Payroll Tax and Payroll Liabilities

[yasiph]

Continuing the discussion from Payroll:

@lubos

You should create new expense account called Wages & Salaries or something like that. Then when paying employee, categorize the payment under this account.

Obviously then there are deductions, entitlements etc. which should be recorded as journal entries.

For example payroll tax would be a deduction so you would have liability account called Payroll tax or something similar. When paying employee wages, you pay only net amount. Tax portion of wages should be recorded as journal entry where you credit Payroll tax account and debit Wages & Salaries expenses.

There is a bit more to it but generally it just follows double-entry accounting principles how money is moving between accounts based on what is really happening. So I’m not really saying anything new here.

Can you update us on the procedure now that Payslips are here.

I want to know if Tax portion should be recorded as said in this post now.

When I do a journal entry as said in above, payroll liabilities doubles!

[lubos]

When creating payslips, tax deductions should be recorded on payslip itself in Deductions.

Keep in mind, payslips/employees are in very early stages of development. I hope to add a lot more functionality by end of this month and then document the whole process of running payroll in Manager.

[yasiph]

ok thanks

[Nadine]

I am still not sure how to move tax payment and superannuation payments from liabilities to expenses - I have currently entered them as deductions. I have cleared the staff salaries but not sure how to clear the deductions. Thanks

[lubos]

@Nadine, have a look at Guides | Manager

By the way, if you are in Australia, don’t create “Superannuation” as deduction. Superannuation is actually contribution because it’s contributed by employer on top of gross pay rather than deducted from gross pay. So make sure to create “Superannuation” as payslip contribution but the principle of “clearing the balance” is the same as for deductions.

[Nadine]

Thanks for that - when I went into setting there was no payroll tab I could push on - have I done something wrong. Setting gives me business details business logo chart of accounts email setings invoice template start date tax codes and user permission - have I done something wrong - thx

[Nadine]

So you say I must place both tax payment and super contributions into deductions - but when I then have to pay the amounts they are all grouped - how do I separate the super from the tax payment for when I do my BAS - do I have to go thru each pay slip manually - that’s frustrating

[lubos]

First, go to Settings tab, then Chart of Accounts and create two new liability accounts:

• Superannuation payable
• PAYG payable

Then go to Settings tab again, then Payslip items (if you don’t see Payslip items click Customise button to make them visible).

Under Payslip items, create 1 deduction called PAYG and link it to account PAYG payable, then create 1 contribution called Superannuation and link it to account Superannuation payable.

When issuing payslips, use these payslip items to categorize PAYG deductions and SUPER contributions.

The last thing is that you will need some sort of report that will sumarize payslips for given period by earnings, deductions and contributions so you can get figures you need. This report is coming in a few days.

[Nadine]

Thanks for that - My issue is that super is not taken from their salary - it is not included in the salary - it is calculated as a percentage of their gross salary, and then contributed on behalf of them by me to their nominated account - so I think to leave it as contributions works - if we can mearly create a report where we can specify dates that will show us the amounts of PAYG and Super contributions separately then my problem will be sorted. Thanks. Once again when I look in setting and try and custom them there is none for payroll - although I do have payroll in my drop down menu. Not sure why.

[Nadine]

I have one more question - how do you link the staff super under liabilities to expenses staff super Thanks

[lubos]

@Nadine

if we can mearly create a report where we can specify dates that will show us the amounts of PAYG and Super contributions separately then my problem will be sorted.

Check the latest version (14.10.2) which contains 3 new payroll reports:

• Payslip Summary
• Payslip Deductions Summary
• Payslip Contributions Summary

If you have only single deduction and single contribution item, just use Payslip Summary report. The other two reports show totals per each employee/item which is useful if you are using multiple deduction items (PAYG, Union fees etc.) or multiple contribution items (Superannuation, Long service leave etc.)

@Nadine

I have one more question - how do you link the staff super under liabilities to expenses staff super Thanks

Yeah I forgot to mention, when you are setting up payslip contribution items, you can set both “expense” and “liability” account.

[Nadine]

Thank you. How do I access the latest version if I downloaded a version that doesn’t have the payroll report

[lubos]

When in Reports tab, click Customise button to enable these reports. All new reports (including these payroll reports) are hidden by default.

[mattyh]

Any plans to integrate the tax tables with the payroll system so as it calculates the correct amount of PAYG Withholding automatically?

Also, how would FBT be handled by the software?

[lubos]

I want to add support for payroll formulas before end of June which would allow to calculate PAYG automatically.

Manager doesn’t support FBT natively. You would need to record FBT liability as a journal entry for now.

[mattyh]

Hi Lubos,

Is this coming along?

Thanks

[leevish]

Just started using Manager. I can’t seem to record a period for payslips

[DeeRaven]

“Under Payslip items, create 1 deduction called PAYG and link it to account PAYG payable, then create 1 contribution called Superannuation and link it to account Superannuation payable.”

So when I try to link to PAYG Payable I don’t get that option * Payroll liabilities is defaulted and no other option exists, even though I’ve created PAYG Payable and Super Payable in Liabilities.

What have I missed?

[DeeRaven]

Is OK, I had created these accounts under New Group instead of New Accounts, sorry, silly me!

[DeeRaven]

Could you please make this a bit clearer for me thanks, I’m in Australia, how do I record payments for super. I have set up a Liability Account for Super and have made a deduction from payslip, but are you saying in Australia we don’t need to do this. If not how do I record super, sorry if I don’t understand well!