I have been bringing the books up-to-date on a business for a client that started about 2 months before he contacted me.
The method of bookkeeping he employed was fairly erractic so i have had to do a lot of digging around to balance everything - not a lot of fun!!!
It turns out he guessed his staffs net wages for the first few weeks so some weeks he underpaid and some he overpaid. I have used a payroll software package to work out the correct wages.
My question is how do i account for this - do i ask the owner to either repay or take back wages from his employees now or do i let things run as they are until payroll year end and balance it out then.
I would make the necessary adjustments to get back on track. Unfortunately from what you say some of his employees are going to be in for a shock ! better to sort it out now than at the end of the year.
With the correction, it may be easier to do this adjustment with the next pays to bring it on track.
Hopefully there won't be too much discrepancy, and if anyone is getting a significant cut taken it may be worth spreading this over several pay period.
It's probably worth the owner being completely up front that errors were made, and letting the staff just how their next pay may be affected (and providing everyone with correct payslips for the past periods).
Those that have been underpaid can be sorted straight up, but any that were overpaid should be made aware - hopefully none will have a problem with it.
