How do I enter payroll / PAYE journals and entries

Why does PAYE come up as a asset in the Balance sheet not as a liability when entered ?

I used the way stated in the instruction with the input new transaction in the current account.

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If you tagged the transactions as ‘Salary, dividend or other drawings’ this will appear in the P&L nominal account ‘NET Staff Salaries Paid’. Detag the transactions and re-tag if it has been tagged incorrectly on the bank, this should solve the problem.

It was done by using the input Tax payment to HMRC (e.g. VAT, PAYE or Corporation Tax) on the input function are you saying I should change it do a different way and inc in the wages area as its PAY/NI

Tagging the payment to PAYE from the bank will enter the movement from bank to PAYE on Quick File, the final wages/salary journals need to be entered after you run your payroll, this is in order to take into account both tax and national insurance contributions on the P&L Account and Balance Sheet. I have prepared a worked example, along with the steps to follow below:

1. EXAMPLE:

Lets take an example of a payroll report processed through payroll software:

Gross wages = £1000.00
Employers NIC = £49.50
Employees NIC = £42.36
Tax = £42.60

NET WAGES = £915.04 (tagged directly from the bank to ‘NET Staff Salaries Paid’:

2. TAGGING FROM BANK:


a. Tag Net Salaries Paid:

Click ‘Tag Me!’ next to this item, followed by ‘Salary, dividend or other drawings’, enter the 'Recipient’s Name’and click ‘Save’. .

b. Tag the PAYE/NI Payment:

Click ‘Tag Me!’ next to this item, followed by ‘Tax payment to HMRC (e.g. VAT, PAYE or Corporation Tax’, on the next screen select ‘PAYE Liability’ under 'What type of tax is being paid? and finally click ‘Save’.

PERIOD/ MONTH END PAYROLL JOURNAL:

Salary/wages payments tagged from the bank will debit ‘NET Staff Salaries Paid’ on the P&L, this is because ‘Gross Wages’ includes both PAYE and employees national insurance contributions, therefore the final wages/salary journals need to be entered as shown in the example below:

You can access the journal system through the full chart of accounts (COA) from your dashboard by clicking ‘Reports >> Chart of accounts’ from top navigation menu option, followed by ‘New Journal Entry’:

If you now check the balances on the ‘Chart of Accounts/Trial Balance’ you can see the balances are correct with no PAYE/NI or Net Wages Liability on the Balance Sheet, see the example below:

Joe I hate to say I really don’t get it let me explain what I have done to see if we both understand.

Here is some number I pay wages each month of £1000 i enter these under the person name and also use the salary add function you say above 'Salary, dividend or other drawings. I only enter the money I pay them directly as it shows on the account so its net

Then a payment every 3 months of the PAYE/NI as its a on-line system this is all the money accumulated over the period for the £3000 of wages paid this £3000 is net as its the money

I enter in ‘Tax payment to HMRC’ the account what I did is simply enter in the current account the PAY for the 3 months payment and then it come up on the balance sheet as a asset its not entered each month as its not paid each month the PAYE is paid every 3 months.

I really don’t understand the other parts as they don’t seem to apply to what i’m doing what is going wrong here how would I enter the 3 months NI/PAYE to the government ?

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The procedure is the same whether you enter the journals monthly, quarterly or annually (when you prepare you accounts). You need to obtain your payroll report to enter the above figures, alternately if you have an accountant and want a simple approach, create a new nominal code on the P&L under overheads, called PAYE/NIC’s Overheads:

http://help.quickfile.co.uk/main/1/adding_a_new_nominal_account.htm

Then enter a journal as follows, I have used the figures from the example above based on a quarterly basis:

You accountant will then be able to obtain the payroll reports at the year/period end and complete the necessary payroll journals.

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