Integrating payroll systems in new accounting software can be a challenge for businesses. Especially when changing to a different system, a proper integration requires following all the rules and converting plenty of data. While the underlying principles behind payroll accounting are universal, the conversion process can be time-consuming. Keeping track of payroll requires a lot of transaction information that must all be accurately transferred. Accounting managers can take advantage of new software by integrating their existing systems. Follow this guide to integrate accounting software into a company’s existing payroll system.
Gather The Required HR Information
To ensure a smooth process, managers should start by getting all of the required information together. This information is anything that relates to a company’s records of employee compensation. This includes, but is not limited to gross wages, salaries, commissions, and any bonuses paid. Additionally, information related to the withheld taxable gross income, such as income or social security taxes, should be collected. Accounting managers should collect accurate information to start a smooth transition to the new software for high business impact.
Set Up A Chart Of Accounts
Recording payroll in a new accounting software requires accounting managers to set up a chart of accounts. A chart of accounts is a ledger that details financial transactions a business has, in this case payroll. Accounts within a payroll system will typically be either expenses or liabilities. An expense account is a cost that has occurred through the normal course of doing business, such as wages. A liability is money that is owed to other parties. Detailed charts of accounts may be provided by the accounting software company. A chart of accounts is the first step in setting up a new accounting software system.
Collect And Record A Payroll Journal
After creating a chart of accounts, managers can start integrating their accounts beginning with a payroll journal. To begin, create a record of any employee pay, health insurance bills, and payroll taxes. This information is then used to record payroll for one employee or more in the journal, which breaks down every payroll transaction into relevant debits and credits. Most accounting software will assist with this break down once it has been fully integrated in the payroll system. However, new users will have to enter this part in manually. Once the payroll system has been merged with the software it becomes much faster in subsequent years.
Enter Payroll Information In A General Ledger
Once the payroll journal is fully recorded that information must be stored in the general ledger of accounts. Accounting managers should carefully review this information for accuracy as most software will not allow this information to be changed once added to the general ledger. Many accounting systems will automatically flag discrepancies, such as debits not matching credits or gross wages not matching payroll expenses. Of course, a manual review is recommended. Software programs can have errors or miss data entry mistakes. Managers should ensure that their existing payroll accounts can be merged with the general ledger in the accounting software.
Reconcile Payroll With The Ledger
The last step in payroll accounting software integration is to merge the information into the company’s general ledger. This ensures that the payroll accounts match up with the company’s broader financial accounting. This process can be time-consuming so it is best for accounting managers to perform it on a monthly or quarterly basis. As with payroll information, many errors are caught by accounting software but should still be manually reviewed for accuracy. Integrating accounting software into an ongoing business ledger allows you to keep complete digital records of all company transactions.
A company or wealth manager adapting to a new accounting software can be a challenging and time-consuming process. This process often pays off as the integrated system becomes much faster with subsequent uses. To set up the system, accounting managers have to start by gathering together all relevant payroll documentation. These documents are then added to a payroll journal where they are broken into expenses and liabilities. This information is then added to a general ledger that contains a more detailed breakdown of each transaction. Finally the sum of the information is checked against the company’s existing ledger to make sure that the data being entered is accurate. Following these steps, accounting managers can easily integrate accounting software into their existing payroll systems.