Free Payroll - How to create payroll entries

 

If you need payroll features, we strongly recommend that you upgrade to PiggyZen Pro. Using the payroll features in PiggyZen PRO have many advantages and makes payroll easy and quick. If however you prefer to continue using the free edition of PiggyZen, it is possible to manually do your payroll using the free edition.

If you haven't already, create your Free PiggyZen account. 

Why payroll in PiggyZen PRO is better

Before I start showing you how to do your payroll in the free edition, you need to understand that there are a lot of features that you will not have and that can cause problems later. 

Below is a list of features that payroll in PiggyZen PRO has that you will not have access to:

• Once set up, doing a payroll run in PiggyZen PRO is very quick and easy.
• Payslips are generated for you and automatically emailed to employees.
• Salary payments and advances are automatically allocated to each employee's salary history and will be displayed on payslips. Salary statements are also available with history of payments, advances and more. 
• Paying employees and payroll liabilities are easy and quick. 

To see how payroll is set up and how it works in PiggyZen PRO have a look at this video. 

Managing your payroll in the FREE Edition

If you have decided that you want to keep on using the free edition. You can manually create the needed Journal entries in PiggyZen by following the steps below. 

Initial Once-Off Setup for Payroll

PiggyZen comes with the following payroll accounts:

• Wages (Expenses)
• Payroll Payable (Liabilities)

You will need to add any other accounts needed to keep track of employee deductions (PAYE, SDL, UIF - or whatever deductions your country requires). For this example we will only add 'PAYE Tax'.

To add the account, from the PiggyZen menu select 'Accounting and Finances' and then 'Manage Chart of Accounts'. Click on 'Add Account'.

We enter 'PAYE' as the account name, select 'Liabilities' as category and 'Payroll Liability' as a sub category. Click on 'Add' to add the account.

In a spreadsheet you can then add your employees with each employee's salary and deductions. Again, for this example we are only going to deduct PAYE. Other deductions and company contributions are not added in this example.

The initial once-off set up is now done. 

Wages Journal Entry

We can now create a wages journal entry. In PiggyZen, go to 'Accounting and Finances' and then 'Create Manual Journal Entry'.

Add a date and description. Then add the following accounts and amounts:

1. Add 'Wages' account and enter the gross wages amount. In our example it will be 30 000.00. The account will increase, so make the amount positive. PiggyZen will sort it under Debits.
2. Add 'Payroll Payable' account. Enter the total NET salary amount for all salaries. In our example it will be 27244.00. The account will increase so make the amount positive. PiggyZen will sort it under Credits.
3. Add the 'PAYE' account. Enter to total amount of PAYE tax you need to pay for all employees. The account need to increase, so again, make it a positive amount. PiggyZen will sort it under Credits.
4. You will then also need to add all your other deductions - but this is it for our example. Click on 'Submit Journal Entry'.

Let's have a look at our balance sheet.

Under our liabilities we now have two accounts we need to pay. The payroll payable (payments to the employees) and the PAYE tax. We can also see that our earnings were reduced by the gross wages amount.

Salary Payment Journal Entry

We can now start paying the employees. We again need to create a manual journal entry. 

We select a date and add a description. We then add the following accounts and payments.

1. Add your bank account from where you will pay the employee (read this if you haven't added your bank account to PiggyZen yet). Enter the amount you will pay for the specific employee. The money in the account will decrease, so enter a negative amount. PiggyZen will sort it under Credits.
2. Add the payroll payable account. Enter the amount you will pay the employee. The amount payable will decrease, so enter a negative amount. PiggyZen will sort it under Debits.

You can continue the process for all the employees. In your balance sheet you will then notice that the salaries paid were taken off your bank account and your payroll payable account was reduced to zero.

When you pay your PAYE tax you can record similar journal entries by simply selecting the correct accounts.