Payroll Transactions Tutorial
Overview
Payroll refers to the steps and processes involved in compensating employees, including calculating earnings, applying deductions and distributing net pay. Payroll transactions are essential for ensuring employees are paid accurately and on time, while also meeting legal obligations for reporting and deductions.
💡These tutorials explain how to enter payroll transactions where confidentiality is required, and where confidentially is not required.
How to Create Payroll Expenses
This process is to enter the payroll expenses in your accounting records.
It assumes you receive a summary sheet from the Payroll Department. You can enter as much or as little detail as you wish. Below are two examples:
Entering information in summary:
| Account | Description | Debit (R) | Credit (R) |
|---|---|---|---|
| Salaries: Admin | Admin Salaries for November | 10 000 | |
| Salaries: Production | Production Salaries for November | 20 000 | |
| Salaries: Directors | Directors' Salaries for November | 20 000 | |
| Pension Fund | November Contribution to Pension Fund | 2 500 | |
| UIF Expense | Company Contribution to UIF | 500 | |
| Payroll Liabilities | November Salaries | 53 000 |
Entering information in detail:
| Account | Description | Debit (R) | Credit (R) |
|---|---|---|---|
| Salaries: Admin | Sally's Salary | 7 850 | |
| Salaries: Admin | Sally's UIF | 80 | |
| Salaries: Admin | Sally's PAYE | 70 | |
| Expenses Pension: Admin | Sally's Pension Company Contribution | 100 | |
| Expenses UIF: Admin | Sally's Company Contribution | 80 | |
| Payroll Liabilities | Sally's Total Cost to Company | 8 180 |
Steps
For more flexibility, Payroll Expenses can also be entered as a General Journal.
- Navigate to the Ledger.
- Click New (button) and select Payroll Expenses from the dropdown list.
- Select the date and period.
- Enter the reference.
- Click Add Item (button).
- Dr. Account = Select the Payroll Expense account.
- Enter the amount in the Total (Exc) field.
- VAT = 0.
- Repeat Step 5 as often as needed.
- Click Done (button).
How to Enter Payroll Payments
This process is to capture the cheques or EFT payments made to staff and other departments.
Entering information in summary:
| Account | Description | Debit (R) | Credit (R) |
|---|---|---|---|
| Payroll Liabilities | Payments to Staff | 44 500 | |
| Payroll Liabilities | Payment to Pension Fund | 2 500 | |
| Payroll Liabilities | Payment to SARS (Tax Authorities) for PAYE | 5 000 | |
| Payroll Liabilities | Payment to SARS for UIF | 1 000 | |
| Bank Account | November Payments | 53 000 |
Entering information in detail:
| Account | Description | Debit (R) | Credit (R) |
|---|---|---|---|
| Payroll Liabilities | Sally's Salary | 7 850 | |
| Payroll Liabilities | Payment to SARS for Sally's UIF | 160 | |
| Payroll Liabilities | Payment to SARS for Sally's PAYE | 70 | |
| Payroll Liabilities | Payment to Pension Fund Company | 100 | |
| Bank Account | Total Payments for Sally | 8 180 |
Steps
Payroll payments can also be captured when doing a Bank Import.
- Navigate to the Ledger.
- Click New (button) and select Payroll Payments from the dropdown list.
- Select the date and period.
- Enter the reference.
- Cr. Bank = Select the Bank Account.
- Enter the amount.
- Select No VAT.
- Change the Description.
- Click Done (button).