How to Pay off Employee Expense?


I use manager to manage the accounts for acting work. Very basic, money in from income, money out on expenses.
No money changes hands as it’s just me so it all goes in and out of my personal bank account with everything else.

My questions is; I have “Employee Clearing Account” under expenses. When the time comes, how do I actually “clear” this to zero? As it is now, it looks like the “business” still owes me all of that money, although I’ve had it and/spent it.


Are you using Manager to track all movements through the personal bank account or just those transactions relating to the acting work.

What goes into the Employee Clearing account ?
Normally “clearing” type accounts are Balance Sheet accounts and not P&L Expenses.

Does the “business” owe you the money or does it just represent the “profit” on the acting work.
Until there is a better understanding on how your chart of accounts is set up its hard to say.

Can you post a screenshot of your Settings - Chart of Accounts (not the Summary tab)

Hi Thanks for the quick reply.

I have 1 personal banking account where all my bills, income, take aways etc all go through.

I use Manager just to track the acting ins and outs. (essentially so I know what additional personal income I’ve had over the year for my tax return)

In a nutshell, an entry goes like this:

Money Billed 1 £value
Agency Commission -1 £value

New Expense: Mileage

This then gives me an expense of the commission. I never actually get that money, they take it before I receive it, but it’s tax deductable so counts as an expense.

I then have the Clearing Account comprised of Mileage (and maybe research books, admin fees, clothing etc)
This is all paid out of my pocket and, in theory, the “business” now owes me from the income.

But as it’s all the same account I just have the all the income money when it comes.
Rather than, for example, filing a claim and getting the company bank account to pay me that money into my personal account as you would with a limited company or in Sage etc

Does that make sense?

On the COA I put “mileage” under Motor Vehicle Expenses, as I just use my own car so that’s fuel is the only vehicle expense I have.

The whole Manager gives me the figures I need to see what I have earnt, what needs tax etc. It’s just telling the Manager software when the money in the Clearing Account is no longer in “the business” but that expense has been “paid” to me.

Month to month I’m not fussed. But at the end of the year I need some way for Manager to say “all this in the clearing account has been paid to the employee and the figure should show zero”

I hope that makes sense :stuck_out_tongue: This is the entire COA, as I say, it’s very basic

Firstly, your edition of Manager is quite old so perhaps you could update.
Secondly, as your Manager accounts are only a sub-set (acting related) of your whole bank account, there will always be balances that never get paid out - because there is no where to pay them to.

If your acting transactions were in a separate bank account - then funds could be transferred to your personal bank account - so essentially we are just dealing with book entries.

Yes, but the “business” has no where to pay it to as the money is already in the bank account. What you could do, if you ever take cash out (ATM), treat that as a payment from the business to you - if you like, reimbursement of the out of pocket.

I think, setting yourself up as Employee is probably confusing things as you are actually operating more like a sole trader. Your current Employee Clearing Account is a misnomer as you aren’t an Employee and I am guessing the balance in that account is made up of unpaid Expense Claims.

If the Expenses Claims remained as (unpaid) Expenses Claims then the ATM withdrawals would be “repayment” of those Expense Claims - if you can follow what.

Also, do you use all those P&L expense account with in the acting “business”

As I see it, you have the following transactions - Sales Invoices, Receipts for those Invoices, Expense Claims and possible cash payments for any directly related acting accounts.

If you like we could work through these just to ensure that you are getting the right results.

A few suggestions, @Cinobite:

  1. Update your software. Your version is far out of date. When you do, Customer credits and Supplier credits will be absorbed into Accounts receivable and Accounts payable.

  2. Simplify the Profit and Loss side of your chart of accounts. You have many expense accounts that, as an actor, you are almost certainly not going to use. While I can’t tell you which ones are necessary, I doubt you are incurring research and development expenses. Remember that a Other expenses account can always be used to sweep up those once-in-a-lifetime expenses.

  3. Stop treating yourself as an employee. As a sole trader, you are not an employee of a company; the company is a way of accounting for a portion of your income for tax record purposes. You have no pay slips, so you should be able to delete yourself as an employee.

  4. Simplify your Balance Sheet side. Under Customize, disable the now-unnecessary Employees and Suppliers tabs. (You don’t have any suppliers, either.)

  5. Some expenses you described are not expenses in the usual sense, because no money is spent. But they are real for tax purposes. You should account for these using expense claims. See the Guide, Use expense claims, which deals with the situation explicitly. Vehicle expenses are probably worth more to you than you are claiming, because allowable deductions generally take into account more than fuel.

  6. While it is possible to get by as a sole trader using your personal account, it is messy, difficult, and ugly. And the tax authorities will question whether you are improperly mixing personal and business expenses.

As I write this, I see @Brucanna has just posted a reply with some of the same points. Bottom line: you are making things more complex than necessary for your situation.

@Cinobite stated “maybe research books”. Researching and development for the roles to be acted

Not until the expenses claims have been re-assigned from Employee to Expenses Claim Payer

These are already being used - the tab shows 22

Not if the expenses are clearly defined and documented.

On this last point, for decades I have run several businesses (including corporations) and private expenses from single bank accounts - never been an issue with any of the tax audits so far, as long as the transactions are appropriately based and documented.

Yes, we can pick nits if we think that is helpful.

My questioning of the R&D expense account was only an example, and @Cinobite indicated that research books weren’t going there now.

It goes without saying that before an employee can be deleted, transactions involved will have to be properly recategorized. But since there are no payslips, I wonder if there are any such transactions. My larger point was that as a sole trader, @Cinobite is not legally an employee–at least in most jurisdictions.

My comment about using expense claims was directed at things like vehicle mileage, which I thought my context made clear. I certainly saw that Expense Claims was being used, but it wasn’t clear for what.

Finally, it is possible to adequately document and account for mixed expenses. But standard advice is to use separate accounts. That makes it easier to reconcile, justify, and defend if and when necessary.

Thanks all for the info, I’m just working through it all.

You’re right, I am running the acting as self employed. And my ultimate goal is to have the profit at zero lol without confusing things, I’m a managing director, sole share owner and PAYE employee of my own limited company. I use Sage for all of that and actual business bank accounts. This is like a second job and I’m using Manager to account for any additional income so I can balance my PAYE income and get the correct tax return amounts.

So in Sage it’s easy. I log expenses all year, at the end of the year I make a payment from the company account to my personal account and it’s done. But as you say, with the one account here, there’s no where to pay the money to :stuck_out_tongue:

But yeah, basically we’re treating Manager and acting as a self employed person using their own personal bank account.

Then perhaps Manager should be organised so as to reflect that

This implies if you earn a pound you need to spend a pound - or act for free :wink:

There is, its just how you view the transactions.

If you go to the ATM to get 20 to buy drinks at the pub - you could say you are taking cash out.
Or you could say you are taking 20 out to reimburse your pocket against the last expense claim which you then happen to spend on drinks.

Or another way to view this - set up a separate purse with a 100 float, use it for the acting out of pocket expenses. After spending 20, create an expense claim and then go to the ATM and reimburse the purse. This will clear out any build up in the expense claim/employee clearing account.

Similar with mileage allowance, if you have built up 50 worth of allowance, withdraw 50 and fill up the car with fuel or buy a dress

Absolutely :wink: My main job pays my bills. The acting is going to be used to fund hobbys and projects which, coincidentally enough, just happen to fall into acting expenses :slight_smile: (guitar lessons, gym, spanish lessons etc)

You imply I don’t have it set to reflect self employed at the moment - where did I go wrong? :stuck_out_tongue:

Not so much wrong but taking an incorrect path. You have used an employee set up, in place of a sole trader setup.

To adjust this go to Setting - Expense Claim Payers and set yourself up.
Now go to each Expense Claim and re-allocate the Payer from Employee to EC Payer

(If you haven’t updated Manager, then your panel above may look slightly different)

As you do each one, this will shift values from the Employee Clearing account to the Expense Claims account. Once completed, go to the Employees tab and click Edit and Delete. If it wont allow delete, then there are transaction still linked to the employee name.

Next, go to Customise and deselect Employees and Payslip, this will remove several redundant BS & P&L accounts. If you aren’t going to be using the Suppliers tab, then you could deselect that as well.

Now the Expense Claims account balance represents non-reimbursed out of pocket expenses.
So now to answer your original - How to pay off.

  1. Go to the personal bank account (ATM) and withdraw the cash - lump sum or smaller amounts.
    In Manager you would record that by a Cash on Hand - Spend Money with Account = Expense Claims.

  2. If you don’t want to take the cash out, then you could transfer the balance to Equity - Owners Contributions. A new account set up in the Chart of Accounts

  3. Or a combination of 1 & 2.

PS: not fund hobbies, but to acquire diversified acting skills. (more taxman friendly)