Hello all,
I’ve been using Manager for the last 4 months and thought I had a good handle on it, but now I’m beginning to question myself when I have to submit my quarterly report!
In short, after paying all my employees (through the ‘spend money’ option), I still have liabilities that remain. Specifically, these liabilities are my super contributions (which I have paid and were moved to expenses) and the PayG withholding tax.
How are items in the liabilities cleared from there? I know why the accounts payable is there (these are invoices in the system, but not due yet). But after I’ve paid my employees, shouldn’t superannuation and withholding tax be cleared and move into the expenses just like what happens in the employee clearing account? My superannuation did move over, but the same amount it still remains in liabilities.
I feel like I have set up witholding tax and super contribution incorrectly, but I can’t seem to find out what I’ve done wrong.
Sorry for what is likely a basic question, but I’ve spent the last two hours going through old posts and making sure that my payslip items are set up properly (screenshot below) and I’m not any closer to an answer.
Firstly, the Payslip creation creates the expense not the payment, the payment to employees clears the liability.
For Superannuation, the Payslip creation puts a debit to the expense account and a credit to the liability account. When you pay the Superannuation, it posts a debit to the liability account to clear the balance. The payment doesn’t get posted to the expense account.
For Withholding Tax, the payment is posted to the liability account, not an expense account.
Hi @Brucanna,
That makes complete sense and that’s exactly what I expected that it should do – which means that I must have set up something incorrectly somewhere as the liabilities aren’t clearing after I ‘spend money’.
I’ve gone through all the tutorials again just now to make a fake business. I created a payslip and the BS/P&L looked exactly like your first one, but then when I ‘spent money’ the liabilities didn’t clear. It’s exactly the same problem I originally have.
I’m just at my whits end! Any insight would be greatly appreciated as I just can’t see where I’ve gone wrong. I’m sure it’s something obvious too…
Thanks in advance.
What you have not shown is your payment transaction(s). There is a hint in what you wrote that you believe the Payroll liabilities account will be cleared by paying your employees. That does not happen. Payroll liablities records amounts you owe to outside entities, such as tax authorities. So you need a separate payment, posted to Payroll liabilities, to clear that.
The same would be true of Superannuation Payment. Contribution payslip items are unique because they affect so many accounts. But all “clearance” transactions are separate: payments to employees, payments to tax authorities, payments to superannuation funds, etc.j
And to reinforce something @Brucanna wrote earlier, your payments are not what put any payroll transaction into expense accounts. Payslips are what do that, along with putting relevant amounts into the various liability accounts.
Hi @Tut and @Brucanna,
I think I’m starting to understand.
Your request @Brucanna coupled with your comment @Tut is making me realize that there is a separate spend money transaction that needs to occur for the Payroll Liabilities and the Superannuation payment. And you’re correct @Tut, that was my assumption.
Let’s see if I have this straight then: To get rid of the liabilities, I need to ‘spend money’ for superannuation and the tax separately. Which means adding separate lines for each of the items (previously, I only had the employee clearing account). And @Brucanna, the image you wanted is I hope this:
You stated correctly “making me realize that there is a separate spend money transaction that needs to occur for the Payroll Liabilities and the Superannuation payment” BUT then you combined them into the ONE Spend Money - that is not separate Spend Money transactions.
So one Spend Money for the employee, one for superannuation and one for tax.
How did you think the super and the tax were going to get there money if they are in the one payment to the employee.
No, your payment entry is not correct, because you are paying everything to the employee. You would end up clearing the Payroll liabilities and Superannuation Payment accounts, but it would be by overpaying the employee. In your situation, you actually need three separate payments: one to the employee posted to Employee clearing account, one to the tax authority posted to Payroll liabilities to forward the income tax you deducted from the employee’s pay, and a third to whoever keeps the superannuation account posted to Superannuation Payment.
Unrelated to your troubles, I would recommend changing the name of the Superannuation Payment account to something like Superannuation contributions or Superannuation clearing. Amounts in that account have not been paid to anyone yet. So your current account name is a little misleading. The expenses you incur for superannuation contributions is already showing up in Superannuation. If you figure out how to keep things straight, you could also post superannuation contributions to Payroll liabilities instead of maintaining the separate account. But that’s up to you.
Oh wow – they have to be separate spend money transactions!
Of course, that makes sense @Brucanna@Tut. And @Tut, I did read that statement in that link, but it didn’t make the sense that it does now.
Okay, Then I’ll post three separate spend money transactions to three separate entities.
And thanks for the tip @Tut. I’ll change the name as that will definitely make more sense.
That clears everything up there. Thanks again to the both of you for your patience!
If I can ask here (please tell me if I should open another forum question for this), I’m having the same problem on how to clear the withholding tax from individual spend money transactions for when I do cash payments. The GST is automatically calculated and placed in a ‘Tax Payable’.
This is a function of the GST I have paid in cash purchases. I looked through the guides on cash payments, but I can’t seem to figure out how to clear this either.
That’s because (being a negative figure) its an amount to be refunded to you - not paid by you.
GST on purchase gets refunded, GST on sales gets paid - the net between the two will either be a refund or a payment depending which is greater…
When you do your GST return (say Sep 30) it should reconcile with the Tax Payable account balance as at that date - if tax collected is greater then tax paid then you do a Spend Money for that net figure using the Account - Tax Payable, just as do with Super or Wages Tax. For vice versa, being a refund, do a Receive Money using Account - Tax Payable when the refund is received.
Ahhh yes. That makes complete sense.
I realized that the sum is owed to me, but I couldn’t think of how to reconcile it because there wasn’t a ‘spend money’ option.
