I started a company last year, August. Its now the financial year and I need to pay out the planned salary, PAYG and super. I always wanted to take out a salary for myself, but I didn't know how to set it up (I do now).
The problem is that I need to now process 41 weeks of backpay, super, PAYG etc... I would like to use the Quickbooks clearing house and ABA/BPAY files to handle these payments. I've setup all the fields in quickbooks.
How do I add a payrun for all the weeks back?
My accountant added a Journal entry, but:
1. a journal entry doesn't report to the ATO.
2. it also doesn't go through the clearing house for super (not superstream compliant).
3. it doesn't setup the HELP debt repayments.
4. doesn't connect the salary to the year the salary was for (profit and loss statment no good).
5. it doesn't connect the salary to the employee (myself).
I'm looking to do this properly.
You have two options here - one is creating a single 'Ad Hoc' pay run and manually adjusting the super, PAYG, accrued leave and so on as required. The other option is to create the pay runs one by one - you can do these on a monthly basis to lessen the amount of work. I have broken down both options below as much as possible.
Option One: Using an Ad Hoc Pay Run
You can use what's called an 'Ad Hoc' pay run to enter backpay, or in this case your annual salary. The positive is that you are only creating one pay run, however there will be some extra steps and you will run into some issues with calculation. Specifically, an ad hoc pay run is unable to calculate PAYG and HELP (otherwise known as STSL) debt correctly. This is because all pay runs are based off the tax tables provided by the ATO which calculate on either a weekly, fortnightly or monthly pay schedule. A pay schedule cannot be created on an annual basis as the ATO does not provide a tax table for this. Consequently when you enter your annual earnings in, the pay run will calculate a much higher amount of PAYG as you are entering a year's worth of earnings in what the system will see as either a week, fortnight or month.You would need to manually calculate how much PAYG needs to be entered, both for normal PAYG Withholding and for the HELP debt. You can then adjust the PAYG amount accordingly using a PAYG Adjustment line. Refer here for more information on STSL debt - this also includes a link to the ATO tax tables to help you calculate the correct amount.
If you also need to record accrued leave, you can calculate how much your balance should be and use Leave Adjustment line(s) to add on to your leave balance (eg if you accrue annual leave, personal/carers leave and so on). Similarly, any super amounts can be manually adjusted as well using a Super Adjustment line if required.
Option Two: Entering the Pay Runs on a Monthly Basis
The alternative option is to set up a monthly pay schedule and record your pay runs this way. You can set up your annual wage in your Pay Run Defaults, and the system will then be able to calculate the PAYG, HELP debt repayments, super amounts and so on correctly for you for each month. If you need to record accrued leave, you can set yourself up to accrue leave and this will also then automatically calculate in the pay runs. While this option involves creating several pay runs, you may find this easier as you will not have to do any manual calculations, although ultimately it is up to you how you choose to record this activity.
You mentioned setting up to use ABA files - keep in mind that this setting is specific to a pay schedule, so whether you use Option One or Two, you need to make sure the ABA settings are completed for the pay schedule you use. As either method you use will still require you to set yourself up as an employee with certain settings enabled, I've included below where to locate the specific settings for HELP debt repayment, leave accrual and super details as well as setting up your base wage:
As you mentioned using the clearing house in QuickBooks Online to pay the super, I have included some resources on setting this up (QuickBooks Online payroll integrates with the clearing house Beam) and how to create the batch payments:
All pay runs entered into payroll will automatically export a journal to QuickBooks Online once you have finalised them. Regardless of whether you use Option One or Two, these will be recorded in your books so you may find you do not need the journal your accountant has created. Where these pay runs journal to in your Chart of Accounts is up to you - there are default accounts, however you can change these if required. See here for more information on the setup of your wages journals.
To summarise, you can either use a single Ad Hoc pay run with manual adjustments or enter the pay runs in monthly. Once the wages, PAYG, super and so on have been recorded into payroll, you can download the ABA file to pay the wages and PAYG from your online banking, and use Beam to make your super payments. All wages entered into payroll will automatically journal across to your QuickBooks Online Chart of Accounts for you. While it is up to you how you choose to record your wages, we would strongly recommend you reach out to your accountant or bookkeeper for their advice prior to doing so, particularly if you are using Option One and manually calculating PAYG/HELP debt repayments and so on. You are also more than welcome to contact our Support Team directly to talk this through - please keep in mind that we are not accountants and cannot provide advice specific to your books or assist you with any manual calculations, however can absolutely walk you through how to enter your wages in payroll once you have decided how you would like to do so. You can reach Support by:
Regarding Option Two: Entering the Pay Runs on a Monthly Basis:
When do I set the payment date? The problem is that if I put the date as today, the profit and loss is all weird. Additionally, in both methods does the PAYG still count towards the last financial year (with ato reporting, super etc...), how do I check?
Would the easiest approach with the journal entry by my accountant be to revert it?
It's up to you exactly when you set the payment date, but if you want the amounts to be included in the previous financial year you will need to edit the date accordingly to fall in that time frame. You can edit both the pay run period dates and the pay run paid date when first creating the pay run, or after it has been created. To adjust the actual pay period dates, edit the 'pay run ending' date and this will automatically update the 'pay run beginning' date.
The wages, PAYG and so on are recorded using the pay run paid date and correspondingly are included in that financial year. As an example, if I enter a pay run and backdate it to pay period 01/07/2019 to 30/07/2019 with a paid date of 31/07/2019, all payments, PAYG and so on will be dated in the 19-20 financial year for reporting purposes. You can check this by running various reports, eg a PAYG Withholding Summary, Detailed Activity Report, Gross to Net Report or so on.
Regarding the journal your accountant has created, you can delete this if you choose. Locate and open the journal, and select the option More down the bottom of the screen, then Delete.