Hi, Just seeking clarification of how to best manage payments and debts for “employees” I am considering using the employee and payslips tabs for a sports club and record coaches hours at a $rate. I understand that I can enter all the coaches as employees. I believe I can use payslips to record each week their weekly hours. They all get “paid” an honorarium two or three times throughout the year. Each week I was thinking of entering a payslip for their hours and “pay” bulk payslips throughout the year. As some coaches also have incurred debts to club I was going to enter those as deduction amounts at time of payment. I also will use a journal entry to create contra payments for their debts on the invoices as per their amount received when they are paid. I am keen to use these tabs as I will be able to see our liability at various times. Will that work? Thanks for your help.
Some of your ideas will work; some will not. You should create a test business and make some trial entries, checking the results in the Summary frequently (including drilling down on various accounts to see what make up their balances.)
This will work just fine. The amounts owed to the coaches because of hours entered will show up in Employee clearing account.
When you pay them, you should post the payments to Employee clearing account. This approach presumes that the “honorarium” varies to match the hours worked. If it doesn’t, but is a fixed amount, you probably should not record hours via payslips. The payslip creates a liability for the organization. That is, you owe the coaches money for their hours. If you are just paying a fixed honorarium, you would do better to simply enter those as expenses, charged to a suitable expense account.
This may not work, or at least not well. Deductions were originally meant for amounts owed to some other entity, such as income tax withholding, retirement savings by the employee, etc. By default, deductions create liabilities in the Payroll liabilities account, because you have reduced an employee’s pay and owe the money to someone else on behalf of the employee. (You must remit the tax withholding to the government, pay the retirement savings to the custodian of the retirement plans, and so forth.)
You can set up a deduction to post to some other account, such as an employee loans account, but that would only apply under certain conditions. There are also potentially other ways to account for debts of the coaches. Just which method works best depends on the origin of the debts, who originally paid and how, what the debt is for, etc. Can you provide some representative examples?
Journal entries should be the last resort. They can’t be used at all for actual movement of money to/from cash or bank accounts. Whether they are useful for other situations depends on how you end up arranging things on the debt question above.
The coaches honorariums are not fixed but variable based on hours put in and a reasonable dollar amount. More hours equals higher amount received. The debt incurred may be for membership of the club and player subscriptions, uniform hires etc. When they get paid, the amounts would be applied to their debt(s) and any balance transferred to their bank account or carried as credit in the system. I would hope that any shortfall would still show as a small amount on an invoice, at the same time the employee clearing account would be zero. I am trying to avoid the club paying them in full and them paying the money back for the debt.
It really depends on how the “debt incurred” is processed within Manager. If you are entering these via a Sales Invoice, then you would use a Journal Entry to transfer the Accounts Receivable balance to contra against the Employee Clearing balance payable. Your subsequent nett payment avoids them paying money back to the club.