Looking to update your chart of accounts in QuickBooks Payroll to QuickBooks Online?
The chart of accounts page consists of 2 sections:
- Primary accounts: These accounts are required and are the accounts that will be used if no location specific accounts are mapped.
- Location specific accounts: These accounts are used to override the primary accounts for transactions at a given location.
Mapping accounts overview
Journals are produced based on the account that is mapped to a 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 account from the lowest level to the highest level.
Default account types
Firstly you’ll want to go to the Chart of Accounts page for payroll, this is in a different location to the Chart of Accounts for QuickBooks Online
- Select Employees from the left hand menu
- Select the Payroll Settings tab
- Select Chart of Accounts (Located under Business Settings).
- 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 SGC 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.
Note: Transactions cannot be mapped 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 accounts
Pay category transaction accounts are used to allocate specific wage expenses to different accounts. E.g. You may want to track bonuses, leave paid or allowances paid to different accounts. To do this, you would map a different account for the specific pay category.
If you don't specify a pay category transaction account, the default Wages Expense Account will be used.
Deduction Category accounts
Deduction category transaction accounts are used to allocate specific deductions to different accounts. If you don't specify a deduction account, the Default Payroll Liability Account will be used by default.
Expense category accounts
Expense category transaction accounts are used to allocate specific expenses to different accounts. If you don't specify an expense account, the transactions will be posted to the Employee Expenses Account by default.
Employer liability category accounts
Employer liability category transaction accounts are used to allocate specific employer liabilities to different accounts. If you don't specify a liability account, the transactions will be posted to the Employer Liability Account by default. Additionally, if you don't specify an expense account, the transactions will be posted to the Employer Liability Expense Account by default.
Splitting by location
When you map your default accounts, you'll notice that there is an option to Split by location . This allows you to write a transaction line per location to the journal for the same account. This is particularly useful if you're using locations or classes tracking in QuickBooks Online.
Location Specific Accounts
If you want to split your GL by location and allocate the transactions to different accounts, you can define location specific accounts. These accounts will work in exactly the same way as the primary accounts, however, they will only apply to the location they are specified for.
Exporting the Chart of Accounts
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 Data Extracts in your Payroll Settings