How best to record wages I owe myslef?

Rich Shepard rshepard at appl-ecosys.com
Wed Jan 11 13:32:21 EST 2017


On 10/01/17 21:34, John Whitmore wrote:

> The thing is that at times the company can't afford to pay those wages,
> waiting for customers to pay. So I'm paying the tax on my salary but I'm
> not actually paying myself. I consider my company owes me that salary and
> it'll be paid when customers pay.

> My question is how best to record this in GnuCash.

John,

   This is a question your accountant should answer. Depending on where you
are, and the the legal structure of your company, the answer needs to be
specific to your situation. Your accountant will advise you.

   My business is incorporated as a sub-chapter S corporation. I, as the sole
employee practitioner, am a vendor in accounts payable (against which I pay
myself), and there are two expense accounts: salary and S-corp distribution.

   I pay estimated taxes quarterly. My accountant prepares the forms; I sign
them and send company checks for the amounts due. When I have outstanding
client receivables (as I now do, including one from 1 October 2016), the
quarterly taxes show no revenue from that account so no taxes are due.

   When there's insufficient cash in the business accounts to pay me I don't
take any salary, or only a portion of it.

   The above has worked for me over 27 years so it's likely to also work well
for you.

HTH,

Rich





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