Change from manual to automatic payroll journals

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

Once set up, a journal is created 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 categories.

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.

Set up the integration

From More, then Settings, 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.

Bank feeds

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 category

If you don't want to automatically record the bank payment, then your total net wages are recorded against the 2250 - Net Wages ledger account. Just choose Post employee net wages to 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.

How your payroll journal is recorded

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.

Salary details

Code	category	Description	Debit	Credit
Bank account specified in the		Total value of your net wages.		Credit
2210	PAYE to pay to HMRC	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.		Credit
2220	NIC to pay to 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.		Credit
2230	Student Loan	Total value of student loan deductions made.		Credit
2240	Attachments	Total value of attachments deducted from employees’ net pay.		Credit
2250	Net Wages	Total value of the employees' take-home pay.		Credit
2250	Net Wages	When the bank payment is created, the net wages category is debited for exactly the same value as the credit, to show that your wages have been paid.	Debit
2260	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	Wages & Salaries	Total gross wages for all employees, not including statutory payments.	Debit
7020	Employer's NI Contribution	Total employer National Insurance contributions.	Debit
7030	Employer Pensions	If you have more than one pension scheme, separate entries are made for each scheme.	Debit
7050	Other Deductions	Total of any remaining employee deductions, excluding attachments and student loans.		Credit
7060	Statutory Sick Pay	Total Statutory Sick Pay paid.	Debit
7070	Statutory Maternity Pay	Total Statutory Maternity Pay paid.	Debit
7080	Statutory Paternity Pay	Total Statutory Paternity Pay paid .	Debit
7090	Statutory Adoption Pay	Total Statutory Adoption Pay paid.	Debit

Manage existing categories

If you've previously created manual payroll journals, when you allow payroll integration , additional categories will be created in Accounting.

On your reports, you'll see values in the old and the new categories, so to report on the total wages over the year, add up the totals of both categories.

You can keep both sets ofcategories or move the values from the old to the new categories using a journal.

If you keep both sets of ledger accounts, we recommend that you hide the old categories so they cannot be selected when new transactions are created.

Hide categories

From Settings, then Business Settings, select Chart of Accounts.
Open each ledger account and clear the Visibility check boxes.

Manage your settings

You can manage the connection between your Payroll and Accounting Start subscriptions at any time by going to Payroll & Accounting Integration Settings in Accounting Start.