Apologies for the mix up with NI / PAYE in my previous post.
Referring to the “Recording payroll” post I linked to above, there’s a setting in Advanced Settings labelled “Post Net Wages to Balance Sheet only”. If this is Off, it will lead to the journal being created. If It’s On, then no journal will be created and you can do it manually.
Because it sounds like this is switched off, on your account, you can simply amend the journal in this case. In my example, I’m paying my employee £900.00, with £100.00 PAYE (£1000 gross pay). Therefore, with the option switched off, I have this journal created for me:
So you can just amend this one to something along the following lines, by:
- adding a row for PAYE
- amending the value of Director’s Salaries (Debit)
Just to explain this - the bottom 3 rows splits the pay into PAYE and net wages; the top 2 rows show’s it’s paid (and not on the balance sheet). Instead of having these top 2 rows, you should switch the option mentioned above to on for future journals and payments.
This in turn adds this to my P&L:
No pay (the £900) is on my balance sheet, as this journal also creates the bank transaction to say it’s been paid.
When you mark the PAYE as paid from the bank account, then 2210 will disappear from your balance sheet as it’s no longer owed, and therefore no longer a liability.
As I mentioned, I’m not an accountant so I would double check that what you’ve done is correct.
This was a recent change. There was a reason behind this, which I addressed this in another post.
I hope that explains it a bit better! 