Journals are produced based on the GL account that is mapped to the transaction type. The transactions are created based on a transaction hierarchy. The hierarchy is defined as follows:

Top Level:

Default Account Mappings

Second Level:

Pay Category Mappings, Deduction Category Mappings, Expense Category Mappings

Third Level:

Location specific default account mappings

Fourth Level:

Location specific Pay Category Mappings, Deduction Category Mappings, Expense Category Mappings

Transactions are matched to the GL account from the lowest level to the highest level.

The following transaction types are mapped at the default level:

Payment Account:

This account is often called the "payroll clearing" account and is used to reconcile the net payment amount of the payroll to the transaction from your bank account.

Wages Expense Account:

This account is used to record the gross wages expense for the pay run.

Default Payroll Liability Account: 

The account specified here will be where all the deductions get journaled if there is no specific liability account set up. 

PAYG Expense Account:

This account should not be used unless you are using a non-standard accounting methodology. The PAYG expense account will split the PAYG expense component from the wages expense component if it is specified. It is strongly advised that you set this account to have the value of "Use wages expense account" - This option has been removed from new business files

PAYG Liability Account:

Sometimes called the PAYG clearing account, this account will track your PAYG liability transactions.

Superannuation Expense Account: 

This account is used to track your SG super expense transactions.

Superannuation Liability Account: 

Sometimes called the super clearing account, this account will track your super liability transactions.

Employee Expenses Account: 

This account is used to record any employee expenses processed within the pay run. Expenses are not deemed part of employee wages. 

Employer Liability Expense Account: 

This account is used to record any employer liabilities recorded against an employee within the pay run.  

Employer Liability Account: 

This account will keep track of your general employer liability transactions.

Leave Provisions:

This is an optional setting and would be used to track the cost of any leave liabilities within the business.

Note for QuickBooks Online users: QBO does not allow us to write transactions to bank accounts directly, so the recommended way is to use a clearing account and then reconcile the bank transaction against the clearing transaction in the journals.

 

Pay category transaction accounts are used to allocate specific wage expenses to different GL accounts. For example, you may want to track bonuses, leave paid or allowances paid to different GL accounts. To do this, you would map a different GL account for the specific pay category. If you do not specify a pay category transaction account, the default Wages Expense Account will be used.

Deduction category transaction accounts are used to allocate specific deductions to different GL accounts. If you do not specify a deduction account, the Default Payroll Liability Account will be used by default.

Assigning a GL account to the Expense Account is not compulsory. It should only be done if you want the deduction amount to be posted as a debit entry against the allocated GL (which, in turn, reduces the wages GL account by the same amount).

For example, if you were to up your Salary Sacrifice Super deduction as follows:

 

It will be reflected in the payroll journal as follows:

 

The deduction amount appears as a liability. On the other hand, you can assign a GL account to the Expense Account:

 

The output result will be as follows: 

 

If you set up a deduction (not just salary sacrifice) to be paid directly to a bank account, it is not considered a liability because it has already been paid over. It will therefore go to payroll clearing. If you want the journal entry to be a debit (i.e. not a credit), use an Expense account in the chart of accounts.

Expense category transaction accounts are used to allocate specific expenses to different GL accounts. If you do not specify an expense account, the transactions will be posted to the Employee Expenses Account by default.

Employer liability category transaction accounts are used to allocate specific employer liabilities to different GL accounts. If you do not specify a liability account, the transactions will be posted to the Employer Liability Account by default. Additionally, if you do not specify an expense account, the transactions will be posted to the Employer Liability Expense Account by default.

The chart of accounts can now be split by both employing entity and location for file export and detailed file export journal types. Simply map the accounts as required, and the journal will generate accordingly. This enhancement allows for more granular and relevant financial data, helping businesses track transactions more accurately across different locations and employing entities.

Splitting by employing entity

If you have set up multiple employing entities, your chart of accounts can now reflect the split of earnings accordingly. Your journal export will display the earnings split under the Entity column.

Note: You will need a working integration into File Export or Detailed File Export to be able to publish multi-entity chart of accounts.

Your journal export will display the earnings split as specified in the chart of accounts, under the Entity column.

Splitting by location

When mapping your default GL accounts, you will notice an option to "Split by location." This allows you to write a transaction line per location to the journal for the same account. This feature is particularly useful for businesses that use locations, classes, or tracking categories in their accounting software.

Note: If you also want to assign classes to your journal entries, ensure that you have assigned classes to your locations.

Location-Specific Accounts

If you want to split your GL by location and allocate transactions to different GL accounts, you can define location-specific accounts. These accounts function the same way as primary accounts but apply only to the specified location.
 

Entity-Specific Accounts

If you want to split your GL by entity and allocate transactions to different GL accounts, you can define entity-specific accounts. These accounts function the same way as primary accounts but apply only to the specified entity.

How entity specific accounts work

• Employing Entity Specific Accounts allow you to override primary and location-specific accounts at the employing entity level.
• If an employing entity account is mapped, it will take precedence over primary and location-specific accounts.
• This feature applies only to file export and detailed file export journal types.
• Your journal export will now display the employing entity split under the Entity column of an exported spreadsheet.

Setting up employing entity specific accounts

1. Navigate to Payroll Settings > Chart of Accounts.
2. Scroll down to Entity specific accounts.
3. Click Add.
4. Select the employing entity for which you want to map accounts, using the drop down menu.
5. Assign GL accounts for relevant transaction types.
6. Save your configuration.

Important Notes on setting up specific employing entity specific accounts

• If you set up employing entity-specific accounts, location-specific accounts cannot be used.
• You must have a working File Export or Detailed File Export integration to use this feature.

For users with multiple sets of location specific accounts, if they need to change a particular account, it can be difficult to find all the places that an account is used.

The 'Export Configuration' feature adds an excel spreadsheet export so that the user can see which accounts are used across the whole Chart of Accounts.

 

Additionally, you can export your Chart of Accounts configuration via Payroll Settings > Data Extracts:

 

NOTE: If you make any changes to the journal service (including changing from "File Export" to "Detailed File Export") this will require you to re-map your Chart of Accounts accordingly.

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