#Setting up
Settings → Payroll has five areas:
Allowances and Deductions — the pay components. Each has a name, how it is calculated (a fixed amount, a percentage of basic pay, or a condition), who it applies to, whether it is taxable, and — required for the ledger — the account it posts to.
Automation — Pay statement auto-generation (the schedule on which statements are created for each pay frequency).
General — Currency, Notice period, Payout rates (overtime and holiday multipliers) and Ledger accounts — the basic salary, tax payable and payroll payable accounts, the company bank account disbursements leave, the employer contributions expense (needed once a deduction has an employer rate), employee loans (what staff owe back) and staff fines (income). Naming the first three accounts is what switches ledger posting on.
Statutory — the country pack payroll applies (see Statutory payroll below).
Tax Withholding (in the Payroll rail) holds the filing statuses and the bracket ladder each one withholds by. With a country pack chosen, the pack's tax replaces them.
#Statutory payroll
A country pack knows what a country's payroll law requires and how to calculate it; the figures — every rate, cap, threshold and tax band — are entered by you for each tax year, from the official notices, and are used only once someone has checked them and confirmed the year. LedgersLab ships no figures.
- Nepal — Social Security Fund (employee and employer contributions on basic or gross pay), gratuity accrued for employees outside the fund, the festival allowance (one month's pay on the payslip whose period holds the festival date), Citizen Investment Trust, and remuneration tax deducted at source. Tax is assessed on the year: what was paid so far, plus this period's pay for each period left, less the retirement-contribution deduction (within its share of income and yearly cap), the insurance premiums and the remote-area deduction; the year's tax less what was already withheld is spread over the periods left, so a raise or a one-off payment is absorbed over the rest of the year. The first tax band is reported as social security tax, and can be waived for fund contributors; the women's rebate applies to employees marked eligible.
- United States — federal — federal income tax by the percentage method for a W-4 from 2020 on (the step 2 tables when step 2 is checked), Social Security up to its wage base, Medicare and Additional Medicare above its threshold, and FUTA up to its wage base. State taxes stay ordinary deductions.
To set it up, in Settings → Payroll → Statutory:
- Choose the country pack and map where each line posts — the liability each withholding and employer amount is owed to (a tax line left empty goes to Tax payable), and the expense of a statutory earning. Employer amounts are also expensed to Employer contributions.
- New tax year — its name as the tax authority writes it (e.g. 2082/83), its first and last day, and optionally Start from last year's figures.
- Enter every figure and the bands of each tax table (yearly amounts; each band starts where the one before ends, the top band has no upper limit). The year lists whatever is still empty.
- Confirm year, saying who checked the figures and against what. A confirmed year is read-only; Return to draft to correct it (payroll stops using it until it is confirmed again). A year that pay statements were computed with cannot be deleted.
With a pack chosen, a pay statement whose period no confirmed tax year covers is refused rather than calculated. A pay period belongs to the tax year its end date falls in.
Each employee's Tax & statutory tab records what the law asks of them: Nepal — assessed as single or couple, PAN, SSF contributor and number, CIT per pay period, remote area, life and health insurance premiums, the women's rebate; US — W-4 filing status, step 2, dependents, other income, deductions and extra withholding; and whether they are exempt from income tax. With nothing saved, an employee is assessed as single with nothing declared.
On a pay statement the statutory withholdings appear among the deductions, the employer amounts under Employer contributions, and the taxes in Income tax. Payroll → Statutory Reports lists, for pay statements whose period ends in the chosen dates, each employee's figures for the Monthly SSF contributions and Tax deducted at source returns (Nepal) or the Federal payroll taxes summary (US), with totals and a CSV export.
#Contracts
Every paid employee needs an active contract: Contract name, Employee, Start date / End date, Status (Draft, Active, Expired, Terminated), Notice period; Compensation — Wage type (Monthly, Daily, Hourly), Basic pay, Pay frequency (Weekly, Monthly, Semi-monthly), Filing status; Placement (department, position, role, shift, work type); Leave handling — Deduct unpaid leave, Use the daily rate or a fixed Deduction for one leave day.
#Running payroll
- Payroll → Overview → Run payroll: Batch name, Period start, Period end and the Employees to include (everyone with an active contract by default).
- A pay statement is generated per employee from their contract, attendance, approved leave, loans, reimbursements and the allowance and deduction components. The Pay statement pipeline shows each statement moving Draft → Review ongoing → Confirmed → Paid.
- Open a statement to check gross, each allowance and deduction, tax and net pay, then move it to Confirmed. Confirming posts the cost: Dr basic salary and each allowance account · Cr each deduction account, tax payable and payroll payable (net pay). Basic salary is what the employee earned for the period: unpaid leave lowers it, and a deduction taken from basic pay is still part of it (that amount goes to the deduction's account). A deduction with an employer rate also posts the employer's share — Dr employer contributions · Cr the deduction's account — so, for example, the provident fund account holds both halves owed to the fund. Net pay is not affected by the employer's share.
- Pay the employees (outside LedgersLab — no payment file is generated) and mark the statements Paid, which posts Dr payroll payable · Cr bank. Moving a paid statement back to Confirmed reverses the disbursement only.
The Overview shows Total payroll, Gross pay, Deductions, Headcount paid, Average net, Pending pay statements, cost trends by month and department, component breakdowns, Contracts ending and Active loans. Pay Statements lists every statement with filters for employee, department, pay period and status; GL Entries shows what payroll has posted to the ledger.
#Loans, advances and reimbursements
- Loans & Advances — a Loan, Salary advance or Fine with an amount, start date and instalment schedule; each instalment is deducted from the matching pay statement automatically. A loan or advance is Paid out either With the next pay statement (added to it as a one-time payment) or From a company account: open its schedule, choose the date and the account, and Pay out — Dr employee loans · Cr that account. Undo payout reverses it while nothing has been recovered. Either way the money is owed back, not a cost: the payout debits employee loans and each instalment credits it, so that account holds what staff still owe. A fine is never paid out; as it is recovered it is credited to staff fines. The list shows each record's Outstanding and the header the total owed by staff; the schedule shows Paid out, Recovered and Outstanding, counted from confirmed and paid statements only.
- Reimbursements & Payouts — expense reimbursements, leave encashment and bonus-point payouts, approved by HR and added to the next statement.