This is probably wrong, because I presume the contributions were originally credited elsewhere, Payroll liabilities by default. In saying this, I am assuming you are referring to an employer’s contribution, not an employee’s deduction.
Also, this option ignores the expense allocation to Wages & salaries that occurred when the contribution payslip item was used.
This seems easiest. You must, of course, do it individually for every employee involved. When the receipt is entered, allocate it to Payroll liabilities. That will drive the Payroll liabilites account in the credit direction, as desired. Ignore the Wages & salaries account, because that will have been credited by the negative contribution payslip item for the employee.
Wrong for the reasons you indicated.
No, because your liability to the tax authority was not lodged in Accounts payable, but in Payroll liabilities.
Thanks, Tut.
We only have one employee and our start date was in 2017, so I’ll do a payslip with a negative employer contribution and take it from there. No impact on the employee as she works part-time and did not have any deduction for social insurance
When you think about accounting you have to use, basically, logic. By that what I mean is, you have to think where this Social Insurance Contributions went in your accounting books when were paid. Using your example, contributions made by the employer that are related to Payroll, like disability insurance, unemployment, etc., in some point were registered in your accounting if you have the correct setup. Example:
If you follow this example, then when you as employer pay the deductions and employer contributions you have to split your transaction to decrease the balance payable in both accounts (I used two in the example but many people use just one account for employee and employers contributions payable). Then, if you paid, lets say 3,000 then your payable balances would be in negative, so the difference is what the refund should be and must be allocated to the payable account.
That is if the things are easy. In practice, if this Social Insurance was an expense account then you should put this refund to the same account and the expense will decrease by this same amount. Another possibility is that you never registered this excess in your books. The correct way then should be to allocate this to the retained earnings account because this transaction is, in fact, from prior years; this is commonly known as prior year adjustments in accounting.
Bottom line: I don’t think that you should do the wages adjustment. This adjustment would then give you an incorrect balance and what you’re trying to do for what I see in the post is to correct the amounts that were paid in excess. What I would do is first to check if this overpayment is registered in your books. Look into the tax due or tax payable accounts and if they are up to date then you should only see the current balance. If there’s less, then that’s your overpayment (in theory).
The negative contribution payslip item does this automatically.
My recommended approach is not a wages adjustment. It is only a contribution adjustment. The wage figures of your example never enter into the process.
Yes, and that is exactly what the negative contribution transaction does.