Basic info on setting up wages and payg withholding

Chris_7194422

I have a couple of casual employees (more than likely will be under the tax threshold) that I cannot setup correctly in Reckon Accounts Accounting. I have a default list for Wages>PAYG. Not sure if I made this some years ago, or if it is a default setting.
If I pay a nett wage to a casual, is this entered into 'wages', then the withholding amount entered into 'PAYG'?
If this is the case, I am unsure where the amounts come from for W1 (total of salary) and W2 (amounts withheld) of the simplified BAS statement. None of the Reckon options for W1 look familiar, or make any sense to me.
Any clues on this basic query are more than welcome. Thanks

John Graetz

Hi Chris.  It should  only be a very extreme event where you have to manually change or enter the amount for PAYG during a pay run.  Tax is calculated automatically for each payment and is determined by the following factors:
1.  The payroll period (weekly, fortnightly, monthly etc)
2.  The value of the pay, particularly in relation to the payroll period
3.  The tax code that you set up for the employee e.g. if set up for 1-No TFT, tax will always be calculated on whatever the gross pay is, or, if 2-TFT, then tax will only be calculated if the value of the pay exceeds the tax free threshold for the payroll period (weekly etc.)
There should not be a reason for you to have to input the PAYG value for any employee.  The automatic calculation occurs irrespective of whether the person is full-time, part-time or casual.
When setting up your payroll items, generally the majority would be set up as Gross Payments or Allowances.  
The total of wages for the W1 tab on the BAS comes from the types of gross payroll items that you specify behind this label e.g. gross payments, allowances etc.  As mentioned above, almost all payroll wage types should fall under these two headings.
The data behind the W2 tab should be linked to the Payroll Liability account that you use for your PAYG deduction.  John L G

Chris_7194422

Thank you for your response John. I operate a small business that mainly uses subcontractors. This is easily maintained by Reckon Accounts. For the minimal payments that I make for casual employees I do not really want to jump to Accounts Plus. Where would I go for assistance on setting up the accounts list to properly filter into PAYG of the BAS statement?

John Graetz

Unfortunately Chris, I have no knowledge of the limitations of your Reckon Accounting program which, as I understand it, does not have payroll functionality.  Therefore I have no idea what data input lies behind the W1 and W2 tabs on your BAS, if you are running the BAS Report from within Reckon.  The only other option that I can give you, based on my lack of understanding of your version, is to keep a record of the wage and tax components of those pays during the BAS period and then manually add them to your BAS return.
With those programs which have the payroll function, it is not the accounts list which produces the data for the BAS, rather it is the payroll items which do this.
Somebody else with knowledge of your low level program might be able to provide you with some accurate information to cover your circumstance.  Sorry.  John L G

Chris_7194422

Thank you John. Your information is good and straight to the point. Think that I might investigate Reckon One.

John G

Hi Chris,

Welcome to the Reckon Community.  

As Reckon Accounts Accounting does not have a payroll module, you'll need to pay your casuals via a Write Cheque with the various components of the pay listed as separate lines in the table. I suggest you talk with your bookkeeper/accountant or Reckon Accredited Partner on how to structure this transaction, and its associated accounts, for your specific needs.

In the BAS Lodgement Form you'll need to manually enter the amounts for W1 and you can link the W2 button to the account that collects your PAYG withheld.

Hope this helps,

regards,
John

Chris_7194422

Thanks John. My accountant has worked in with this suggestion

Chris_7194422

To make a BAS payment to the ATO I usually go to Supplier>Tax activities>Pay tax.
With the added input of PAYG withheld it has been suggested to me by my accountant to enter the PAYG (W2 on the BAS statement) into Payroll Liabilities. We looked and eliminated the other possiblities, which included 'Income tax provision', Owners contribution, Owners drawings, payroll liabilities and tax payable'.
After trying this, a Reckon message reports "you must specify a tax agency for the tax account". I am not sure if it is referring to the  Tax Payable or the Payroll Liabilities account.
If I enter the information by writing a cheque for  'tax payable' and not using Supplier>Tax activities>paytax the information is accepted by Reckon.
My logical mind says that both the GST payable and payg withheld be entered as an expense, and not a liabilitiy since they have been paid.