Please can you advise me. I have run a profit and loss report but it contains two errors as follows:
It shows directors salaries (7001) as the net salary paid. To give the correct profit this needs to either show gross salary or include the PAYE taxes as an extra expense line. When I paid my salary I simply used the banking (current account) page and tagged the payments as directors salary and PAYE tax. Looking at other similar questions I see advice about making journal payments. I am surprised that such a routine thing does not happen automatically - are the journal entries just to correct mistakes or should I be making them every month as a routine part of my payroll. I do not use payroll software. My accountant does the RTI and tells me the amount of tax/NI to deduct. I have to move the money and update Quickfile. Any advice on how to enter payroll correctly would be appreciated.
I am on the Flat Rate VAT scheme. I did a VAT return one month ago and the profit and loss statement correctly shows a Flat Rate VAT sales adjustment on sales up to that point. (4999). It does not show any adjustment for the flat rate scheme gain I will make on all the invoices I have issued since then. Can I make it do this as I want to know the profit up to this point in time.
I am trying to work out the correct amount of profit up to the current moment in time so I can calculate the amount of dividend I can pay. I suspect I have not been entering my payroll correctly although I am surprised as other tasks in Quickfile seem so simple. The VAT issue really puzzles me. I understand the flat rate scheme, just not why the profit and loss account only includes completed VAT returns. Unfortunately my accountant is on holiday so I am trying to work this out myself.
Firstly, the payroll journals need to be done on a regular basis, usually when your payroll is run. Your accountant should be able to help with this. QuickFile actually works well with The Payroll Site which can create the journals automatically. They involve accounting for the NI and other aspects which is why it isn’t automated within QuickFile itself. I’ll dig out an example of the journals shortly and update this post.
As with VAT, until it’s paid it will sit as a liability on your balance sheet.
I must add that VAT isn’t my area, and I’m not an accountant. If you need more help with VAT on QuickFile, please let me know and I’ll ask my colleague to take a look for you.
Thank you for the fast reply. 13 minutes is amazing.
It sounds like I must manually do the journal entries for payroll. There are only 2 months (previous months had either no wages or no deductions) to do so it shouldnt be too hard to go back and do them once I understand what they are (I assume tagging the payments from the current account will have got me part of the way there and I just need to know what the missing journal entries are to complete it.) I will need to do the calculation this weekend, before I can talk to my accountant, even if I have to do it manually with a pen and paper.
On the VAT, surely I can include the expected flat rate scheme profit on sales I’ve invoiced, even if the VAT return has not been filed yet. I am using unpaid invoices to calculate my profit for dividend purposes and my accountant was quite happy with this.
On the flat rate scheme the adjustment on 4999 is performed only when the VAT return is committed to the system. Unfortunately we don’t have any way to automatically adjust in the interim period, it’s too resource intensive to track this with every minor invoice and payment modification that can happen.
The only way I’m afraid would be to post your own manual journals and revoke them later when the VAT return is filed.
Thank you for your answers. Between your answers and help from an accounting friend I finally managed it. For the benefit of anyone with the same problem here is a description of the solution in terms I (as a non-accountant) can understand.
To correct the payroll I first deleted my bank transfers made from the current account for salary and PAYE. These are not needed and although this seemed the obvious way to do it they do not show up in the profit and loss account properly.
I then went to chart of accounts and added a journal entry with 3 lines as in the below image. One of these journal entries is needed each month.
This journal entry is for gross pay of £2100, net pay of £1606.60 and PAYE (employee NI + tax) of £493.40.
If you have to pay employers national insurance as well then add a forth line with a debit entry to nominal code 7006. The journal name and descriptions of each line are just typed by me, not created automatically by Quickfile.
The journal entry automatically removes the amounts from the curent account so there is no need to entry these as banking transactions as I was wrongly doing at first.
For the flat rate VAT I now know that this is only calculated up to the end of the last VAT return. I manually added up all invoices since this point and did a manual calculation (not in Quickfile) to work out an adjustment to the profit in the profit and loss account. This was required since I needed to know how much profit I had made to calculate the allowed dividend payment.
I hope this is of help to other people. Everything in Quickfile is so intuitive but I’m sure lots of non-accountancy trained people must have tried to record their salaries as bank transfers.
This works, though you would normally journal net salary and PAYE to the relevant balance sheet codes rather than directly to the bank account, then tag the bank payments to the same codes. That way the payments don’t all have to appear on the same date - you wouldn’t necessarily pay the PAYE tax to HMRC and the net salary to the employee on the same day.