ACCOUNTING FOR

PAYROLL
ACCOUNTING FOR PAYROLL
Accounting for wages and salaries

MUST show the full cost to the

employer for employing someone

MUST show the employers liability to the

HMRC for PAYE and NIC
 Hence 2 main accounts are
needed
The Wages expense account
The PAYE/ NIC account

Finally a, WAGES CONTROL

Account
DOUBLE ENTRY

GROSS WAGES
DR: Wages Expenses Account

CR: Wages Control Accounts

DOUBLE ENTRY

EMPLOYEESs
NIC/PAYE
DR: Wages Control Accounts

CR: PAYE/NIC
 PENSION
DR: Wages Control Accounts

CR: Pension
DOUBLE ENTRY

NET PAY
DR: Wages Control
Accounts

CR: Cash Book

 Activity: Daniels Annual Wages is
24000. His deductions for January
2013 are :

PAYE 250
Employees NIC 160
Contribution to Pension 100
Employers NIC 170
 Compute:
Daniels NET PAY

The cost to the employer of employing Daniel

in January 2013

The amount Paid to various organisations

Inland Revenue
Pension Company
 A.
Gross Pay 2000
PAYE (250)
NIC (160)
Pension Contribution (100)
NET PAY 1490
 B
Cost of employing Daniel

Gross Wages 2000

Employers NIC 170
2170
 C. Inland Revenue

PAYE 250
NIC Employees 160
NIC Employers 170
580

PENSION COMPANY

Pension Company 100