Hi - does anyone know how to record salaries in QuickBooks Essentials without them having to have a VAT code and appearing in the VAT return?

Hi there, @Corranet.

While QuickBooks Online International doesn't have a payroll function, you can enter a journal entry to record salaries manually. However, I recommend seeking help from your accountant to know how to enter it without a VAT code, and appears in the VAT return.

To create a journal entry, here's how:

1. Sign in to your QuickBooks Online account.
2. Click the + New button, then select Journal Entry.
3. Under the Journal Date, enter the payroll payment date
4. Add the entry number (optional).
5. Enter your debit and credit entries, then click Save and close.

You can read this article for more details: Record payroll transactions manually.

You may also check out this article to learn how to manage your VAT in QuickBooks Online: VAT Feature Update FAQ.

Our Community forum is always open to help you again if you need further assistance with this. Have a good one.

Hi Mark

I agree with you that the logical thing to do would be to raise journal entries for payroll. The journal screen has a VAT field, but I have been experimenting, and it appears that although the VAT field appears I can in fact raise a journal without entering anything in that field.

My original plan was to use bank import transactions (including salaries) to populate my trial balance and then tidy up afterwards, but unfortunately using the bank import file forces me to enter a VAT code. If I raise a journal crediting bank and debiting salaries, can I then match the bank transaction in my bank import against the credit amount from the journal (and thus avoid a duplicate entry)?

thanks

Yes, you can match the imported bank transaction against the credit amount from the journal, Corranet.

With the Match feature in QuickBooks Online, you can locate the transaction against a credit journal amount. 

Here's how:

1. Navigate the Banking menu, then tap Banking.
2. Choose the appropriate bank account and click the For Review tab.
3. Locate the transaction to expand the view.
4. Tick the Match radio button.
5. Review the Records found, then select the link next to each record to get more details.
6. Check the Deposit to field on the forms.
7. Tap Match.

Here's an article to learn more about the process: Categorise and match online bank transactions in QuickBooks Online.

If you need help reconciling your account, check our reconciliation workflow for a guide.

I'll be here to help you if you need more assistance matching your transactions in QBO.