Once you have set up your chart of accounts in QuickBooks Online, you can map the accounts to different payroll transaction types.
The chart of accounts has primary and location-specific accounts. Primary accounts are required and used if no location-specific accounts are mapped. Location-specific accounts are used to override the primary accounts for transactions that have a location.
Mapping accounts to transaction types
Journals are based on the general ledger account which has been mapped to the transaction type. Transactions are created based on a transaction hierarchy. These are 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 and Expense Category Mappings
Note: Transactions are matched to the General Ledger account from lowest to highest level.
Default transactions types
The following transactions are mapped to the following accounts by default:
- 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's no specific liability account set up.
- PAYE Liability Account: Sometimes called the PAYE clearing account, this account will track your PAYE liability transactions.
- Employer Pension Expense Account: This account is used to track your pension expense transactions.
- Employer Pension Liability Account: Sometimes called a clearing account, this account will track your pension liability transactions.
- Employee Pension Liability Account: This account will track Employee Pension liability transactions.
- National Insurance Expense Account: This account is used to track your National Insurance expense transactions.
- National Insurance Liability Account: This account is used to track your National Insurance liability transactions.
- Employee Expenses Account: This account is used to record any employee expenses processed within the pay run. Employee expenses aren't counted as 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: If you haven't created any Categories for Employee Expense or Employer Liability Accounts, you can't map these accounts. You can create these categories in Payroll Settings.
Pay category transaction accounts
Pay category transaction accounts are used to allocate specific wage expenses to different General Ledger accounts. For example, you may want to track bonuses, leave paid, or allowances paid to different General Ledger accounts. To do this, you would map a different General Ledger 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 transaction accounts
Deduction category transaction accounts are used to allocate specific deductions to different General Ledger accounts. If you don't specify a deduction account, the Default Payroll Liability Account will be used.
Expense category transaction accounts
Expense category transaction accounts are used to allocate specific expenses to different General Ledger accounts. If you don't specify an expense account, the transactions will be posted to the Employee Expenses Account by default.
Employer liability category transaction accounts
Employer liability category transaction accounts are used to allocate specific employer liabilities to different General Ledger 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 General Ledger accounts, you'll notice that there's an option to Split by location. This lets you write a transaction line per location to the journal for the same account. This is particularly useful if you're using locations, classes, or tracking categories in your specified accounting package.
If you want to split your General Ledger by location and allocate the transactions to a different General Ledger account, you can define location-specific accounts. These accounts will work in the same way as the primary accounts, however, they will only apply to the location they are specified for.
Exporting the chart of accounts
If you have users that have multiple sets of location-specific accounts, it can be hard to find all the places an account is used. The Export Configuration feature adds an Excel spreadsheet to show which accounts are used across the whole chart of accounts.
To export your chart of accounts:
- Go to Payroll, and then select Payroll Settings.
- Under Business Management, select Data Extracts.
Frequently asked questions
Why am I getting an error message saying that journals aren't publishing?
If you get this error during the pay run, it means there's an issue with the chart of accounts. Make sure the mapping is correct.
Why aren't journals creating in Advanced Payroll?
You may not be able to create journals for the following reasons:
- Your books are marked as closed
If you've closed the books and have the status 'Close the books"'for the period you're trying to create a payroll journal, you won't be able to create one. If so, turn off the status and run the payroll again.
- Warning notifications are off
If the option 'warn when a duplicate journal number is used' is set to Off, then you won't get any pop-up error message for duplicate journal used and the journal won't be created. To fix this problem:
- Go to your Accounts and Settings, and select the Advanced tab.
- Under the Other preference section, and make sure that the 'warn when a duplicate journal number is used' option is set to On.
- Make a fake journal entry
If none of those work, make a fake journal entry for 0.01 P to any accounts. Make sure the new transaction number is in the top right corner and hasn't been used before in QuickBooks Online. Try running payroll again to see if journals are created. Remember to remove the fake journal.