Hi, we have a contractor who became an employee in August. As I wasn't told this until now (!) I've rolled back his pay to start in August. This means that when I paid him in August as a contractor he was overpaid. I've journalled the portion of his pay into the wages account but where can I put the overpayment until he/we are able to claw back the excess? I use Liberty and can create custom accounts but I wasn't sure whether this overpayment account should be a liability account or not.
Not sure how it works, whether you can make a deduction from his pay for an overpayment when he was a subcontractor.
The payment wasn't an error in his pay calculation but a payment against his self-employed work, which means that he should be paying it back from his own business accounts.
I would set up an account for him as a supplier and debit it with the amount paid as a subby. This will make him a debtor on the books.
You could (with his agreement) deduct it from his pay but he will need to account for it on his own books.
Presumably he is aware of the error.
Some one else may have different view on this
Bill
-- Edited by Wella on Wednesday 1st of December 2010 10:22:58 AM
Do you mean that when you paid him in August, it was against an invoice that he'd submitted as a sub-contractor and that if he was employed by you then, that he shouldn't have submitted this invoice and you should have paid him through payroll instead? Bit confused.
I agree with Bill other than you set him up as a customer and enter the overpayment as a dummy invoice to whatever nominal code you use for sub-contractors, as this will reduce the amount posted to that account.
As Bill said, someone else may come up with something better.
