How to Set Up Your Payroll Software Employment Hero
Introduction
This video explains how accountants can set up and use Keypay to manage payroll in line with a company’s chart of accounts, with a focus on accurate journals, reporting, and month-end reconciliation. It covers choosing a journal source, importing a chart of accounts, mapping pay categories and departments to specific expenses, and handling leave provisions. The video also demonstrates how to use location-based and dimension reporting to split expenses across different cost centers. Practical guidance is provided on creating self-reconciling journals, generating useful month-end reports, and automating report packs, helping accountants manage payroll efficiently and maintain accurate financial records under the SCHADS award.
Key Takeaways
- Choose the appropriate journal source (direct API or detailed file export) for accurate integration with accounting systems.
- Import a chart of accounts, mapping account codes, names, and types to ensure payroll items are correctly classified.
- Use pay categories and location-based accounts to report specific wages and allowances in the P&L.
- Track leave provisions separately from wages to accurately reconcile balance sheet movements.
- Apply dimensions for reporting across departments or projects to meet accounting and internal reporting requirements.
- Use report packs and Payday report packs to automate month-end and payroll reporting efficiently.
Transcript
Introduction to Payroll System Setup
As an accountant, when you're setting up a new payroll system, things can be a little daunting, particularly getting your journal right, getting the right reporting out, and getting end-of-month reporting correct. In this video, we're going to cover all these topics and more to get you comfortable with how to use your payroll system in conjunction with your chart of accounts.
Hi, thanks for joining us today. We're going to go through Keypay for accountants. We'll look specifically at journals and reporting, and how you can set up Keypay to suit your accounting requirements. As we know, wages are usually the biggest item on the P&L. It's usually the biggest expense for most companies and touches a lot of different areas on the balance sheet. There are a variety of ways to set it up to meet your business needs, and we're going to explore some of those options today.
We'll also look at a few tips for month-end, such as what happens at month-end in terms of reconciling items on your balance sheet, what best practice looks like, and what types of reports you can pull to help achieve that. Before we move into the session, we'll look at choosing your journal source, importing your chart of accounts in different ways, going through a basic setup, and showing how certain pay categories and departments can appear in different expense areas in your P&L. We'll also cover leave provisions, movement of leave provisions, dimensions—a fairly new feature—and useful month-end reports.
Presenter Background
About myself, my name is G. I'm the founder here at Payat. I'm actually a chartered accountant and tax agent by trade, with over 15 years of experience looking at debits and credits before starting Payat. I worked for Big Four firms and large mid-tier firms, and I also had my own practice called Revolution Business Services, now Vector Advisory, where I'm still a legacy director, so I still dabble in accounting a little bit.
Choosing the Journal Source
Choosing the journal source is the first thing we'll look at. Things to consider: the journal produced per pay run can either be a text file download or a direct download. Systems like Xero, QuickBooks, and Dynamics Business Central can connect directly via API. Other systems may provide a generic text export or Excel file.
We'll go to Payroll Settings and Integrations. Here, you can filter by accounting system and choose the system that makes sense. If your system isn't listed, you can select either file export or detailed file export. I usually choose detailed file export because it provides more context. Click add, enable it, and you can choose whether to show full location names in the export.
Some systems, like Xero, require an API connection, so ensure you have full access to the file. For multiple businesses or ABNs, consider splitting them if you have different Xero businesses you want to connect. For industry-specific systems, a detailed file export provides a generic output that can be manipulated and imported into your accounting system.
Importing Your Chart of Accounts
Next, importing your chart of accounts. Pull your chart of accounts from your accounting system—typically account codes, account names, and account types. You can import via CSV. Decide whether to import your entire chart or only items affecting payroll. For example, if reimbursing an employee's phone bill, include a telephone expense account.
Your CSV should have columns for account code, account name, and account type (asset, liability, expense, revenue, equity). When mapping, consider whether your system allows sending a general journal to a cash at bank account. Often, using a clearing account is better. Upload the CSV through Manage Accounts > Import, confirm the upload, and your accounts will be installed. You can export or reimport later without affecting mappings.
Basic Chart of Accounts Setup
Basic setup: Fill out the default account section in your chart of accounts. Required fields include payroll clearing, wages expense, super expense, employee expenses, etc. For expenses, consider splitting by location to get separate lines in the journal for different locations. This is useful for wages, super, and employee expenses.
Deductions
Deductions are optional but recommended. Coding expenses in deduction categories isn’t always needed. For example, if one employee gets a net pay of $80 and $20 goes to a sink account, wages expense is still $100, cash at bank gets $80, and the liability section handles the $20. Use deduction clearing and super clearing accounts, and special accounts for items like child support deductions.
Expense Categories
Expense categories can also be coded. Bringing in different expense accounts for travel or other reimbursements helps report on them separately. Location splits allow coding expenses to specific locations for more granularity.
Pay Categories to Specific Expenses
Pay categories to specific expenses: For example, NDIS providers may have sleepover allowances. These can be reported separately in the P&L by overriding the default wages expense with a specific pay category for sleepovers. Only override what you need; avoid mapping every expense unless necessary.
Department Costing
Department costing: If different parts of the business need different P&L reporting (e.g., admin vs support staff), use location-specific accounts. Override the default mapping only for the items that differ. Location hierarchy applies: the lowest (most specific) location overrides higher ones.
Leave Provisions
Leave provisions: These include annual leave and long service leave. For reporting entities or charities, it’s often a requirement to track movement in leave provisions on the balance sheet. Keypay calculates leave provision movements per pay run based on leave accrued, taken, and base pay changes. Use separate expense accounts for leave provisions to reconcile correctly. Don’t code leave taken in pay categories if tracking provision movements. Import opening balances from the leave liability report to match your balance sheet.
Dimensions
Dimensions: This allows reporting by multiple categories, such as department and area. Employees can specify their dimensions on the timesheet. Dimensions appear in the journal export for use in accounting systems that support dimensional reporting.
Month-End Reporting
Month-end reporting: Paid date usually matters more than period-end date. Reports can be downloaded to Excel or PDF. Useful reports include super contributions, leave liability, gross/net, payroll tax, and state-specific breakdowns. Report packs save time by automatically generating recurring reports. A Payday report pack can include pay slips, PCE loops, audit reports, payment files, journals, and variance reports, sent automatically upon finalizing a pay run.
Next Steps
Next steps: Work with your Customer Success Manager at Payat to achieve the desired journal output. Review locations early to suit P&L and department reporting needs. Set up a month-end report pack to automate reporting.
Conclusion
In conclusion, Keypay is a useful tool for accountants for reporting and analysis, allowing for a seamless process to reconcile balance sheet items and P&L using a self-reconciling system. Thank you for your time today, and I hope you enjoy using Keypay for accounting purposes.