Payroll and journals

Our accountant tells me that we have been entering our wages into our accounts incorrectly and as a result we have some differences which appear to be with our NI.

We’ve been using the Quickfile tagging to for our wages and NI.
*We tag the wage transactions in our bank account as Employee Salary and tick the director box, which seems to move the net amount to nominal 7001.
*We tag the NI transactions as NI and it puts a debit in 2210 but this then leaves this account balance out and I have been advised that this should be at zero.
*The NI is also not accounted for in the nominal 7001

I have been advised that we should be debiting 7001 for our gross wages and sending credits to 2210 for NI and 2220 for net wages. The net wages seems to be fine, it appears as if it’s just the NI that is not being accounted for.

Our accountant says we should debit 7001 for our gross wages and credit 2210 for NI & 2220 for out net wages. Quickfile seems to be putting a journal through which only accounts for the net wages.

Is there any reason why I can’t put the NI through as a separate journal, eg: debit 7001 and credit 2210 for the NI amount we pay to the revenue?

I realise this may not be the exact way an accountant does it, but to me it sort of makes sense. Instead of doing 1 journal made up of 1 debit and 2 credits, we’re effectively doing 2 journals made up of a corresponding debits and credits?

Hope that makes sense?

Hi @bigfootnetworks

I’m not an accountant, but will try to help with general advice.

Have you created the payroll journals at all, or only tagged the entries when the money has left your bank?

There’s a few topics regarding the journals on the forums, which may be able to help you:

Thank you for the above.

From what I can tell, the journals Quickfile is doing by default is only missing off the debit to 7001 and credit to 2220. I know there is an option in the advanced features to turn off the journal entries for net wages to 7001 and 2220, but it seems like I will just be doing this as part of a later journal?

With the option turned on in Advanced Settings, tagging a payment will only record it against 2220

Whereas, if it’s marked as off, then it will post to 2220, and move it automatically to 7001/7003 (dependent on whether or not ‘Tick if Director’ was ticked or not.

So, if you have this option turned on under Account Settings >> Advanced Settings, you would need to create the journal manually, something along the lines of the following. We’ll use ‘Bob Smith’ as an example, and a pay amount of £200.00:

7003 could be 7001 if it’s a director’s pay.

Hope that helps. If not, ask your accountant for clarification on exactly what needs to be entered in terms of a journal, and hopefully we can advise a bit better :slight_smile:

This is a Journal template of typical payroll journal entries when the ‘Post Net Wages to Balance sheet only’ is set for ON:

Its taken from a payroll softwares nominal postings report
It was for low wages so no tax or NI

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