Setting up a superannuation liability for a contractor

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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)?
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Nadine

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Posted 1 year ago

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Adrian

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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
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Kevin Russell, Accredited Partner

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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.
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Nadine

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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.
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Kevin Russell, Accredited Partner

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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
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Pam

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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. 
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Wilma van Eyk

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And in addition to that Pam I would reconcile my Super Liability account to ensure no payments were missed
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Kevin Russell, Accredited Partner

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Wilma if you use the "pay liabilities" function doesnt this accomplish the same thing?
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Pam

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Absolutely and always Wilma, thats part of good bookkeeping!