We use Moneysoft for Payroll and Sage Line 50 for accounts - I am entering payroll onto Sage to record it as follows (as advised on this great forum)
Debits
Gross Pay = 7000
Employers NI = 7006
SMP = 7011
SSP = 7010
Credits
Total NI to be paid = 2211
PAYE = 2210
Net Wages = 2220
My accountant tells me that in addition I need to create a wages account in Suppliers for each employee (x 3) and enter an 'invoice' to put the bank wages payments against . Can I not just make a bank payment for wages without doing this? It seems to me if we had many more employees this would be very time consuming! Given we already have the records on Moneysoft and as journal on Sage this seems unnecessary but I am learning on the job and there may be an accounting reason for it I am missing.
I used to set up a department for each employee, using their payroll record number, and post each net pay individually to Net Wages (with totals to all the other accounts). Then each bank payment was also allocated to their department/payroll number, and I could reconcile the account using a departmental analysis report. They're not trade creditors, so I wouldn't put them on the purchase ledger.
Hi Mary-Anne
Ive never heard of what the accountant is suggesting and surely this just creates additional work. When you make the payments surely you debit net wages (2220) and credit Bank (in Sage - just do as a 'payment' from Bank with 2220 nominal code. Same when you pay PAYE - debit 2210 etc.
The Net wages account should then always revert to nil, unless there is any overlap if you have weekly and monthly payments. If it doesnt revert to nil then this would probably then prompt a check (eg of this - you have Director's wages in there, they may not actually have paid him/her but you have forgotten to adjust his DLA. Or eg - you havent paid the staff the correct amount.
Not tried John's idea but sounds like a good one, especially if you have quite a few staff (none of mine have)
I would be tempted to ask the Accountant why (if you have a good enough relationship)
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thank you both John and Joanne for your advice. Although I am new to this I did think the supplier thing was very strange - and I am getting to know the accountant well enough to ask such a question (and there are more!)
How about setting up a 2220 sub code for each employee, and posting their net wage journals and payments to that instead - it might that the accountant is struggling to balance the wages control and is trying to save time (and thus fees) at the year end.
You could just do bank payments to 2220 - as doing a supplier invoice on top of the journal would surely duplicate the wages?
-- Edited by FoxAccountancyServices on Wednesday 14th of January 2015 01:53:09 PM
I also dont split NI and tax- just put it all to 2210 and make sure it clears to NIL each month, after you have made payment. Using two accounts just makes work, if you ask me
-- Edited by FoxAccountancyServices on Wednesday 14th of January 2015 01:54:12 PM
I only use split PAYE codes for one customer and its one who pays CIS subbies so I have a n/code for CIS then just use PAYE n/c for payroll but Ive seen all split out as above before too (too much like extra work for me that!)
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I post as you do and post the payments as a bank payment to 2220
Then at the end of the month do a reconciliation
Could you do the reconciliation and then supply this to the accountant each month/year thereby saving him time but creating a little extra chargeable work for yourself
