Up until now I've only done bookkeeping for one Limited Company - all the others have been Sole Traders or (in the past) Partnership.
For this Limited Company, the Directors' wages were kept separate (in the Profit & Loss Account) from the other staff wages as was the Directors ER National Insurance and the other staff ER National Insurance.
Now, this Employment Allowance has thrown a small spanner in the works as each month (up until the £2000 is reached) I will be reducing the ER National Insurance by this amount. But with two entries for National Insurance it could complicate matters.
Do you think it would be ok to just show an all inclusive figure (Directors and other staff) for ER National Insurance in the Profit and Loss Account? The total for the Directors ER NI can be retrieved for reporting purposes elsewhere.
-- Edited by Peasie on Monday 12th of May 2014 05:11:58 PM
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Never buy black socks from a normal shop. They shaft you every time.
Can't you apportion the Employment Allowance? If the accounts were being produced for me, I would want to see the cost of employing the directors, not have to go searching for it, or be misled into thinking it's lower than it actually is because the NI isn't obvious.
That was what I was hoping to avoid, so in effect, you've answered the question for me. The only downside being that until the Directors reach a certain level (£7956) they are not going to be showing any national insurance and the other staff's ER national insurance will swallow up the amount. Unless they go with the Table Method which might be better. Tomorrow is the first day for wages but at the moment there is only one employee (other than the one Director) as they are not open yet. When they open there will be a staff of around 10 which won't take long is swallowing up the £2,000.
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Never buy black socks from a normal shop. They shaft you every time.
I suppose the question then is, is it material? If the £2,000 is a small part of the NI cost, it won't distort the accounts much by setting it all off against the employees. Otherwise do some rather nerdy calculations of what the director's NI would have been if they were on the Table Method, and prepay it until there's some Directors NI to set it off against, which I suppose I might do as a sad person who likes to play with spreadsheets!
Or you could just put it in a separate account called something like "One Off Employers NI Allowance" and show it as a negative expense in the P&L. Then next year you'll have accurate prior year comparisons. Maybe I'd do that instead of playing with a spreadsheet!
I'm liking the second idea. It keeps things simple. Unless someone can come up with a downside of using this idea?
"Sad person who likes to play with spreadsheets?" I thought that would apply to all bookkeepers - although no so much the sad bit. There is nothing sad about playing with spreadsheets. My life revolves around them. I plan my (main evening) meals in advance and have them in a spreadsheet. Sometimes I don't know what I am having that night until I get home and can open the spreadsheet. I used to have it planned a month in advance but as I had already done a year previously I just copied last years meals to this year.
Kind of ruins my argument about not being sad.
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Never buy black socks from a normal shop. They shaft you every time.
If the staff are going to swallow up the Employment Allowance, wouldn't it be better for the director to be on £663 per month (so no national insurance is due) and take the rest as dividends? Or is there not the profit in the company to allow that yet?
That's getting into the domain of tax advice - I'm staying well clear of that. I've mentioned to him about seeing the Accountant regarding wages/dividend. I also said to the Accountant about it earlier on today - it was the Accountant that put this person on to me to do the bookkeeping.
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Never buy black socks from a normal shop. They shaft you every time.
Peasie - you are sad! What if one evening you fancy something different to eat that isn't on the spread sheet, what do you do then?
If it's on the spreadsheet then that's what I have to eat. I remember a conversation on Facebook with my wee sister one night after she had posted a picture of her pizza and I was complaining about the rabbit food I HAD to eat because that's what the spreadsheet told me.
EDIT : It isn't as mad as it sounds. Prior to this I was forever having to throw food out but now no food is wasted.
-- Edited by Peasie on Tuesday 13th of May 2014 09:51:31 PM
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Never buy black socks from a normal shop. They shaft you every time.
I can see that it is good to not throw food out but sometimes I may just fancy a pizza (homemade of course), and not say chicken which is on the list.
Maybe I should be mad as well and plan my meals to save on wastage!
Any bread that is left over you could make bread pudding, that is basically any old crap left in the cupboards, like dried fruit, sugar, milk, bread, egg and spices. I have xmas cake left over so I am going to make rum truffles.
