Setting up a superannuation liability for a contractor

NadineNadine Member Posts: 55
edited August 2019 in Accounts Business Range
We have a contractor whom is paid on receipt of his invoice but we pay super for him and therefore need to accrue a superannuation liability for him. Currently, at the end of each quarter I do a manual expense payment write cheque entry, which obviously relies on me making sure this is done but also means it doesn't ever show on our balance sheet with the super liability accounts. Just wondering how others may handle this in reckon (using Accounts Premiere Edition 2017)?

Comments

  • AdrianAdrian Member Posts: 200
    edited September 2017
    Hello Nadine

    I have some clients that reflect the amount in the bill, have separate line to show super expense and allocate to super Liability.

    But this does not then get picked up in any superannuation reports, you need to then manually add to SuperStream. But the PnL and Balance Sheet reflect the amounts of super.


    Some have set the supplier up as an employee, and process a wage for the super amount, then it is included on super reports and exported SuperStream data file.

    In the Taxes area for that contractor employee they are ticked to exclude from Payment Summaries.


    Hope that gives you a couple of options.

    Adrian

  • ZappyZappy Accredited Partner Posts: 4,463 ✭✭✭
    edited August 2019
    If you are paying it there is no liability. You only need to accrue for expenses that remain unpaid. I have a firm of fifty five contractors. I use payroll for everything. It works fine. The only minor issue is the gst I journal once a month.
  • NadineNadine Member Posts: 55
    edited August 2019
    We only pay it quarterly with the other quarterly super payments for our staff, so it is a liability as I see it, until we pay it.
    Both of these options are good, I will look into these. I always avoided setting him up in Payroll because of the tax side and the Payment Summaries, just worried it would complicate things.
    Thanks for your help.
  • PamPam Member Posts: 37
    edited August 2019
    Nadine I would most definitely set up the super as an expense and liability whether  you go through payroll or enter manually, - so dr the super expense account  and cr the super liability for the invoice.  This gives you a true reflection of your costs in the period as well as showing on your balance sheet, and with the other employees you know exactly how much you need to pay out at period end and your P & L is more accurate for a time period. 
  • ZappyZappy Accredited Partner Posts: 4,463 ✭✭✭
    edited September 2017
    You do have an option to exclude from the payment summary. It doesnt complicate things au contraire. My life has completely changed since I started using the payroll function. It has streamlined the process bigly. Kevin t:0407844914
  • Wilma van EykWilma van Eyk Member Posts: 16
    edited September 2017
    And in addition to that Pam I would reconcile my Super Liability account to ensure no payments were missed

  • ZappyZappy Accredited Partner Posts: 4,463 ✭✭✭
    edited September 2017
    Wilma if you use the "pay liabilities" function doesnt this accomplish the same thing?
  • PamPam Member Posts: 37
    edited September 2017
    Absolutely and always Wilma, thats part of good bookkeeping! 
  • LeeLee Member Posts: 66
    edited December 2020

    Following on from this thread, @Zappy do your contractors supply you with an invoice that contains a line for the Super? or is it calculated by Payroll functions?

    And how do you set up the contractors in Payroll? Do you use their ABN or TFN?

    Many thanks

  • Acctd4Acctd4 Accredited Partner Posts: 896 ✭✭✭

    I agree with Zappy - Setting the contractor up as an “Employee” is a great way of tracking & managing their Super.

    * You can set up & use a specifically-created Payroll Item linked to the appropriate expense account (eg Subcontractors - Do NOT use a Payroll expense account as they’re not (payroll) “employees”!)

    * Ensure you select “None” from the dropdown in “Tax Tracking Type”. It is THIS section that determines if &/or how an Payroll Item flows through into STP!

    * Make sure you do NOT tick PAYG in the “Taxes” window (but do check Payroll Tax inclusions in your state to determine if “Payroll Tax” should be ticked) Also ensure you do NOT have the checkbox ticked for inclusion in leave accruals here too!

    * Ensure you choose to “exclude from Payment Summaries” in their employee record.

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    Reckon Accredited Partner (AP) Bookkeeper * Regd BAS Agent (No: 92314 015) *

    ICB-Certified Bookkeeper * Seasonal Tax Consultant since 2003

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    0422 886 003

    [email protected]

    https://www.accounted4bs.com/

  • ZappyZappy Accredited Partner Posts: 4,463 ✭✭✭

    Lee, yes they do. It's the law

  • ZappyZappy Accredited Partner Posts: 4,463 ✭✭✭

    Shaz I agree with me too.

  • Acctd4Acctd4 Accredited Partner Posts: 896 ✭✭✭

    @Lee A subbie who is switched on will have it on their invoice however, this is most often not the case as the onus is on the employer to be aware of their responsibility & calculate this liability.

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    Reckon Accredited Partner (AP) Bookkeeper * Regd BAS Agent (No: 92314 015) *

    ICB-Certified Bookkeeper * Seasonal Tax Consultant since 2003

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    0422 886 003

    [email protected]

    https://www.accounted4bs.com/

  • ZappyZappy Accredited Partner Posts: 4,463 ✭✭✭

    Switched what now...... ?

  • LeeLee Member Posts: 66

    @Acctd4 Thanks Shaz for all your information and assistance. It was really helpful.

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