Which Accounts to record unpaid salaries to Employees?

[Zhong Ayi]

Thanks for your advice. Actually I forgot about the social benefits. We are
in Hong Kong so it is relatively simple since we only have 2 things need to
pay: "Employee1 Salary" and "Employee1 Social Insurance". So there is no
tax or anything else (HK is great place to do business!). So even if we do
not pay Employee1 Salary this month, we still always pay the Social
Insurance to the government that month.

OK I understand your idea about putting it in Liability:UnpaidSalary and I
like that idea for making separate for each employee, but then when it gets
to that monster split I fear about screwing up multiple places in my
accounts. There must be an easier way.... maybe I go back and treat each
employee from the beginning as a vendor and then treat their individual
social insurances (which always stay 5% of their salary) as another Expense
and/or Liability.... but then I guess that is the same thing as your idea
and eventually still need a monster split eh? Very confusing :(


On Tue, Apr 1, 2014 at 6:19 PM, Maf. King <maf at chilwell.net> wrote:

> On Tue 1 April 14 16:55:00 Zhong Ayi wrote:
> > I am running GnuCash for a Business and so have many Business related
> > accounts. My business is running at a big loss and I need to record
> > salaries as a type of Account Payable because I need to record that I owe
> > employees their salaries but I can not pay them now.
> >
> > Is the best way to record this type of transaction as a Account Payable
> and
> > treat employees as Vendors? How should I record in the future maybe a
> > partial payment to them if I start paying a little at a time, and what do
> > you suggest I do as the months accumulate and their unpaid salaries also
> > increase? I am confused about what accounts these should best be placed
> > inside.
> >
> > Thank you for your keen ideas.
>
> Hi,
>
> How you handle this really depends on how your government requires that you
> account for employee taxes and other deductions. I can see that you would
> either handle deductions when the payment is actually made, or on the date
> that you "promise" the money to your employee.  (You could be deemed to
> make
> payment then, and the employee loans it straight back (less tax...))
>
> My advice is to get professional advice from an accountant who is familiar
> with your local rules.
>
> Having said that, in the UK, my instinct is to keep track using a
> spreadsheet
> outside of GC... (but I would have to check the tax position with my
> accountant!)
>
> IMHO, if you were to fudge this into GC, Vendors and A/P is not the way
> forward.  Just a normal liability account (Liability:UnpaidSalary -
> possibly 1
> subaccount per employee) is the way to set up within GC... but I'm not sure
> what you would use as a transfer account - probably something under Equity?
>
> Then when you eventually make payment, transfer from bank to expense:salary
> and liabilty to equity in a "multi-split monster" transaction.
>
> HTH,
> Maf.
>
>
>
>
>