Re: [SL] Payroll

[Angus C. <ac...@sa...>]

Stuart Luppescu wrote:

>On 金, 2006-02-24 at 12:45 -0600, Angus Carr wrote:
>  
>
>>Thanks in advance for any help.
>>    
>>
>>That's more-or-less what we do here.
>>I calculate the earnings with cdnpayroll, which tells me what to put
>>in the boxes. Then, I prep an AP transaction for the employee. In
>>notes, I put the number of hours worked, and then put a straight
>>amount in the box coming from "wages and salaries payable". For
>>deductions, I put a negative amount in the boxes for tax, CPP & EI
>>(We're in Canada). These go to the appropriate Payable accounts.
>>    
>>
>
>OK, but I don't get this exactly. I put each employee's gross pay in an
>AP transaction, and then entered the net pay (gross pay - deductions) in
>a cash payment. But since the net pay is less than the gross pay, the
>transactions remain open. Do I enter negative AP transactions for the
>deductions, or do I transfer cash (or do a GL transaction) from the
>employee's vendor account to 5510 - Inc Tax Expense Federal? And then
>from 5510 to the Federal Gov't's vendor account? I'm confused. My head
>hurts.
>
>  
>
My head hurt too.
You're in the US, I guess, so this may not be the right way for tax 
withholding, but what I get as an employee is a gross pay with a 
collection of deductions. These deductions are handled by the employer, 
and sent to the government, insurance, etc.

As an employER, I pay my employees a gross hourly wage, say $10/hr. They 
work 60 hours in the pay period, so I pay them $600 gross. I think we've 
all got that part. The AP Transaction is from "Wages and Salaries 
Payable" or something like that. In my books, it's a payable, which I 
will later move to expense, once the cheque clears. It doesn't go into 
COGS, or anything like that, because of the nature of the business.

We have CPP, EI, and tax deductions to calculate for the employee. They 
are all handled by tables, external software, what have you. As far as 
SL is concerned, I consult a higher power- it doesn't matter, I need to 
reduce the payment to the employee by some known amount. On the 
employee's AP transaction for the month, I put a negative amount for 
CPP, payable from the "CPP Payable" account. I then put a negative 
amount for EI, and a negative amount for taxes withheld.

The employee ends up with an AP transaction saying (roughly):
$600      Wages & Salaries Payable
-$10.62  CPP Payable
-$8.79    EI Payable
-$12.00 Tax Payable
================
$568.59  Net Payable

At the same time as I post the AP Transaction to pay the employee, I put 
in the employer's contributions. These are matching payments into the 
CPP Payable and EI Payable accounts. They are also reported by the 
payroll package. I pay from the Expense to the Payable account.

At month end, I do an AP Transaction paying from the CPP Payable account 
and the EI Payable and the withheld Tax Payable accounts to the 
governement. I make sure that at the month-end, the payable accounts are 
0'd.

That's our monthly process.

ps. CPP is Canada Pension Plan, EI is Employment Insurance.

>>At the end of each month, I prepare a single GL entry which moves 
>>everything around properly, including the employer contributions for 
>>CPP, EI and WCB. Then, I do an AP Transaction for the government, and
>>an AP transaction for the WCB to zero those accounts. That happens on
>>the last day of the month, so that I can have all of payroll happen at
>>month-end, which is how I am supposed to do it for the government.
>>    
>>
>
>The exact meaning of ``GL entry which moves everything around properly''
>is lost on me, I'm afraid. I'm sorry, but could you give me a little
>more detail?
>
>  
>
The GL Entry to move stuff is an entry to move the payable amount to 
expense accounts. I'm sure there are other ways to do it, but that's 
what I've been doing, based on list reading, and a functional knowledge 
of our business. At the end of the month, my accounts balance, and the 
chequing account reconciles, so I can't complain.

Angus Carr.