wages control account

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hiya all

Could someone please help me out with the following info
What would the entries be in the wages countrol account for

Gross Pay
Net Pay
PAYE
Employees' NIC
Employers' NIC

Many thanks

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:wages control account

    Hi

    The entries would be:-

    Cr: Gross Pay
    Dr: Net Pay
    Dr: PAYE (Tax)
    Dr: Employees' NIC
    Cr: Employer's NIC

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:wages control account

    hiya Dean

    Thanks for that

    Di
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:wages control account

    I actually post wages as follows:

    Firstly, once the payroll is done, the journal is:

    Dr Gross wages (P&L a/c)
    Dr Employer's NI (P&L a/c)
    Cr Net wages control (current liabilities)
    Cr PAYE/NI liability with PAYE, employee's NI and employer's NI (current liabilities)

    Then, once the employees are paid,

    Dr Net wages control
    Cr Bank

    This should clear the Net wages control account.

    Then, at the end of the month (or quarter) when the PAYE becomes due:

    Dr PAYE liability
    Cr Bank

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:wages control account

    Hi Tom

    I would say that your way is what all good bookkeepers should do i.e. throughout the year.

    My way is the accountants "check" i.e at year end.

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:wages control account

    Hi Dean,

    Is it easier from the accountants point of view if wages are posted via control accounts?? In one of my previous jobs that is just what I used to do, but then I started working in a practice doing bookkeeping for clients and was told to just post the net wages to the P&L as well as the NIC/PAYE. I'm now working for a company and do the same (they are clients of the practice I used to work for, and set up Sage for the company). Wages wise, the only thing different I do is seperate out the Director's wages - apparently my predessor didn't do this and was reluctant to let the accountant have the wages records so the accountants "check" wasn't done till I took over. (they checked out OK).
    I've never got my head round why they do it this way and didn't want to make myself look a fool by asking :oops: At the same time I don' want to give myself unnessary work or make work for the accountants.
    Jan
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:wages control account

    Always use control accounts where you can. They're exactly what they say on the tin, "Control" being the operative word.

    What the accountants where telling you to do i.e. post directly to the P&L is strictly incorrect but it does form part of the management accounts, and you can monitor profit etc.

    If you are happy with what control accounts do and why they are there then always use them. Not only is it good from the accountants point of view it will help you in being confident that the business is paying it's liabilities as it should.... rather than getting to the end of the year and the accountant saying "you've underpaid PAYE by £2,000".

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:wages control account

    Thanks Dean,

    Guess I will be using control accounts from now on. My predessor was one of the directors and I have been up against the "I've done it this way for years" attitude. Its a family firm - mother & son were directors and I must be the first person outside the family (and accountant)to see the books, so changing anything has been an up hill struggle! Now if he will only let me know the price of materials we could get the invoicing done quicker :shock:

    Jan

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