What a pay run posts to a law practice's books
What the wages journal posts when a law practice approves a pay run, and how amounts owed to tax authorities and funds are shown and cleared.
By Achekam · · 5 min read · For Legal businesses in South Africa, Nigeria, Kenya
For many small practices, payroll and the books live in different worlds. Payroll is run by one person or an outside bureau, salaries go off, and at month end the bookkeeper posts one figure called "Salaries" from the bank statement. The amounts withheld for tax and the funds disappear from view until a penalty letter brings them back.
In Achekam, payroll and the ledger are joined: approving a pay run posts it to the practice's own books. Understanding what that journal contains, and how each amount owed is later cleared, lets the bookkeeper and the partners see at any date exactly what the practice owes to the tax authority and the funds. This article explains it for law practices in South Africa, Nigeria and Kenya.
Approval first: why an approved run is never recalculated
Nothing reaches the ledger until a pay run is approved. A pay run is approved by someone other than the person who prepared it, nobody can approve a run that pays themselves, and an approved run is never recalculated.
That last rule is what makes the books reliable. Once a run is approved, the payslips, the journal and the schedules all describe the same figures, and a later change to an employee's details cannot silently rewrite last month. If something was wrong, it is corrected on a later run, where the correction is visible.
The wages journal in the practice's own ledger
An approved pay run is posted to the practice's own ledger as a wages journal, with amounts owed to the tax authority and funds as liabilities.
In broad terms, a wages journal has two sides:
| Side | What it records |
|---|---|
| Expenses (debits) | What staff cost the practice for the period |
| Credits | What must still be paid out: each amount withheld or owed to an authority or fund, and the staff's pay |
The expense side tells the partners what staff really cost. The credit side tells the bookkeeper what must still be paid out, and to whom. Because the journal is posted from the approved run, it never needs to be typed in from a payroll report.
Open the journal of the first approved run and note which accounts it uses. That list is your map for the rest of this article: every liability account on it has to be cleared later by a payment.
Liabilities to SARS, State tax authorities, KRA and the funds
Who the liabilities are owed to depends on the country under whose rules the employer was set up.
South Africa. The monthly EMP201, including the Employment Tax Incentive, is prepared from approved runs and downloaded as a PDF, and the person who files it on SARS eFiling records the reference. SARS's page on completing the monthly employer declaration (EMP201) explains how PAYE, SDL, UIF and ETI are declared and paid each month. The EMP201 process is covered in more depth in the EMP201 and the Employment Tax Incentive.
Nigeria. Monthly schedules for PAYE per State, pension per pension fund administrator, NHF and NSITF, and the annual employer and ITF returns, are prepared from approved runs. A Lagos practice with staff living in Ogun owes PAYE to more than one State, so expect more than one PAYE liability to clear.
Kenya. Achekam runs Kenyan payroll with PAYE, the Affordable Housing Levy, SHIF, NSSF Tier I and II and the NITA levy, and prepares the P10, SHIF, NSSF and NITA schedules, with a P9A per employee for the year. Each contribution posts to its own liability account, for example PAYE and Housing Levy Payable (KRA). KRA collects PAYE and the Affordable Housing Levy, but not SHIF, NSSF or the NITA levy, so those liabilities are cleared by payments to other bodies.
Achekam does not file any payroll return with, or pay, any of these authorities. It prepares the documents and records what a person filed and paid.
The payment schedule, and what marking a run paid means
Each approved run has a payment schedule downloadable as CSV. Marking the run paid only records the fact: Achekam moves no money. Staff are paid through the practice's bank, from the schedule or a bank file.
So "marked paid" in payroll and "money left the bank" are two separate events, and both should happen. Mark the run paid when the bank confirms the salaries, not when the payment is loaded, and keep the bank's confirmation with the run.
Clearing each liability when the authority is paid
Each liability stays on the balance sheet until it is cleared, and it is cleared from the bank side. Bank lines are matched by suggestion and a person accepts each match; a line not yet in the books becomes a suggested journal a person approves.
When the practice pays the tax authority or a fund, the bank line is approved against that liability account, not against an expense. When the salaries leave the bank, the line is approved against the account the wages journal credited for staff pay. Choosing an expense account by mistake doubles the cost in the books and leaves the liability standing.
A habit that helps: describe each payment at the bank with the authority and the month, such as "PAYE March" or "NSSF March", so the person approving the match knows which liability it clears.
Checks on the month-end trial balance
The trial balance shows each account for all time, for a period or at a date, and says whether debits equal credits. Run it at month end and read the payroll liability accounts:
- Any balance for staff pay should be nil once salaries have left the bank.
- Each tax and fund liability should equal the amount declared for the month, if it has not yet been paid, or nil if it has.
- A balance that grows month after month means a payment was missed or posted to the wrong account.
- The general ledger lists every posted line, so open any liability that looks wrong and read its history.
Do these checks before closing the month. Leave arrangements that change pay are covered in maternity leave in payroll, and a different profession's version of the same journal appears in agent commission through payroll.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
