The Payroll Journal Entry window is used to record the Journal Entry from your outside Payroll Provider and, at the same time, ‘true-up’ the labor accrual entries that were created from the POS import each day of the pay period. There are two unique fields on the Payroll Journal Entry transaction that set it apart from the normal Journal Entry transaction: a place to enter the Start and End Date of the Payroll Period in the header and a tab that displays the reversing entry of all the labor accrual entries on the grid called ‘Payroll Estimate Clearing’.
Labor accrual entries are made from two sources:
Hourly Wages - Imported through the POS integration by way of Job Titles and Labor Punches Salaried Wages - Set on the Location Record (Labor Estimates tab) as Manager Daily Salary
Important Note Before Creating a Payroll Journal Entry - Ensure that all of the related Daily Sales Summaries are approved before creating a Payroll Journal Entry. If all of the Labor information is not approved, the Journal Entry will not clear out the Accrued Payroll Account properly. More information on this topic is explained in the 'Approving a Payroll Journal Entry' section below.
Creating a Payroll Journal Entry
To create a Payroll Journal Entry, hover over 'Account' in the top ribbon and click 'Payroll Journal Entry'. A new window will open will open where Payroll information can be entered or imported on the 'Details' tab.
1) Date - This is the date of the Journal Entry. It defaults to the current date. For Payroll Journal Entries, it normally should be changed to the last day of the pay period for which the transaction is being recorded
2) Number - This is a system-generated unique number assigned to this Journal Entry
3) Type - The type of Journal Entry created. Due to the nature of this Journal Entry, this field will be defaulted to 'Payroll' and will be displayed as read-only. On an import, the 'Type' column will need to have 'Payroll' entered for the import to be successful. Click here to learn more about Journal Entry Types
4) Payroll Start Date - The first day of the pay period for which this journal entry is being entered
5) Payroll End Date - The last day of the pay period for which this journal entry is being entered
6) Location - This is the Location for which you want to assign this Payroll Journal Entry. For Payroll Journal Entries, this is normally the 'Corporate' Location for the Legal Entity that owns the checkbook from which the Payroll funds are withdrawn. The individual Payroll expenses are broken down by specific Locations in the Journal Entry in the 'Details' grid
- Note: If your company does one Payroll entry per Legal Entity, then it can clear all Locations for the Legal Entity in the same Entry. To set your preference, open System Preferences and on the 'Miscellaneous' tab, set the 'Payroll Clearing' field to either 'Per Location' or 'Per Legal Entity'
7) Comment - This is an optional comment field
8) Link to Asset - This will link the JE details to specific Assets. The 'Asset' column will appear in the 'Details' grid when clicked, where each line can be linked to a selected Asset. Click here to learn more information about Link to Asset
9) Details / Distribution / Payroll Estimate Clearing:
Details – Enter the full journal entry transaction as provided to you by your outside payroll provider
Distribution – Once you have selected the Payroll Start Date and Payroll End Date, and entered the full journal entry on the Details tab, you will be able to see the ‘Net’ effect of this payroll journal entry to your GL accounts on the Distribution tab. The reason why this is not simply the values on the Details tab is because this transaction is also creating a reversing entry of all the labor accruals that have been made. Therefore, the Distribution tab displays the difference between the full payroll entry for the period and the reversing (or ‘Clearing’) entry of all the accrual entries for the period
- Note: The values displayed on the Distribution tab should be relatively small if your accrual %’s are accurate. You can adjust the labor accrual %’s on the Location setup. Also, if your Job Titles are assigned to the incorrect GL Accounts (as described above), they may also be larger than expected.
Payroll Estimate Clearing – This tab displays the reversing entry of all the labor accrual entries made by the POS integrations once the transaction is Approved
- Note: Keep in mind that the individual daily labor accrual entries are not lost. The Payroll Clearing Entry makes a single reversing transaction on the date of the payroll journal entry for the sum total of all the accrual entries for the payroll period.
10) Upload File - Click to import entry details
Importing a Payroll Journal Entry
When Importing a Payroll Journal Entry, download the Payroll JE Import Template and enter in the necessary Payroll information. For the 'Type' column, ensure to enter in 'Payroll' for each row. Otherwise, the Journal Entry will import as a Standard Journal Entry. Click here to learn more about Journal Entry Types.
Navigate to the Import Journal Entry screen by hovering over 'Account' in the top ribbon and clicking 'Import Journal Entry'.
When the screen opens, ensure to click the 'Payroll Journal Entry' checkbox. The 'Payroll Start Date' and 'Payroll End Date' fields will then appear where the User can select the date range for the Payroll Journal Entry. After completing these fields click the 'Select Files' button to import the Payroll Journal Entry.
- Note: Ensure that 'Payroll' is entered as the 'Type' in the Payroll Journal Entry import. Additionally, the entry can be imported as approved as long as the 'Import as Approved' checkbox is clicked.
If you accidentally approve (and create the reversal) before approving all DSS in that date range or if changes are made to the labor entries in the POS and you need to re-run the accrual reversing then just Unapprove the Payroll Journal Entry and Approve it again and the accrual reversing calculation will be recreated The smaller the amounts on the Distribution tab, the more accurate your accruals have been. If you note that there are large dollar values on the Distribution tab, you may want to adjust some of the accrual %’s on the Location setup. The accrual clearing amounts may also be larger than expected (or off) if the accounts assigned to Job Titles or to the location default accounts are incorrect. For example, the ‘Cook’ Job Title might incorrectly be assigned to FOH Labor in R365 but actual payroll entry from your outside payroll provider books the ‘Cook’ labor to BOH Labor so the amount shown on the Payroll Journal Entry Distribution tab would show the full amount going into BOH Labor and then the full amount coming out of FOH Labor. Therefore, be sure to review Job Title setup if the amounts on the Distribution tab are larger than expected.
Another Sample Payroll Journal Entry
After running payroll through your payroll provider, either import (or enter) a journal entry that has the summary of the expense accounts (i.e. FOH, BOH, Manager etc.) and a single line for each employees net pay (i.e. the amount that will clear the bank – each check) into Restaurant365. By doing this, we can use Restuarant365 for Bank Reconciliation for the payroll account and also capture the actual payroll expenses.
Sample Entry for each check run using an example of 3 locations (having one of your locations as a ‘Corporate’ location where executive and administrative salaries would be booked). The amounts credited to the Payroll Checking account below automatically create R365 Bank Withdrawal entries that show up on the R365 Bank Reconciliation and are auto-reconciled when you import your bank activity into Restaurant365:
Debit $1,000 FOH Hourly Wages Expense – Location A
Debit $1,000 FOH Hourly Wages Expense – Location B
Debit $1,000 BOH Hourly Wages Expense – Location A
Debit $1,000 BOH Hourly Wages Expense – Location B
Debit $1,000 Administrative Salaries Expense – Location Corporate
Debit $500 Taxes/Benefits/Insurance – Location A
Debit $500 Taxes/Benefits/Insurance – Location B
Debit $500 Taxes/Benefits/Insurance – Location Corporate
Credit $500 Payroll Checking Account – “Jane Doe” “Check 1123”
Credit $500 Payroll Checking Account – “Steve Smith” “Check 1124”
Credit $500 Payroll Checking Account – “Kobe Bryant” “Check 1125”
Credit $500 Payroll Checking Account – “Tim Duncan” “Check 1126”
Credit $500 Payroll Checking Account – “Steven Smith” “Check 1127”
Credit $500 Payroll Checking Account – “Parley Pratt” “Check 1128”
Credit $500 Payroll Checking Account – “Dan Jones” “Check 1129”
Credit $500 Payroll Checking Account – “Brittany Spears” “Check 1130”
Credit $500 Payroll Checking Account – “Elton John” “Check 1131”
Credit $500 Payroll Checking Account – “Steve Wonder” “Check 1131”
Credit $500 Payroll Checking Account – “Jim Kaa” “Check 1131”
Credit $500 Payroll Checking Account – “Carl Karcher” “Check 1131”
Credit $500 Payroll Checking Account – “Summer Harris” “Check 1131”
The entry will have a single row for each check sent out (the credits) and will have a row for the total expense by GL Account by Location (the debits). After running your payroll just as you do today, you can either prepare this entry in Excel and import it into Restaurant365 or create a Memorized GL Transaction in Restaurant365 and then each pay period you would need to simply update the $ amounts and the check numbers in the comment for each row (this is done easily in Restaurant365 as the journal entry screen is like an Excel spreadsheet.)
Lastly, Restaurant365 takes this entry and uses it to offset the labor accruals that come in daily from your POS system into Restuarant365. So when you enter this journal entry above (or import it), you select the start and end date of the pay period for which it covers. The system then makes an adjustment to true up/down the accrued payroll expenses for the pay period. This way you get the benefit of having your weekly prime cost reports and having them totally accurate however often you run actual payroll.