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User 2021
September 14, 2021
Question

Paying weekly, a month in arrears - year end issues

  • September 14, 2021
  • 1 reply
  • 0 views

We pay our staff weekly, a month in arrears (so; work done in week ending 5 September will be paid on 3 October; work done in week ending 12 September will be paid on 10 October, etc).  It's kind of messy but with the industry we're in, staff need weekly payments, but our customers all pay us monthly.  So!

 

It works OK for most of the year, but at year-end there's always an issue.  The combination of weekly pay slips, a month in arrears, AND across the end of one financial year and the beginning of another, always causes errors (understandably).

 

QB haven't been able to suggest an answer - is anyone else in the same position, and have you managed to find a workaround, please?!

1 reply

RoscoPC
RoscoPC
September 26, 2021

Hi 2021,

 

I presume you want to show the liability of having to pay the staff in the previous Financial Year in your P&L, even though you actually pay them in the next financial year.

 

A way of doing this would be to use a clearing account. So you should know how much you will or have paid  for wages in the following period. Say it totals £1000. Debit the wages payable account and credit the clearing account. Your P&L account uses the Wages payable as a liability account and will reduce the Profit for that financial year by the amount you have to pay. 

 

When you actually pay the wages then you need to debit the clearing account and pay the staff weekly for the outstanding weeks pay as they occur.

 

Hope that helps.

 

Kindest regards

 

RoscoPc

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