Hoping some experienced Bookkeepers may be able to help
We have a small business run from home and do our own bookkeeping, which in general is fine, but we have just reached the point of needing to register with HMRC as a new employer to allow us to finally pay some basic salaries and hopefully bonuses to myself and my wife (who are the only employees).
The problem is that I need to understand the basic principles of how to enter a payroll payment into our accounts package (Microsoft Office Accounting 2009)?
I understand the basics of PAYE and that the company will have to deduct PAYE Income tax and NI contributions from the salary payment to the individual as well as make its own employers NI contribution, but need to know the basic Bookkeeping methodology of how to enter these payments and post the correct amounts to correct nominal codes?
I am assuming that for example a monthly salary of a nice round £1,000 would leave current account and part would be posted to payroll/salaries, part to employee NI and part to Employee Income Tax, plus then a further entry for the employer NI?
The problem is that when we set up the company in the software we used a basic template and Microsoft removed the payroll functionality in an update so I cannot find nominal codes for most of these and do not understand the mechanics of entering these payroll elements.
Can anyone help guide me through how say Sage Payroll would code up these elements and how I can correctly create or locate a nominal code structure to allow me to do this?
Similiar response to what I was typing before doing the school run!
Only thing that I would say is that if you are a small business then HMRC may allow you to make payments quarterly therefore be careful about posting the payment Dr the PAYE and NI and Cr bank do it when it's paid. The NI in the current liabilities is both employer's and employees.
Sorry took so long to reply myself, but just found notifications of replies in Junk Mail folder .
You make it sound simple, so will set-up in a test environment and see if I can get it to work!
Just one question - with Employee NI & PAYE - do I need to separate these when posting to the "Dr PAYE/Ni (current liabilities code)", or just lump them together?
Dr Gross Pay (Expenses code) Dr Employers Ni (Expenses code) Cr Net Pay (current liablilities code) Cr PAYE/Ni (current liabilities code) a seperate code for PAYE and NI (post both NI employers and employees to the same code)
The dr entry for employees NI is included in gross salary and the cr entry NI (current liabilities)
The other postings are when you pay the salary and the payment to HMRC.
Sure this will make more sense when looking at software, but I am in China this week (for the business) so will be next week before I can give this all a try.
Nice to find a forum of experienced bookkeepers who can help, so expect more questions :).
Have no Expense codes for Gross Pay, PAYE or NI, so will have to create these, but can anyone advise if I should/could post the "Dr Net Pay" to either of the 2110 or 2310 codes above?
It is just that the 2110 code looks like it may be the one?
I am new on the forum so if this is the wrong place i apologise.
I am using microsoft office accounting and have just paid my self assessment from my business account my question is how do i account for this in MOA i don't want to enter the payment wrong and it reduce my profit or something its not meant to do would it be a journal entry if so which nominal account type etc would it be under
Would probably be better if you posted as a new topic as the title of this old post isn't relevant to your question.
I am sure that if other here see your post they will give more detailed answer, but I would start by asking if your business is a sole trader, partnership or Limited Company as your payment of personal tax from business account would be dealt with differently.
Assuming this is sole trader situation I would guess this would be classed as "drawings".
We ran our business as a Partnership in the first year and had codes in "Equity's" section of MOA for each partners drawings.
Our accountant set these up for us at some point with nominal code 3060, but I don't think the code number itself matters, just that it was under Equity's type.
Hopefully someone else can put more detail on this for you in general book-keeping/accounting terms.
Thanks for the reply, had a chat with an accountant to day and he also said treat it as drawings. I am a sole trader and already have an account setup as owners equity and just perform a journal entry.
I am thinking of upgrading to quick books soon as there is not much support arounfd for MOA anymore. But its one of those better the devil you know.
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