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Profit and Loss account for sole trader doesn't show salaries paid
I'm looking at our Profit and Loss account, and have noticed that the salaries paid to our employees are not showing up, thus giving us false figures. I wonder if FreeAgent is assuming that sole traders can't be employers as well. If so, can we get this sorted?
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Inappropriate?Tim, you're right - and if I recall I did tell you we were going to enable payslips for sole trader employers didn't I (if only to get the PAYE/NI account right).
I'll make sure that happens by this week's release or the one after at the latest...
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Inappropriate?Thanks, Ed. Looking forward to it. -
Inappropriate?As of last Thursday we support setting up payroll for employees of Sole Proprietorships. This allows you to track the PAYE/NI balance as well as a salary account for each employee.
We understand this is the correct treatment, since the liability for these arises on the payslip date, not when the money is actually paid to HMRC or the employee. Otherwise your PAYE/NI expense, which might only be paid a few months after the payslip, would fall in the wrong year.
Is that not what you were after - were you wanting to handle these effectively as cash transactions?
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Inappropriate?We've been able to categorise payments to users as 'Net Salary' for some months now, but those payments don't show up in our profit and loss account. So we end up with inflated profits (and thus higher tax!). All the other payments we make show up under their correct headings, but not Net Salary.
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Inappropriate?Hmmm, yes I see.
Payment to User > Net Salary really means 'Payslip Net Salary Paid'.
It's the payslip itself which gives rise to the P&L expense.
The difficulty is that we can't build a Balance Sheet for you if we don't track employee salary accounts and the PAYE/NI liability account.
Is there maybe a way we could make it easy to bring payroll data into FreeAgent? -
Inappropriate?> Is there maybe a way we could make it easy to bring payroll data into FreeAgent?
That might be the best way. Trying to set up payroll now doesn't help us with our 07/08 accounts, as it only lets us enter a start date in the current tax year.
Also, we would need to edit each entry that FreeAgent payroll generates for us, as it doesn't do student loan repayments. -
Inappropriate?You can enter setup previous years by choosing a different year from the payroll screen itself. We only prevent out-of-year payroll setup from the form to prevent people accidentally overwriting an existing payroll.
Is it the case that we need to add an 'Other Deductions' field to our payslips to allow you to represent your payroll properly?
I’m confident we can make this work for you...
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What I'd really like is for FreeAgent to leave our payroll alone! It doesn't seem to be able to handle things like student loan deductions, for example; so I'd rather it just left us alone, and treated our 'Net Salary' transactions in the same way it treats all of our other expenses. Its insistence on us using its payroll system or nothing at all means that we're having to prepare our accounts manually. -
What I'd really like is for FreeAgent to leave our payroll alone! It doesn't seem to be able to handle things like student loan deductions, for example; so I'd rather it just left us alone, and treated our 'Net Salary' transactions in the same way it treats all of our other expenses. Its insistence on us using its payroll system or nothing at all means that we're having to prepare our accounts manually, as it's throwing them off with inflated profits.
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Inappropriate?Within the next few weeks you will be able to enter journal entries (adjustments) which hopefully will allow you to enter net salaries ( Just check with Ed that wage adjustments will be included)
I’m happy to help!
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Inappropriate?Good news: as well as Journal entries in tonight's release, we'll also be adding Net Salary Expense and PAYE/NI Expense (or Payroll Taxes Expense for our Universal users).
These'll only be visible as options for Universal accounts or UK accounts with no payslips.
Your accountant may need to make some adjustments at the end of year if you're using these.
Tim, I'd still like to see whether we can pull your payroll data into FreeAgent (adding support for whatever deductions you need us to).
EMPLOYEE
