Hi Glen,
Just looking through a couple of topics and found one that related to the posting of wages to the 7000 group for Directors…
I looked for the wages paid to my Wife who is also a Director and found that they are all in 2220, is this OK? it is not in 7003 - so should it be??
If not how do I move them to another ledger, I am almost at our year end…
Cheers
Hi @daveh001
I’m not @Glenn but I’ll certainly try to help 
How the tagging of the wages are handled within QuickFile depends on a setting in your advanced features (Account Settings >> Advanced Features).
There’s more information on this from my colleague, here.
Typically you would move them using a journal. I’m guessing from what you’ve said that the advanced feature is turned on, in which case you would need to create a journal.
There are also some examples of journals here, which includes some details about directors compared to non-directors.
If you’re unsure, I’d recommend speaking to your accountant to make sure it’s correct.
Hope this helps
Thanks Support - super quick response… excellent…
Which is the correct setting with the post to balance sheet on or off…??,
I am think that wages should be seen on the P&L sheet otherwise are you not making more profit than you think…??
IF the correct way is to copy each one to 7003 and I use the bulk move tool am I going to just ‘move’ all the entries rather than copy as you seem to suggest it should or would be in both ledgers?
Dave
If they’ve only been added to 2220, then your setting should be on, which is fine, you would just normally create a payroll journal monthly.
As long as they’ve been paid, yes. If they’re owed they should be seen as a liability on the balance sheet.
If you move them using the tool, it would completely remove them from the original ledger. Personally, I’d say a journal would be the correct way so you have a trace of it left in 2220. However, I’m not an accountant, so I would double check this to be sure.
If you don’t have an accountant, we do have a panel available who may be able to help. Please let me know if you’d like details about this.
Thanks for that,
I’m thinking this is the last month of the year so perhaps I will turn the setting to copy from next year and perhaps do a copy or an entry into 7003 - if needed, rather than screw up the ledgers at this late stage…
Thanks again for the prompt reply…
I currently have that setting to on. All my wages are sent from the bank to Net wages(2220) and so all years wages are in 2220 at present. How or what should I do to put them in 7003?
Hello @ESL62
With the setting On, you would need to journal the payroll figures to the correct nominal code(s). There’s more details with an example here:
I am not an accountant so can you just explain what the difference is between 2220 and 7003 codes?
2220 is a balance sheet code and 7003 is a profit and loss code - anything tagged to 7003 will show as an expense on the P&L report but 2220 just sits on the balance sheet and doesn’t show as an expense.
There’s two different ways to handle wages in QuickFile. In the simple case where there’s no income tax or national insurance to deduct (e.g. a single director company paying a minimal salary to get the NI credit for the year without paying any contributions, then taking the rest of their pay as dividends) you set the toggle to “off” and QuickFile puts the whole salary payment into P&L with no further steps.
Anything more complicated involving tax/NI/pension deductions you’re going to be running a proper payroll anyway, so you set the toggle to “on” and it just posts salary payments to the balance sheet. Then you create journals based on your payroll information to attribute this to the correct mix of expenses (the gross salary, employer NI and employer pension contributions) and liabilities (to HMRC, to your pension scheme, and net wages to the employees which cancels out the “asset” created when you tagged the bank payment).
Ok so throughout the last year I have tagged a net wages figure from the bank each week to 2220. Each month I tag the PAYE and NI figures to 2210 and 2211 using a journal and obviously credit the bank 1200. This now means in the P&L is not showing any expense to wages and the balance sheet is obviously showing as a ‘asset’. How should I now treat this in order to show a true refllection of my accounts at end of year?
You can fix this up with one more journal in this case. Whatever software you’re using to do your weekly payroll calculations and RTI submissions, it should be able to give you a report somehow that tells you the total gross wages for the year, the employers NI (if it’s not all covered by Employment Allowance), and how much of the gross wages was employee NI and income tax. You’d journal:
This should all balance, as long as you haven’t made any other payroll deductions like pension contributions - if you have you’d need to include those as well (debit employer pension costs for the employer share and credit pension fund for the employer plus employee total).
If you want to keep tabs on your wage bill throughout the year on P&L you need to do a similar journal each week from just that one week’s payroll data.
Ok thanks for your help. My accountant looks after my wages weekly so I will have to get all figures from him and hopefully they will all match up.
Can you just explain how to handle the Pension again. At present I have a figure in 2230 ‘Pension Fund’. Obviously I have to credit that figure but where do I put the debit. If I put a debit for the Employer Pension in 7007 where do I put the remaining amount in order for all to balance?
The balance on 2230 will be the sum of employer’s contributions and the employee contributions that were deducted from the gross wages as part of calculating the net. You should only put the employer contributions into 7007, the rest should balance out automatically if your gross and net figures are accurate.
Oh of course thanks again. I am over thinking it obviously then there will be a debit left on 2230 if I only credit the employer amount is that correct.
I presume you’ve been tagging to 2230 whenever you paid contributions over to the pension provider throughout the year, so you’ve now built up a debit balance on 2230 which you want to clear. As part of your fix-up journal you would credit the full amount (employer plus employee contributions) on 2230 but you only debit the employer portion to 7007 because the employee portion is part of the gross wages in 7000. For example (fake figures just to make the point), suppose you’ve paid out £20,000 in gross wages for the year, of which you’ve deducted
leaving net wages paid of £16,737.96, and you’ve also paid
then your journal would look like
The 2211 and 2230 entries are the sum of employer plus employee amounts in both cases.
(N.B. I wouldn’t bother splitting tax and NI to 2210 and 2211 in future years, I just put them all into 2210 as they get paid over to HMRC in one lump each month anyway)
Would it be possible to Debit 7000, 7006, 7007 straight away as I pay these from my bank? Do I need to bother with the 2210, 2211, 2220, 2230?
Not really, because you need everything to show in the correct financial year. You need to show the full costs in 7000, 7006 and 7007 on payday even if you don’t actually pay over the tax, NI and pension deductions to HMRC/the pension scheme until a few weeks later. During the year this doesn’t matter too much but there will be a point where you’ve incurred wage/NI/pension costs on the last payday in your accounting year but you don’t pay HMRC and the pension provider until next year, and these need to show as liabilities on your year end balance sheet.
(Plus your payments to HMRC and the pension would need to be split-coded since part of the payment is employee deductions which belong to 7000 and part is employer contributions on 7006/7007)
Given this, you might as well get into the habit of doing it properly with payroll journals every time. If your accountant does the payroll you could even give them access to QuickFile and have them enter the journals for you, then your P&L is correct and your own bank tagging is purely to 2210/20/30.
Ok its just I printed off a Balance sheet and the 22 codes were showing as assets and I didn’t think that looked right. I transfer the wages weekly and so thought it would be better to get them into the 7000’s asap but I am a novice to be honest and wasn’t sure as I was always taught to do it as you have explained.
That’s right, they will show as “assets” because you have been paying money into them through the year to build up a debit balance, but the journal(s) you create will have the matching credit amounts and it’ll balance out to zero. Normally if you were entering a journal for each payroll as you go along they’d initially show as liabilities (credit balance) which then balance out to zero when you make the payment (which is a debit to the 22xx code).