Payroll by Wave: All about the bookkeeping

SystemSystem Posts: 412 admin

imagePayroll by Wave: All about the bookkeeping

Regular tasks for your business should be easy, so we’ve automated most payroll bookkeeping. Here's how it works.
When you approve a payroll in Wave, Wave will automatically create a corresponding ...

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edited February 26, 2019 in Help Center Discussion
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  • KatarinaKatarina Member Posts: 1

    I see that the "Payroll Withdrawal" on the second image is showing in green as a debit and I understand that that is to 'zero out' the payroll liabilities account. I currently do do direct deposits for payroll however not through Wave but through ADP (which is connected to my Wave). Wave automatically create a payroll journal transaction as in this example, however, it does not seem to automatically zero out my liabilities account because rather than showing green, those transactions pulled from my bank are shown as withdrawals.

    Should I simply make the payroll direct deposit and payroll tax transaction that are pulled from my bank connection a deposit vs the default classification of withdrawal in order to 'zero out' my liabilities account?

  • KMRobertsKMRoberts Member Posts: 2

    We do pay our employees by direct deposit, but it is not reconciling with the journal entry. I talked to someone on the chat three days ago and they were going to look into it and get back to me by email. They have not done that yet. We need to file taxes by the 15th of this month and need to get this resolved.

  • Ryan_WRyan_W Member Posts: 452 ✭✭✭

    Hey @Katarina, to confirm: have you activated the payroll journal transactions feature in your Wave account? It's specific to ADP users, and can be activated/deactivated in the Integrations page. It sounds like you have, but I just want to be sure.

    When activated, the feature creates a journal transaction where wages and taxes owing are recorded as a credit (increase) to Payroll Liabilities. This is the accounting way of saying "I'm on the hook to pay my employees and the government this amount." When wages are withdrawn from your bank account, or taxes are paid, an expense transaction is going to be imported into Wave if you have the same bank account connected. All you have to do with these is categorize them to Payroll liabilities to debit (decrease) the account balance. This is the accounting way of saying "Okay, I've paid those wages and taxes I was on the hook for."

    @KMRoberts it looks like a member of our team followed up by email last Friday, so please check your inbox; if you have further question about his response, please follow up with them in the email thread you have going and he can help you out!

  • CohcCohc Member Posts: 5

    Our Wave account doesn't look anything like the picture's shown. And, we've been using Payroll by Wave for over a year now and it does Not create a journal entry, nor does gross payroll show up on our Income Statements. I think maybe somewhere the platform was upgraded but our account was not. ???

  • Ryan_WRyan_W Member Posts: 452 ✭✭✭

    @Cohc this is because your Wave account is still on the old version; it looks like you signed up a couple months before the cutoff. It should still be creating journal entries, they'll just be located at Accounting > Journal Transactions rather than the Transactions page directly.

  • CohcCohc Member Posts: 5
    They're not there either, that's the first place I looked. I use the journal entries monthly for loan payments and they've never been there. Is there a way to convert to the new platform?
  • SamdSamd Member Posts: 552 ✭✭✭

    Hey @Cohc - could you try heading over to Settings > Account Mapping? These Journal Transactions may not be populating if Payroll hasn't been set to a specific account, but you should be able to set the account you're accounting/funding payroll with here for bookkeeping purposes. In terms of opting into migration, unfortunately not at the moment, but we're hoping to get more users moved over soon!

  • ABLABL Member Posts: 1

    How do you edit an approved payroll entry. I need to edit the payday from April 30 to May 15

  • ZoeCZoeC Member Posts: 388 admin

    Hey @ABL , thanks for reaching out. You can delete an approved payroll if you need to change something by navigating to Payroll > Run Payroll > Approved Payrolls in the top right > Select the payroll in question and delete. I hope this helps :smile:

  • nawabnawab Member Posts: 3

    Hi @Samd @Zoe_caff @Ryan_W I've been using Wave Payroll since the beginning of the year. I was always under the impression that the payroll journal entries were being taken care of by Wave automatically. Now I learn that I have to set the Account Mapping first. You guys should at least provide a check list when folks enroll for Wave Payroll. It's a paid service after all.

    Now that I've done the Account Mapping, I hope Wave will take care of future journal entries. But how am I supposed to handle entries for previous payroll runs? I'm left with a bunch of unverified transaction entries like these:

    Please provide instructions on how to handle these. Thanks.

  • JamieDJamieD Administrator Posts: 1,156 admin

    Hey @nawab You could technically go through the process of creating journal transactions for the missed payrolls, and then categorizing the expense from your bank account as Payroll Liabilities (you can mimic the journal transactions as they appear for all future payrolls now) -- this would be the proper way of being 100% accurate for your reports section.

    However, a bit of a bandaid solution would be to simply categorize those expense transactions with the appropriate expense category from the Chart of Accounts section. This shouldn't really affect the reporting in any negative way, but you could potentially see expense for specific years being higher for a reason that isn't visibly known (due to the journal transactions being missed for PR entries).

  • GorgoGorgo Member Posts: 8

    So you can only use Payroll if you reside in Canada or USA.
    How do you treat transactions to pay 1 employee (me) living in Australia.

  • EmmaPEmmaP Member Posts: 639 ✭✭✭

    Hi @Gorgo! Thanks for reaching out! You are correct, you can only use the 'Payroll by Wave' if you reside in North America. In terms of your specific transactions, there could be a number of ways to treat this. As you are located in Australia I am unable to advise as we only have knowledge in this area. If you reach out to an accountant they should be able to advise you on best practices here!

  • GorgoGorgo Member Posts: 8

    It's OK, I have worked a way of recording wages with a Journal Entry.
    Pity you don't have a template for recurring Journal entries.

  • JuditJudit Member Posts: 7

    Hi
    When I run my payroll, wave creates an expense transaction from Cash on hand account for payroll liabilities. But then a few days later my bank account is synced and brings in another withdrawal for the same amount that's un-categorized.

    I have direct deposit set up, so why is a transaction being created by wave from a cash on hand account?

    Not sure how to proceed. I assume I should be deleting the imported transaction from my bank account and mark the wave created one under that account instead of cash on hand?

    edited December 13, 2019
  • AlexLAlexL Member Posts: 2,869 ✭✭✭

    Hey @Judit . You can change the account mapping of your Payroll under Settings > Payroll > Account Mapping. Here, you can choose another account other than Cash on Hand to properly record these transactions.

    You can then merge together the bank imported transaction with the automatically created Wave transaction.

    edited December 13, 2019
  • BobbyWBobbyW Member Posts: 2

    I find the entire article very, very confusing. I love Wave, but this one 'feature' kills me. I'm still unsure what to delete, what to keep, what to match. "The remainder of that liability will be settled when you remit the payroll tax to your government." Can you explain this in better detail.

    edited January 12, 2020
  • Joseph_DTC01Joseph_DTC01 Member Posts: 3

    Accounting for check withdrawals...
    We switched accountants (who looked after books & payroll) at the end of 1st quarter and began using Waveapp last year.
    1. In regards to payroll, should our old accountant take care of reconciling payroll for the 1st quarter?
    2. We have the business account automatically importing transactions to Waveapp. Should we delete employee check withdrawals or categorize as an expense for the 1st quarter?
    3. Is it correct to categorize all employee withdrawn checks as 'Payroll Liability' on Waveapp?

    Thanks

  • MarilynMarilyn Member Posts: 1

    All was fine before the update. I would just delete the payroll transaction and keep the journal transaction.
    Since the update, for each payroll, I have 1) journal transaction 2) Business PADWave payroll transaction 3) RBC imported transaction. The help desk told me to merge 2) and 3) - but how should they be categorized? The is no "payroll liability account" as they suggest.
    I went back on the help chat and that time was told to just delete 2) and 3). This does not work AT ALL - the journal transaction does not seem to "count" when reconciling - so deleting 2 and 3) is definitely not correct. It makes my previously reconciled month out by the amount of payroll.
    Help?

  • AlexLAlexL Member Posts: 2,869 ✭✭✭

    Hey @BobbyW . When you remit the tax to your government, your bank should pull in these expense transactions which you can categorize as Payroll Liabilities. This will zero out the remaining balance.

    @Joseph_DTC01 I've merged your comment into this thread so that you can read the Help Center article associated to it. To quickly answer your questions though, you can handle the reconciliation on your own, if you're paying all of your employees by check, just categorize the check payment to Payroll Liabilities when it hits your Wave account.

  • AlisonCAlisonC Member Posts: 2

    Same question here. Please help. There was also a thread by drkent, who seemed to figure it out himself, but that doesn't help us. Please provide an overview of the accounting. My auto categorize is miscategorizing, but I'm not sure how it should be categorized.
    Marilyn, you can create a payroll liability account.

  • AlisonCAlisonC Member Posts: 2

    Hi, I echo BobbyW here. I love Wave, but There's not enough detail here. It makes it sound like it's all taken care of and I don't need to do anything, but that's not true. What I need is "You'll see the Payroll transaction categorized as XXXXX. Several days later you'll see the Online banking transfer credit. Make sure this is categorized as XXXXX. If you see a xxxx transaction, this should be merged with xxxx (Instructions or link on how to do that." Things get miscategorized sometimes and we need enough information to get things categorized correctly.

  • SystemSystem Posts: 412 admin
    This discussion was created from comments split from: Payroll transactions - Merge? Apparently yes, but......
  • SystemSystem Posts: 412 admin
    This discussion was created from comments split from: Payroll transactions - Merge? Apparently yes, but......
  • BarsinBarsin Member, Moderator Posts: 2,041 ✭✭✭

    Hey there @Marilyn @AlisonC

    I've merged your comments into this help centre discussion thread about the payroll bookkeeping which you can read more about -->here<--.

    Essentially the initial journaled transaction is categorized under a liability account. So, when a payroll is approved, the liability account is credited (increased) by, the amount that you owe the employees. This is the accounting equivalent of saying “I approved payroll, so now I owe my employees the wages from that payroll”.

    Wave will also create a withdrawal transaction in the Transactions page whose account is set to the funding account from Account Mapping, and whose category is set to Payroll Liabilities. The date of this transaction will match the withdrawal date for the Direct Deposit. Where the journal transaction credited Payroll Liabilities, this transaction debits it by the amount of the withdrawal. This is the accounting equivalent of saying “Ok, now I’ve actually paid my employees.”

    The triplicate transaction is if you have a bank account connected, it will pull in the same withdrawal transaction, so you would have to either merge the two transactions, or delete the bank-imported transaction, as Wave will have already accounted for it. People recommend merging by selecting the check boxes beside the two withdrawal transactions and selecting merge at the top instead of deleting, but it doesn't exactly matter to be honest. Some people don't like the idea of deleting a transaction.

  • jwatsonjwatson Member Posts: 3

    So just clarifying - You leave the journal transaction and one of the records of payment from the bank if there are triplicates or do you delete all the bank imports and just keep the journal transaction??????

  • jwatsonjwatson Member Posts: 3

    @Marilyn said:
    All was fine before the update. I would just delete the payroll transaction and keep the journal transaction.
    Since the update, for each payroll, I have 1) journal transaction 2) Business PADWave payroll transaction 3) RBC imported transaction. The help desk told me to merge 2) and 3) - but how should they be categorized? The is no "payroll liability account" as they suggest.
    I went back on the help chat and that time was told to just delete 2) and 3). This does not work AT ALL - the journal transaction does not seem to "count" when reconciling - so deleting 2 and 3) is definitely not correct. It makes my previously reconciled month out by the amount of payroll.
    Help?

    This is exactly what I found - I deleted all but the Journal Transactions and then tried to do a bank reconciliation and man what a nightmare - I figured out that I had to put the bank one back in - there has to be a more detailed way of explaining it - can you show a step by step by step with pictures at each step to demonstrate what you are trying to tell us. It is super confusing

  • LUTLUT Member Posts: 2

    Wave needs to do something about this. It is obvious that the way its set now the Journal Transactions are causing more problems than doing any good. At least, there should be an option to not include journal transactions when creating reports or doing reconciliation. Last month, in order to reconcile my accounts and prepare info for taxes, I had to manually delete each separate item in all journal transactions to make it work.

    This is obviously not working or it is so confusing that no one really understands how it works, even the administrators that are unsuccessfully trying to explain it to us.

    Please provide a more detailed tutorial or give us an option to not have Journal Transactions.

    Thank you.

  • EmmaPEmmaP Member Posts: 639 ✭✭✭

    Hi @jwatson & @LUT! Payroll bookkeeping can be confusing. I will try to simplify it below but let us know if you have further questions!

    1. When you approve a Payroll in Wave a Journal Transaction will be created in your Transactions page. This transaction is not deletable.
    2. If you have your bank account connected for automated transaction imports, or if you upload csv files of your transactions an expense transaction will be imported for the Payroll withdrawal you have run.
    3. Once you’ve paid your employees, Wave will create a settlement transaction to record the successful payment, which can be merged with the direct deposit withdrawal (in step 2) from your bank account so that the bookkeeping for your payroll is completely accurate. You can read more about settlement transactions here.

    This should leave you with two transactions for each Payroll - a Journal Transaction and one withdrawal transaction.

  • egoego Member Posts: 2

    hello, it seems like approve payroll JEs do not get deleted after the payroll is deleted. can you help with this?

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