I’m using QF for the first time, I’m the director in the business and I’ve paid myself £1,000 as Director’s salary. This involves NI and PAYE. When I imported bank statement, I tagged the net salary (after NI and PAYE) as Employee Salary PAYE and ticked the box “if Director”.
When I check the P&L only the net salary is shown as expense instead of the entire £1,000.
There is an automatic journal created when I tagged the bank transaction.
Crt (1200) Current Account PRANAV VAIDYA ref Salary Mar 879.60
Dbt (2220) Net Wages Net Wages 879.60
Crt (2220) Net Wages Movement To PL 879.60
Dbt (7001) Directors Salaries Movement To PL 879.60
Please could someone guide/help? How can I show the full £1,000 as an expense towards salary and not the just the net salary? What journal do I need to raise for this?
If there’s tax and NI involved then you will need to create your own payroll journal to split things appropriately
Debit Director’s Salaries (7001) 1000
Credit net wages (2220) 879.60
Credit PAYE (2210) 120.40
When you actually take the money you’d tag the £879.60 money out as employee salary, and with the “post net wages to balance sheet only” option set this should simply offset the credit balance on 2220 rather than creating a new expense entry. When you pay the tax and NI over to HMRC you’d tag that money out as a PAYE “tax” payment (yes, I know the PAYE payment is for more than just tax) and it will offset the credit balance on 2210.
If there’s employer’s NI involved as well then you’d just add two more lines to the journal, debit to employer’s NI (7006 - if your account doesn’t have this code you can add it with “more options → add popular accounts” on your chart of accounts page) and credit to PAYE (2210).
