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Payroll and Accounting integration

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How to integrate Sage Payroll with Sage Accounting.


If you subscribe to both Accounting and Payroll, save time when you pay employees and send salary details directly to Accounting.

Here we'll tell you

  • 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 we record your salary details, wage payment and pension payment

If you don't subscribe to both Accounting and Payroll, then enter your payroll journal directly. Read our Create a manual payroll journal article.


How the integration with payroll works

Once set up, we create a journal every time you complete a pay run in Payroll.

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 you want to use a different set of ledger accounts.

Nominal codes do not need to be the same as those listed below, you can create your own, as long as the ledger account is correct.

Set up the integration with Payroll

  1. From Settings, select Apps & Connections.
  2. Select Sage Payroll.
  3. Select Enable Journals from Payroll.
  4. Choose the Default Payroll Bank Account.
  5. Choose whether to record your net wages as bank payment or as a liability.
  6. Select Save to enable the integration settings.

 NOTE: If you want to change your Payroll Integration settings, follow steps 1 and 2, and make your changes.

Record net wages as a bank payment

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. Also use this when you're happy to show this as a single payment, rather than individual amounts to your employees.

  • Just select Post employee net wages to the default bank account. Then 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 creates in Accounting

If you use bank feeds

Remember that the bank payment will also import 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, we record your total net wages against the 2220 - Net Wages ledger account. Just choose Post employee net wages to liability account.

You will also need to:

  • Enter a bank payment to show when you have paid your employees
  • Enter a bank payment to show when you have paid HMRC

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 records as a liability on your balance sheet. This is 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 appears on your 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.

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