Payroll Software Reconciliation

When payroll and the accounts don't agree

Payroll usually runs in one system and the bookkeeping in another. Each pay run should create matching entries in your accounts for wages, employer costs, PAYE and National Insurance owed to HMRC, pension contributions and net pay. When those entries are missing, doubled or coded wrongly, your liabilities stop making sense. You might see a PAYE balance that keeps growing, a pension liability that never clears, or wages in the profit and loss that don't match your payroll reports.

This page is about reconciling payroll against your ledger. If your concern is CIS deductions from subcontractors, our CIS monthly returns service deals with contractor returns.

Typical causes of payroll differences

• Payroll journals not posted for some months, or posted twice.
• Net wages paid from the bank coded to wages expense instead of clearing the net pay liability.
• PAYE payments to HMRC coded as an expense rather than reducing the liability.
• Pension contributions paid but not matched to the liability, or deducted but not paid.
• Corrections made in payroll after the journal was posted, such as backdated changes, leavers or statutory payments.
• Employment Allowance or other HMRC credits not reflected in the accounts.

How we reconcile payroll

1. You invite us through your accounting software's advisor access and share payroll reports. We never ask for passwords.
2. We compare payroll summaries for each period with the wages, PAYE, NI and pension accounts in the ledger.
3. We check PAYE payments against what was reported to HMRC and the balance on your HMRC employer account.
4. We check pension payments against the amounts deducted and the pension provider's records.
5. We post correcting journals and set up a simple monthly routine to keep them aligned.

Recording errors versus payroll errors

If the payroll itself was calculated incorrectly, such as the wrong tax code or pay, that needs correcting in the payroll software and reported to HMRC. We can review that and advise, and our payroll service can take the processing on. If the payroll software itself is malfunctioning, that's for the provider's support team. HMRC's guide to running payroll sets out what employers must report.

What we'll need

Payroll summaries or journals for each pay period, the reports or submission confirmations sent to HMRC, your HMRC employer account statement if available, pension provider statements and bank statements showing wage, PAYE and pension payments.

Payroll reconciliation for Kent employers

We help employers across Kent, from small family businesses to growing teams, get payroll and accounts back in step. Where the ledger has wider issues, our bank reconciliation and historical error correction work can be done at the same time. Get in touch to start.