Q: How do I enter Canadian Payroll Deductions in Clarity Accounting?

Currently, our accounting software does not include Canadian Payroll Tables.  However, we provide a cost effective solution for small businesses to keep track of payroll expenses and deductions by allowing you to add payroll deductions as expenses or adjustments.  If you are new to running a small business, you will need to do some research on Canadian Payroll from the CRA website and how to electronically remit taxes to the CRA.

If you operate a business in the USA, please refer to our help file Entering Payroll Deductions - USA.

One great thing about the CRA is that they have a tool called the Payroll Deductions Online Calculator available for small business owners to get all the payroll deductions calculated online without having to do the work manually themselves.  If you select the “Determine Gross Income” option and enter the gross salary of your employee in a given pay period (i.e. $1000 bi-weekly), then the payroll deductions online calculator generates a very nice printable table giving you a net pay amount with all the deductions included.

Instructions for Entering Canadian Payroll Deductions in Clarity Accounting

1. Create payroll and expense accounts by going to the “Accounts” under the “Setup” section on your left navigation
   
2. Scroll down to the liabilities section.
   
3. Create your payroll deduction accounts by typing in the name and the description of the deduction.  Also use select “Taxes and Remittances” as the type of Long term liability account you are creating.
   
4. For Canadian payroll deductions, you will need to calculate and remit “federal tax deductions”, “provincial tax deductions”, “CPP deductions”, and “EI deductions”.  There may be other applicable deductions you would like to track such as “requested additional tax deductions” or “other amounts deducted at source”.  You may also use this section for to record other liabilities such as union dues and vacation pay.  Please ensure you click the “Add Account” link to add each account.
5. While still in the “Accounts” setup page, go under “Expenses” and add an Expense Account called “Employee Salaries”.
   
6. To enter these payroll deductions, go to the “Expense” section and enter the relevant data.
   
7. For the purpose of this help file, we would assume that Employee A has made $1000 (Gross Pay) in this pay period, please refer to the screen shot below:
   
   Please enter deductions as a negative number (i.e. $-79.72)
8. Note, to get the Tax and Remittances Accounts to show up under the “Expense Account” drop down, you will have to scroll down to the bottom and click “Show All Accounts” or simply type the account name into the text box (we have a search function that will allow you to find the accounts quickly).
   
9. After you click “Add” to add the payroll deduction expenses, you can click on “Edit” to view the summary of this transaction or click “Repeat” to repeat this transaction.  The “Repeat” function is great because you can enter multiple payroll entries in a row by simply changing the employee’s name “Vendor” and the deductions amounts.
   
10. You will be able to view deductions and pay history of your employees under the “Vendors” section.
    
11. You can also view total payroll deductions in the Balance Sheet section.
    
    
12. If you are an employer who is matching CPP contributions, you will have to create an expense account called “Matching CPP” and enter a separate expense transaction for your own records.  This is independent of the payroll entries and you would remit this amount to the CRA.

If manually submitting payroll remittances is something you would like to do for your small business, you can easily keep track of all your remittances and expenses inside Clarity Accounting.  You can try a 30 day free trial of Clarity Accounting with no obligations necessary to see how easy small business accounting can be.  After all, Clarity Accounting is created by Canadians with all the sales taxes like GST, HST, PST, and QST functions included.

Q: How do I enter USA Payroll Deductions in Clarity Accounting?

Currently, our accounting software does not include payroll tables.  However, we provide a cost effective solution for small businesses to keep track of payroll expenses and deductions.  If you are new to running a small business, you will need to do some research on how to manually remit taxes to the IRS.
You might want to review a simple USA payroll tutorial from the IRS website.

If you operate a business in Canada, please refer to our help file Entering Payroll Deductions - Canada.

Instructions for Entering USA Payroll Deductions in Clarity Accounting

1. Create payroll and expense accounts by going to the “Accounts” under the “Setup” section on your left navigation
   
2. Scroll down to the liabilities section.
   
3. Create your payroll deduction accounts by typing in the name and the description of the deduction.  Also use select “Taxes and Remittances” as the type of Long term liability account you are creating.
4. For USA payroll deductions, you will need to calculate and remit “Social Security Tax”, “Medicare Tax”, and “Employee Income Tax Withheld”.  Please ensure you click the “Add Account” link to add each account.
5. While still in the “Accounts” setup page, go under “Expenses” and add an Expense Account called “Employee Salaries”.
   
6. To enter these payroll deductions, go to the “Expense” section and enter the relevant data.
   
7. For the purpose of this help file, we would assume that Employee A has made $1000 (Gross Pay) in this pay period, please refer to the screen shot below:
   
   Please enter deductions as a negative number (i.e. $-62.00)
8. Note, to get the Tax and Remittances Accounts to show up under the “Expense Account” drop down, you will have to scroll down to the bottom and click “Show All Accounts” or simply type the account name into the text box (we have a search function that will allow you to find the accounts quickly).
   
9. After you click “Add” to add the payroll deduction expenses, you can click on “Edit” to view the summary of this transaction or click “Repeat” to repeat this transaction.  The “Repeat” function is great because you can enter multiple payroll entries in a row by simply changing the employee’s name “Vendor” and the deductions amounts.
   
10. You will be able to view deductions and pay history of your employees under the “Vendors” section.
    
11. You can also view total payroll deductions in the Balance Sheet section.
    
    

If manually submitting payroll remittances is something you would like to do for your small business, you can easily keep track of all your remittances and expenses inside Clarity Accounting.  You can try a 30 day free trial of Clarity Accounting with no obligations necessary to see how easy small business accounting can be.

One of the many pains of small business owners is keeping track of sales taxes.  For many governments and jurisdictions, you are required to collect sales taxes on income (sales tax payable) and keep track of sales taxes paid on expenses (sales tax receivable)

Sales Tax Payable

As stated above, this is the money that you charge and collect when receiving income and you are responsible for remitting (paying) the sales tax portion to the government. This is usually a positive amount (i.e. $100)

Sales Tax Receivable

This is the sales tax you have paid while incurring expenses to run your business.  Generally, you are expected to keep track of this yourself and submit this to the government so you can get some money back.  This is usually a negative amount (i.e. $-100).

Non-Eligible Sales Taxes

Many governments jurisdictions apply restrictions on how much expenses you can deduct while operating a business.  For example, if you only use your car 30% of the time and spent $100 on sales taxes to buy gas for the whole year, you would only be able to deduct $30 of the sales tax spent for tax filing purposes.

Keeping track of sales tax payables and receivables in Clarity Accounting…

To ensure that all your sales taxes are properly tracked within Clarity Accounting, please take some time to read the Tax Set Up Instructions help file.

Viewing Sales Tax by Income and Expense Category in Clarity Accounting

To get an overview of how much sales taxes you are charging for your income (sales tax payable) and your expenses (sales tax receivable), please refer to the following instructions:

1. Log in to Clarity Accounting
2. Go to the “Profit and Loss” section under “Reports”
3. Select a date range by entering dates or entering a column (i.e. “last year”)
   
4. Under the “by” section drop down, select “Tax”
5. Under the “focus” section, leave blank for a view of all taxes charged by income and expenses (sales tax payables and receivables).  Choose either “income” or “expense” for a breakdown of sales taxes charged (for income) or paid (for expenses).  Use the blank field as highlighted in the screen shot below to view sales taxes that are applicable to both “income” and “expenses”.
   

Sales Tax Remittances to the Government

Calculating sales tax receivables (the sales tax the government owes you) and payables (the sales tax you owe the government).

1. On the left navigation bar, click on “Taxes” under the “Setup” section.
   
2. You will find a section called “File Sales Taxes”.
   
3. Select the Filing Date, the type of Sales Tax you are filing (GST for Canada’s Goods and Services Tax), the starting date and the end date.  Note: The filing date is usually different from the “end date”.
   Select a Vendor under the “Pay To” section.  For Canada, it is the CRA; for USA, it is the IRS.  Also select a payment account this money will be coming out of (if you owe sales taxes) or going into (if the government owes you sales taxes).
   
4. You will see a list of all the sales taxes recorded by expense category with a data entry field beside each category that allows you to type in the percentage that is “deductable”.  For example, if you only drove your car 30% of the time, you would put 30% in this field and our accounting software will automatically calculate the deductible amout and the non-deductible (excluded) amount. In Canada, you can only deduct 50% of the Good and Services Tax - GST on meals and entertainment you paid.  Clarity Accounting provides a great way for you to keep track of these partial sales tax deductions and filing them quickly and accurately.
   
5. As you can see from the example above, you will need to remit $3218.73 to the government.
   If you are not ready to record this into Clarity Accounting at this time, don’t press the “File Sales Tax” button.  You can use this amount to remit the sales taxes to the government and record the transaction when you actually pay the government or receive a payment from the government.
6. Once you have remitted the sales taxes (either paid the government or received a payment from the government), you can repeat steps 1 to 6 and click the “File Sales Tax” button to record this into Clarity Accounting.
7. Once the “File Sales Tax” button has been pressed, you will see an “Edit” link that will allow you to see a summary of the transaction.
   
   
8. The “GST Expense” is the non-deductible amount (excluded amount) that has been allocated to an expense account for you to track as a business related expense.
   Under the “Payment” section, you will see how much you have remitted to the government.  A positive number means you owe the government money.  A negative number means the government owes you money.

Running a business is not easy, especially with the added pain of trying to do your own bookkeeping and tax filing.  We sincerely hope our accounting software will be able to save you valuable time from trying to track and file your sales taxes on paper or with an excel spreadsheet. You can try Clarity Accounting for free and see how easy bookkeeping can be.

You can also collaborate with your accountant and bookkeeper by sharing secure access to Clarity Accounting with them.  For instructions on how to add multiple users to collaborate on your business file, please refer to our help file Adding Multiple Users to Your Business.

Q: A check has bounced on one of the invoice payments, how do I enter this into Clarity Accounting?

Users of our accounting software can remove any income or expense records that may have been entered in error or if the record is no longer applicable.  We have an audit trail in our “Change Log” that documents all the transactions performed by each user.  Therefore, you can consider removing an invoice altogether and creating another one.

To enter data for a bounced check for an existing invoice payment, please refer to the following instructions:

1. Log in to your Clarity Accounting Dashboard
2. Go under the “Income” section
   
3. Find the invoice you need to edit, click on the invoice
   
4. Scroll down to the bottom of the summary page where “Payment” information is displayed
   
5. Enter the date the check bounced, the bank account affected, and clear out the “amount” field (making it blank)
   
6. Click Save
7. In the comment section at the very bottom of the page, make a note of the date and the reason for correcting the invoice (i.e. “check bounced”).
   

Q: Can I run more than one business (multiple files) with Clarity Accounting?

One unique feature of our online accounting software is that each user has the ability to manage multiple business files.

Step by Step Instructions

1. Sign in to Clarity Accounting with your user name and password
2. On the top left hand corner of the Dashboard, find the drop down menu with your business name under the “Navigation” title
   
3. Click on the drop down — this will show you all the business files you currently have access to
4. Click on the link that says “New Business…”
5. Follow the same procedures as you did when you set up your first business file
6. In the future, you will be able to use the same drop down menu to access all the business files you are managing as well as adding new business files.

Removing a Business File

1. Sign in to Clarity Accounting
2. Using the drop down under “Navigation”, select the business you wish to remove
3. Go to the “Business Profile” section under Setup
   
4. Scroll down to the bottom of the page
   
5. Click on the “Remove” button

Multi-User Access

Oftentimes, the desire to set up multiple business files is associated with the need to give access to multiple users to collaborate on business files.  If this applies to you, please refer to our help file on Adding Multiple Users to Your Business.

When you first create a business file with Clarity Accounting, you may have bank account balances, outstanding receivables, assets, and prior income you’d like to show on your Balance Sheet and Statement of Profit & Loss.

To do so, you must enter a summary of your past business activities.  This can take many steps, and may require some knowledge of bookkeeping terminology, like debits and credits, equity, and retained earnings; if you’re not sure if your ability to do this yourself then we suggest hiring a bookkeeper to assist you.

Step By Step Instructions

Sample opening adjustment

1. If you have income to report for the current fiscal year, divide it into two pieces: paid and receivable
2. For each outstanding invoice, enter an invoice so you can track that receivable
3. If you have expenses to report for the current fiscal year, divide it into two pieces: paid and payables
4. For each outstanding bill you owe, enter a bill so you can track that payable
5. Enter an adjustment with the memo “opening balances”
6. For each bank account and cash, enter it’s current balance into the debit column
7. Calculate and categorize the value of the assets of your business and enter each category’s total value into the debit column
8. For each credit card, business loan, or line of credit carrying a balance you have, enter the amount owing into the credit column
9. For the income you recorded as paid, break it down into rows by Income Account enter the amount of income in the credit column
10. For the expenses you recorded as paid, break it down by Expense Account and enter the amount of expense in the debit column
11. If the owners have given cash to the business in return for shares, create an Equity account for each owner and enter the amount of their contribution into the credit column
12. Add up the two columns to get your total credits and total debits
13. Subtract total debits from total credits to get your retained earnings. Enter this amount in the credit column as “Retained Earnings”; it may be a negative number.
14. Click Add to enter the adjustment and update your account balances.

Notes and Tips

• You can set up accounts directly from the Adjustment form - in the Account dropdown, choose “New Account…”
• When entering outstanding invoices and bills, be sure to enter the correct dates so that the income or expense is reported in the correct fiscal period

This feature has recently been made available to our accounting software due to client request.  The instructions are listed below:

1. Log in to your Clarity Accounting Dashboard.
2. Under “Reports” click on “Profit and Loss”.
   
3. At the top of the Profit and Loss page, choose a date range.  for example “as of” October 1, 2008 “until” October 31, 2008.
   
4. Choose a report “by” Item, this can also be done by accounts, vendors / customers, and sales taxes.
   
5. You can also choose to further customize this report by Income or Expenses under the “focus” area
   Leave this field blank if you would like a report with both income and expense categories.
   
6. You should get a breakdown of your items by quantity and amount.

An important concern when storing financial data online is security.  Security comes in three parts:

1. Can any unauthorized users access my data?
2. Will my data be available when I need it?
3. Can I export my data?

Preventing Unauthorized Access

Ensuring Data Availability

Conclusion

Currently, Clarity Accounting does not include any Payroll or HR support built in.  However, because it supports General Ledger (typically called “GL” by accountants and bookkeepers) entries you can use a third-party payroll solution and enter the results as GL entries into our online accounting software by adding an Expsense or an Adjustment.

We have help files available for those who choose to manually submitting payroll remittances:

Entering Payroll Deductions - USA
Entering Payroll Deductions - Canada

Outsourced Payroll Solutions

For US businesses, PayCycle provides a very affordable and useful payroll service; in Canada you can get a similar service for a comparable price from PayWorks.

The are many benefits of using a third payroll service — you don’t have to do it yourself.  As small business owners, we want to spend time doing what we do best, running our businesses.  While many of us are in the unfortunate circumstances of having to do the bookkeeping ourselves,  once a small business has grown to a level that requires payroll services, it is highly recommended that you get someone else to do this for you.  After all, time is a finite resource.

Import Options:

Currently we do not support any import options.  However, we are very eager to hear some feedback from our users with regards to what kind of import options are most helpful.  If you would like to vote for an import option that is important to you, please visit the contact us page and cast a vote on our feature request system.  This will help us to prioritize our development schedule.

Export Options:

While Clarity Accounting is an online accounting software, we understand our users would like the flexibility of storing their data securely online and offline.  This is why we have implemented Excel export of all data files and PDF exports on invoices and reports.  For specific instructions on how to export your data into Excel, please refer to our help file on “Export Data into Excel“.

For further questions, please do not hesitate to contact us or submit a question on the “Ask a Question” section on the top right hand side of this page.