Configure Payroll Accounting

Payroll Accounting helps you define how payroll transactions are recorded in accounting. By configuring these settings, you can ensure that journal entries for payroll expenses and liabilities are posted accurately and in line with your organization’s accounting practices.

Access Payroll Accounting Settings

• Click Settings in the top-right corner.
• Under Payroll, click Configure Accounts.

Configure Payroll Accounting

Choose the Bank Account for Salary Payments

Select how you want to pay your employees:

• Single bank account for all employees
  • Use one bank account to process salary payments for all employees.
• Multiple bank accounts based on employees’ bank details
  • Process salary payments from the bank accounts mapped to individual employees.

After choosing the payment method, select the bank account from which employee payments will be made.

Set Preferences for Journal Posting

Whenever you approve a pay run or record a payroll transaction, a corresponding journal entry is created in the Manual Journals module.

Select the Posting Basis

Choose when the journal entries should be posted:

• Accrual Basis
  • Journal entries will be posted on the pay period end date. This helps recognize payroll expenses in the period in which they are incurred.
• Cash Basis
  • Journal entries will be posted on the pay date, which is useful if expenses are recognized only when payments are made.

Choose the Journal Entry Status

Select the status in which payroll journal entries should be created:

• Draft
  • Journal entries are created as drafts and must be reviewed and published manually.
• Published
  • Journal entries are created and published automatically when the payroll is approved.

Map Accounts for Payroll Transactions

Map the debit and credit accounts to record payroll expenses and liabilities in Accounting.

For each salary component, specify:

• A Debit account to record the payroll expense
• A Credit account to record the corresponding liability or payment

Once you configure payroll accounting:

• Salary payments will be tracked based on the selected bank account setup.
• Journal entries will be created automatically when payroll is approved.
• Payroll expenses and liabilities will be reflected accurately in Accounting.

Any changes you make to these settings will apply only to future payrolls.