What’s the go with linked accounts?

The fourth step in the Easy Setup Assistant is perhaps the most technical: linked accounts are the hidden mechanisms for working out the debits and credits of any payroll transaction. In short, linked accounts are crucial as they affect what happens behind the scenes of every single pay. (By the way, if you’re not currently working through the setup assistant interview and you want to check your linked accounts, go to your Setup menu, select Linked Accounts, followed by Payroll Accounts.)

When choosing linked accounts, select accounts that are correct for the majority of your employees – you can later override these linked accounts for individual employees who are different. Here are some tips to help you set up your linked accounts:

• If you pay employees cash straight out of the till, your Undeposited Funds account is probably the best choice as the Bank Account for Cash Payments.
• If you pay employees by electronic transfer, select your Electronic Clearing account as the Bank Account for Electronic Payments.
• The Default Employer Expense Account is referring to superannuation and usually defaults to an account called Other Employer Expenses. To make things clearer for you and your accountant, you’re best to edit the name of this account in your Accounts List to ‘Superannuation Expense’ (but change this name later, when you’ve finished the Easy Setup Assistant).
• The Default Wages Expense Account is usually called something like Wages & Salaries Expense (this default account doesn’t normally need changing).
• The Default Tax/Deductions Payable Account is usually Payroll Accruals Payable. For the time being, it’s okay to accept Payroll Accruals Payable as the linked account, but once you get started, it’s good to have separate liability accounts for PAYG tax and super: one called ‘PAYG Withholding Payable’ and another called ‘Superannuation Payable’. See the following tip for more details.

MYOB linked accounts: Advanced tip

Avoid the confusion of PAYG tax and superannuation being combined into one liability account. After you complete the setup interview, go to the Accounts command centre, click Accounts List and change the name of ‘Payroll Accruals Payable’ to ‘Superannuation Payable’. Also, if you don’t have an account by this name already, create a new account called ‘PAYG Withholding Payable’. Next, go to the Payroll command centre, click Payroll Categories and ensure that all superannuation categories are linked to Superannuation Payable, and that PAYG Withholding is linked to PAYG Withholding Payable.

The contents from this page are taken from Making the Most of MYOB Payroll, 2nd edition, by Veechi Curtis, available online for only $19.95

<< Back to MYOB Payroll page