Employee deductions on payslip

Accounting
1

Hi

Say I cash off a bar tab on the tills, this obviously records petty cash code. when i come to do my payroll is this correct?

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also the journal set up is this correct? i have been doing it this way for years without checking! This is for all staff. My Post Net Wages to Balance Sheet only is off. is that correct?

2

There’s a few things that look a little bit off with that journal, firstly 7006 is for employer NI contributions, not employee, and I don’t think you need to use 2214 to record student loan contributions separately as those get paid over to HMRC along with the PAYE tax and NI.

What you should be aiming for in the payroll journal is:

  • 7000 (gross wages) debit the full gross amount you are paying your staff before any deductions of tax, employee NI, student loans, etc
  • 7003 (employer’s NI) debit the employer NI amount from your payroll software, if your employment allowance doesn’t cover it all
  • 2210 (PAYE) credit anything you’re paying to HMRC, both deductions from the gross wages (income tax, employee NI, student loan) and also the employer NI, if any
  • either 7003 (if you don’t set “post net wages to balance sheet only”) or 2220 (if you do), for the net amount you actually paid out to your employees

For the petty cash thing, what exactly do you mean by “cash off a bar tab on the tills”, do you mean you let your employees run up their own tab and deduct it from their wages rather than them paying for their purchases in cash? For this kind of thing I would set up a dummy bank account called “staff tabs” or similar. When you record a staff tab on your QuickFile sales “invoice” you mark staff purchases as paid into this dummy account instead of into petty cash (since you’re not actually receiving any physical cash from the employee), then in your payroll journal you’d need to enter a credit against the dummy account’s nominal code to balance this off and return the bank account to zero (remember in journals bank accounts are “backwards”, so credit is money out and debit is money in).

(Usual disclaimer, I’m not an accountant, I’m just speaking from my own experience working out how to record the payroll for my own employees)

1 Like
3

Hi @Andy_Howard

We’re not able to comment on individual accounts but can offer general guidance.

We have a guide set up in our knowledge base that may help with your journal query:

But I would recommend running it past an accountant to ensure it’s spot on (I’m not one)