Here's how to post your payroll figures if you don't use FreeAgent's payroll.
Here's how to post the salary due to your staff, and the tax due to the tax authority on their wages, into your FreeAgent account if you are a Universal user.
You need to use journal entries and here's how to work out what they should be.
The amount due to the tax authority will be worked out differently depending on what country you're in. There may be tax actually deducted from the employee's wages, and there might also be charges you have to pay to the tax authority because you employ that person, which don't come off their wages.
Let's take an example.
Jack is paid monthly. His wages before tax for April 2011 were $1,500.
The tax deducted from that before Jack receives it is $300, which means that Jack will actually receive $1,200.
His employer must pay that $300 to the tax authority, but there's also a charge of $100 to pay to the tax authority which doesn't come off Jack's wages, so the total amount due to the tax authority is $400.
So the journal entries into FreeAgent, dated the same day as Jack's payslip, would be:
When you pay Jack his salary, explain that as Money Paid to User > Net Salary and Bonuses. This will set the payment of $1,200 against account 902, which shows the amount Jack will actually receive.
When you pay the tax authority, explain that payment as Payment > Other Taxes. This will show the payment of $400 against account 816.
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