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Thank you Shaun! That website helps but what I also want to know is when a self-employed person paid his NIC quarterly, how can I entry this transaction?
Forgive me for being a bit dim and coming over all 'accountant control freak' here but would you not post anything like this to a HMRC control account? As, essentially, it's a creditor that needs to be paid to an external 3rd party. 'Drawings' intimates that the proprietor has withdrawn the money from the business for their own use/personal expenditure.
Just to add to this, I make the payroll postings on £1.5m worth of wages each month, albeit on a limited co basis (and not in Sage)
-- Edited by Melanie on Monday 4th of February 2013 04:27:34 PM
For a sole trader/partner, their own National Insurance is not an allowable expense, so if the payment for the NI has been made from the business then the proprietor has withdrawn the money for their own use/personal expenditure.
Shaun's link further up the page goes to a previous thread that had the journal entries if this was referring to payroll postings, however from Crina's second post it appears that she is referring to a sole trader's own NI.
Sorry I made a confusion here. The company I was talking about is Limited Liability Partnership company. As it is a limited company, I agree that the NI should go through wage account. But there suddenly jumps up a further question: how to entry the owner's NI?
An LLP is not what most people would refer to as a limited company.
The partners (members) of an LLP are treated the same regarding pay, NI & tax as any other partners and their NI is posted to each of their drawings accounts, along with their pay etc. They are self-employed, not employed, and are taxed and pay NI under self assessment.
For a sole trader/partner, their own National Insurance is not an allowable expense, so if the payment for the NI has been made from the business then the proprietor has withdrawn the money for their own use/personal expenditure.
Shaun's link further up the page goes to a previous thread that had the journal entries if this was referring to payroll postings, however from Crina's second post it appears that she is referring to a sole trader's own NI.
Ah yes thanks, I am being dim. I am purely in limited company payroll mode, how daft
