Hi i need help with superannuation payments

Hi, I have been paying my super from my wage and not the company. I want to go back and fix this. I have created a liability account (superannuation payable) and a expense account (superannuation Payments).
Now when i edit my payslip i removed superpayment from employee and moved down to employer.
When i save it, superannuation payable account in liabilities has done nothing. I cant work out where that liability would be showing. Please help.

Under Settings > Payslip Items did you create the Contribution Item there ?

Hi Brucanna,
Thanks for that. I did now fix the settings up.
The issue is now when i edited my payslip it has made that super payment in liability and expense. Shouldnt it be one or the other?

No, when an employer pays contribution superannuation on behalf of an employee the payslip entry sets up the accounting double entry, hence your setting up of “a liability account (superannuation payable) and a expense account (superannuation payments)”.
Debit - P&L Expense (superannuation payments)
Credit - BS Liability (superannuation payable)

Subsequently, when you pay the superannuation to the fund it will be
Debit - BS Liability (superannuation payable)
Credit - Bank

Perhaps “superannuation payments” should be “superannuation expense”

[quote=“Brucanna, post:4, topic:14574”]
Subsequently, when you pay the superannuation to the fund it will be

Debit - BS Liability (superannuation payable)

Credit - Bank

I dont get it.
Credit the bank. As in sales or Retained earnings? Im confused now.

A payment from a bank or cash account is a credit in double-entry accounting.

Confusing even more.

I have created a payslip. i haven’t paid anyone yet. So why is it in expense.

@Brucanna wrote about paying. You asked why credit the bank account. I explained. You may not have paid yet, but when you do, that will be a credit to your bank account.

If you are not comfortable with debits and credits, read the Guide on designing a chart of accounts.

And it’s an expense when incurred, not when paid in accrual based accounting.

so are you telling me when i press spend money. i pay the super and pick expense account (superannuation payable) it will credit my bank and do nothing to expense account?

My question would be are you cash basis accounting or accrual? If you run cash basis accounting then that would be why

Should i just not have super on the payslip and just manually input them. How do i fix my problem. You guys are telling me why but not how. Im trying to learn because i cant afford an accountant as im just over a year in business.

yes im cash basis

again why not how. What do i have to do as im cash basis

Accounting 101. Credit and debit don’t mean anything more than left or right period. Now accounts react differently to that if you put money in bank it’s always debit and to take out would be credit. Expenses to increase is a debit and to lower of close at end year you credit expenses. OE is increased with cr and decreased with a Dr. Income increase with credit (cr) and decrease with Dr. liabilities is same as OE(owners equity).

How does that help me?

Please just tell me what to do to fix up my books so i can go do my lagging 16-17 individual and company tax return. thats all i need. What happens when i pay the super fund. do i press expense claim (superannuation payments) and it will credit my Bank account. Yes or no?

As cash basis accounting GAAP rules are it’s not entered in til it’s paid because that’s what cash basis is. Now some Ppl will have a holding account (lack of better term ) so they can enter it in before hand and when money comes in or out it’s then put in Normal system. Honestly anything on cash basis should never be recorded until the cash goes in or out period

Can I suggest that for the moment you convert Settings > Set Period to Accrual Basis.
Then you will see all the transactions in “real” time. On Cash Basis you only see some transactions when the cash transactions has occurred.

In my next post I will illustrate with a worked example.

Being on cash basis accounting means either you make sure when you in putting slips they don’t affect anything until u move it elsewhere or check a box saying ok post this. If you don’t have a system set up correctly to cash basis programs naturally run on accrual system because CPA use accrual system period. If you can’t keep slip from instantly posting to journal then you can’t enter it til the day you pay out or pay in.

@NEW_START, I understand what you are saying but to the novice all that discussion is confusing.

Yes

@Ashuraya, in the following screenshots I have created a single Payslip and shown the impact on the Summary. The Payslip creates all the accounting obligations (entries) within the accounts regardless of any payments. The subsequent payments will clear those obligations.

With Payslips it doesn’t matter if you are in Accrual or Cash basis as the results will be the same.

Payslip

Summary tab

Now to pay the superannuation fund, create a Spend Money and the Summary will update.

Spend Money

Updated Summary tab

Just for your information - cash basis has more of an impact with regards to Sales Invoices and Purchase Invoices. I would always recommend in using accrual basis as “nothing” is hidden, but you may have your reasons for using cash basis.