employees from the same bank account and are happy to show this as a single payment, rather as an individual amounts to your employees.

  • Just select Post employee net wages to the default bank account and choose the bank the payment will come out of

  • When you choose Record Payment / EPS from the Summary page in Payroll, the corresponding bank payment is created in Accounting

     

    Don't forget you still need to actually send the money to HMRC (UK)!

If you use bank feeds

Remember that the bank payment will also be imported from your bank.

To make sure you don't duplicate this payment, make sure you delete it from your bank feeds import.

To discard a transaction, just select the crossto the left of the transaction.

Record net wages as a liability

If you don't want to automatically record the bank payment, then your total net wages are recorded against the 2220 - Net Wages category. Just choose Post employee net wages to liability account.

You will also need to:

  • Enter a bank payment when to show when you have paid your employees
  • Enter a bank payment to show when you have paid HMRC
Record the bank payment for your wages

Once you've paid your employees, you'll need to make sure your record the corresponding bank payment. This will make sure that you correctly show your wages as being paid in your reports.

Whether you import transactions from a bank feed or create the bank payment manually, make sure you choose the Net Wages category.

To make it easier for you to match with your bank statement, consider creating a separate line for each employee.

  1. From Banking, open the required bank account.
  2. Choose New Entry, then click Money Out.
  3. Choose Other Payment then enter the date for the payment. this should be the same as your pay date.
  4. Enter the total amount paid for the pay period.
  5. Create a single line for the total or create separate lines for each employee with the following details:
    • For category list, choose 2220 - Net Wages
    • Choose No VAT for the VAT rate
    • Enter the amount the employee was paid

If you're entering separate lines for individual employees, check that the total matches your net wages for the pay period.

Record the bank payment when you pay HMRC

When you actually pay HMRC, make sure you record the payment in your accounts. Make sure you record the payment against the correct categories to make sure your accounts are accurate.

Whether you create a payment manually or import via a bank feed or your statement, you'll need to record the payment against various categories, depending on the breakdown of your liability to HMRC.

  1. From Banking, open the required bank account.
  2. Choose New Entry, then click Money Out.
  3. Choose Other Payment then enter the date for the payment.
  4. Enter the amount paid to HMRC.

  5. Add separate lines for tax, national insurance and any student loan payments, if applicable.

    CategoryVAT rate
    2210 - PAYE to pay HMRCNo VAT

    2211 - Other taxes to pay HMRC

    		No VAT
    Student LoanNo VAT

If there is a negative amount due to be paid on your P32 in this period, you can either:

  • adjust your P32, which moves the credit into the next P32 period. This can only happen in Quarters 1, 2 and 3 of the tax year (before month 12 of your tax year)
  • request a refund from HMRC, if you're doing this in Quarter 4 of your tax year. Check that your bank details are valid and up-to-date with HMRC before requesting this refund

HMRC reserves the right to refuse a refund, if they have reason to believe a refund is not due to you or your business.

How payroll details are recorded in your accounts

When you record details of your payroll, the money you owe your employees in wages and the money you owe HMRC is recorded as a liability on your balance sheet to show that this is money owing by your business. These are all entered as a Credit in your payroll journal

The other half of the payroll journal records the costs to your business, and is reported on profit and loss. These are all entered as a Debit value.

Your liability is then cleared when you record bank payment to pay your employees and HMRC.

Salary details

When you complete your pay run in Payroll, we created the following journal in your accounts.

CodeCategoryDescriptionDebitCredit
Bank account specified in the
Total value of your net wages
Credit
2210

PAYE

The total tax deducted.

If you’re due a tax refund, this recorded as a debit and is included in the credit for net wages.


Credit

2211

Other taxes to pay HMRC

The total of employee and employer NI contributions.

If you’re due an NI refund, the value posts as a debit and is included in the credit for net wages.


Credit

2214

Student LoanThe total value of student loan deductions made.
Credit

2215

AttachmentsThe total value of attachments deducted from employees’ net pay.
Credit
2250Net Wages

The total value of the employees take home pay.



Credit

2250

Net WagesWhen the bank payment is created, this debits the Net Wages category for exactly the same value as the credit, to show that your wages have been paid.Debit

2230

Pension

The total employee and employer pension contributions.

If you use more than one pension scheme, separate entries are shown for each scheme.


Credit
7000

Employee Costs

Total gross wages for all employees, not including statutory payments.Debit

7006

Employers NI ContributionThe total employer NI contributions.Debit

7007

Employer Pensions

Total employer pension contributions.

Debit

7009

Other DeductionsTotal of any remaining employee deductions, excluding attachments and student loans.
Credit

7010

Statutory Sick PayTotal SSP paid.Debit

7011

Statutory Maternity PayTotal Statutory Maternity Pay paidDebit

7012

Statutory Paternity PayTotal SPP paidDebit

7013

Statutory Adoption PayTotal Statutory Adoption Pay paid.Debit

Payment to HMRC

If you've chosen to record the bank payment (Post employee net wages to the default bank account), when you choose Record Payment / EPS from the Summary page in Payroll, we will also record the details of the payment you need to make to HMRC.

If you’re due a refund from HMRC in the period, you can choose to either take the refund or postpone it. Select:

  • P32 Adjustment. To move the credit to the next P32 period to offset liability. This option isn't available if you are in the twelfth month or the fourth quarter of a tax year

or

  • Refund. Enter your bank details and submit the request to HMRC. Your bank details will be updated at HMRC, so be sure they are correct before submitting your request

CodeCategoryDescriptionDebitCredit
Bank Account
Total owed to HMRC and should agree to the value on your P32. If you’re due a refund from HMRC, this posts as a debit.
Credit
2210

PAYE

Total Income taxDebit

2211

Other taxes to pay HMRC


If you’re entitled to employment allowance or have statutory payments to recover, this is offset against this value and reduces your liability to HMRC.

Debit

7006

Employers NI ContributionThe amount of employment allowance you can reclaim, if applicable.

If you’re entitled to claim employment allowance, this is offset against your employer’s NI contribution account as a credit.
Credit

7011

Statutory Maternity PayThe total SMP reclaimed.
Credit

7012

Statutory Paternity PayThe total SPP reclaimed.
Credit

7013

Statutory Adoption PayThe total SAP reclaimed.
Credit
Pension Payment

To help you keep track of your pension payments, record the payment of your pension when you complete your pay run and we'll enter the following transactions to clear your liabilities.

CategoryDescriptionDebitCredit

2230 - Pension

Total amount paid to the pension provider.Debit
Bank accountTotal paid to the pension provider.
Credit




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