I have a preliminary layout for the chart of accounts for the payroll section in the documentation.
I am hoping to get opinions about the *general* layout. Yes, some
subaccounts could be moved up or down a level, but I am more interested (at this point) in people's opinions about the general layout and methodology.
The philosophy of this account structure is that you build "payroll liabilities" from "payroll expenses". Then, you pay off these payroll liabilities from your checking account (or whatever).
Thus, you checking transactions always involve liabilities, not expenses. Make sense?
So, let's assume you have 2 employees (Emp1, Emp2), and you have to pay 2 kinds of employee contributed taxes (Tax1, Tax2). No employer contributed taxes for now, although it would work fine with this account structure.
Simple Payroll Account Structure:
-Assets
-Checking
-Liabilities
-Employees
-Emp1
-Emp2
-Tax1
-Tax2
-Expenses
-Salaries
-Tax1
-Tax2Now, how do you go about actually doing payroll?
============================
Step 1: Build "payroll liabilities"
Every pay period, you start by building payroll liabilities, using the
expense accounts. So, let's assume both employees earn 100 units, and
the tax rate for employee contribution tax1 and tax2 is 10% and 5% respectively.
Enter the "total employee cost" (in this case, also gross salary) into each of the Liabilities:Employees accounts in a single split transaction, split amongst the proper expense accounts.
You accounts will look like this:
-Assets
-Checking
-Liabilities
-Employees
-Emp1 100
-Emp2 100
-Tax1
-Tax2
-Expenses
-Salaries 170 (2x85)
-Tax1 20 (2x10)
-Tax2 10 (2x5)============================ Step 2: Transfer Taxes to Proper Liabilities Accounts
Now, we are finished with expenses. But, we need to shift some money around the liability accounts because the employees do not actually receive all that money, some of it is tax liability.
In a single split transaction, transfer from Emp1 10 to Liabilities:Tax1 and 5 to Liabilities:Tax2. Do the same with Emp2.
You accounts will look like this:
-Assets
--Checking
-Liabilities
-Employees
-Emp1 85
-Emp2 85
-Tax1 20 (2x10)
-Tax2 10 (2x5)
-Expenses
-Salaries 170
-Tax1 20
-Tax2 10============================ Step 3: Pay employee salaries, and taxes
Now, write a check to each employee, paying their net salary (85 each) and write 2 other checks, to the Tax1 and Tax2 agencies. In all cases, the 2 account transactions go from the checking account to the proper liability account.
You accounts will look like this:
-Assets
--Checking (-200 of whatever was there)
-Liabilities
-Employees
-Emp1 0
-Emp2 0
-Tax1 0
-Tax2 0
-Expenses
-Salaries 170
-Tax1 20
-Tax2 10
-- -**-*-*---*-*---*-*---*-----*-*-----*---*-*---*-----*-----*-*-----*--- Jon Lapham <[EMAIL PROTECTED]> Rio de Janeiro, Brasil Work: Extracta Mol�culas Naturais SA http://www.extracta.com.br/ Web: http://www.jandr.org/ ***-*--*----*-------*------------*--------------------*---------------
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