In order to track wages in Projects I have to do an adjustment.
However is there an issue if I do the following:
Set up new nominal accounts: Wages, HMRC (NI/Tax Bill) - so they will appear as a purchase item in Purchases (eg 7012,7013 etc)
Enter a new purchase each month to include these new nominal codes 7012,7013 (wage bill/HMRC payment)
Tag the purchase invoices with a Project - to allow full project tracking and show the nominal code in the P&L Project Report (7012, 7013). This would aslo allow bank tagging to the purchase
Journal entry on the new nominal codes at the year end to move net wages to gross wages/HMRC payments etc (EG 7012 & 7013 to 7000)
I would set up each nominal code for Net Wages, Employee Tax/NI and Employer NI. I could then include these items/nominal codes on the purchase. The monthly purchase (wage bill) would include all staff wages, deductions and employer NI due. We only have a few staff to account for so this would be easy to manage as payroll is outsourced. Quickfile is/will be used to report the wages activity only.
I hope Iām making sense!
Iām more than comfortable doing the journal entries required, Iām just wondering if the above is feasible?
Are you not using it for anything else, such as sales invoices etc.? The only reason I ask is for the overall reporting (balance sheet, profit and loss etc.).
Generally speaking, wages should be posted using payroll journals and the payment options through the āTag me!ā feature. This was part of the reason adjustments were introduced - to resolve this issue.
However, if you are using this purely for wage recording against projects rather than P&L etc., I canāt see anything wrong with it.
Actually can I just check what you mean āanything elseā just want to make sure I have a full undersatanding!
My understanding
Invoices are tracked by Nominal codes 4000+
Expenses by 7000+
Net wages, HMRC, NI Employer will be tracked using 7012 etc (shown on P&L), will need adjustment to move net payments to gross which can be actioned at the end of the financial year.
Profit and loss and balance sheet should be fine as the various nominal codes will show the net balances (instead of a total balance gross wages)
If wages are entered as a Purchase will track against the various nominal codes?
Wages are set up to be handled through 2 ways - tagging from the bank, and journals, in the way from your previous thread.
The pay and other relevant nominals arenāt available through purchase invoices. Tagging the transactions from the bank allocates it to the correct code, although a further payroll journal may be required.
Just to confirm I will set up āWages Controlā & āHMRC Tax & NIā as dummy suppliers. This will enable me to pay the net wages and tax from the bank/statement (I can then tag the original purchase to a project)
New nominal codes for Gross Wages & Employer NI
When creating a new purchase for Wages Control & HMRC I will select the relevant new nominal codes (eg 7080,7081).
When the net wages for each employee are shown on the bank statement I pay down the āWage Controlā invoice. When the HMRC payment is shown on the bank statement I pay down the HMRC Tax & NI Invoice.
Iām assuming this will be okay to do as it should update the P&L and balance sheet etc as I input and pay the various dummy purchases. This will allow me to project track the wages rather than adding as a Project adjustment?
The only issue: if certain wages are attributable to certain Projects, I would need to split the wages/HMRC purchase
I would like to get my wages broken up as per project to try and get an accurate feel of how each project is going. So can you just run through what I need to do to assign wages each week to a particular project. I currently tag net wages from the bank each week into the net wages nominal code and do a salary journal to account for PAYE and NI.
As project tags are applied to invoices, estimates and purchases rather than transactions or journals, they would need to be accounted for using an adjustment. Thereās more information on adjustments in our post below, and our knowledge base article:
Thatās correct. The only place they appear are in the project tag reporting. They will appear in the graphs, the totals on that page and the project specific P&L report, but nothing outside of that area.
So I can continue to do my payroll as I currently do and just divide them up into the projects manually each week. The same with overheads. Just assign the amount of overheads as a figure to each contract each week and any received invoices will be catered for in the usual day to day inputting of the data.
Itās not assigned to a nominal code, simply marked as an adjustment and listed as such in the project P&L report.
I would certainly give it a go with a small amount on a project (perhaps even one with a small number of items attached to it), so you can see how it works in relation to your account.
