Payroll

[Derek Atkins]

Phil Longstaff <plongstaff at newearth.org> writes:

> Disclaimer: IWNEAAABIANWAO (I was not educated as an accountant but I am
> now working as one)
> 
> On Wed, 2003-07-23 at 11:14, Derek Atkins wrote:
> 
> > Why can't you have a transaction that looks like this:
> > 
> > 2003-01-15      Derek Atkins
> >                 Expenses:Salaries               $85
> >                 Expenses:Tax-1                  $10
> >                 Expenses:Tax-2                  $5
> >                 Liabilities:Tax-1       $10
> >                 Liabilities:Tax-2       $5
> >                 Assets:Checking         $85
> > 
> 
> Unfortunately, this is wrong.  For one thing, the proper amount to hit
> Salaries with is the gross salary. 

That would artificially inflate your expenses!  If you put the full
gross salary into Expenses:Salaries then you'd have expenses of $115,
when in reality you only have expenses of $100 (assuming no company
payroll taxes).

>   Secondly, the various taxes or other
> things withheld from my gross salary to produce my net salary are not
> liabilities for the company.

This is not true, either...  When you withhold taxes from your
employees that is DEFINITELY a liability -- it's money you still have
which you owe the gov't.  That certainly sounds like a liability to me
(sort of how A/P is a liability!).  When you pay the gov't the withheld
taxes then you pay down the liability.

I'll repeat here what I've said elsewhere: GnuCash DOES NOT DO
PAYROLL.  You are welcome to account for it however you wish, but do
NOT expect GnuCash to be able to maintain enough information to, say,
write a W-2 at the end of the year.  GnuCash does not keep around
enough information for this.

Personally, I just pay ADP to do my payroll.  It costs me $60/mo and
they do everything, including computing/withholding/paying taxes,
filing all the paperwork, even direct-depositing funds.  Considering
gnucash does not do payroll, it's certainly worth my time to pay them
(it would certainly take me more than 20-30 minutes per month to do
all the paperwork).

Once GnuCash actually has a payroll module I might change my mind.

> If I have a gross salary of $100 from which $10 needs to be withheld for
> tax1 and $20 for tax2, then we have:
> 
>                                DB          CR
> Expenses:Salaries            $100
> Liabilities:Tax1                          $10
> Liabilities:Tax2                          $20
> Liabilities:Employees:Phil                $70

And now you're contradicting yourself.  You earlier said "the various
taxes or other things withheld from my gross salary to produce my net
salary are not liabilities for the company" but here you are making
them liabilities!  So, which is it?

-derek

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord at MIT.EDU                        PGP key available