Employee related expenses are significant for many companies. Calculate your employee contributions wrong and SARS'll jump at the chance to penalise you. But don't worry. There are four easy steps to follow to get your calculations right everytime.
Let's have a look...
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Gail is a GP who's just opened her own private practice. Because she's trying to save money on admin costs, she is doing her books herself.
She thinks: 'How hard can it be?' The answer: 'It's very hard unless you've got the right tools at your fingertips!'
The Practical Accountancy Loose Leaf
is just one of those tools. With everything from checklists about how to prepare for an audit, to detailed explanations about financial statements, the Practical Accountancy Loose Leaf
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Four steps you can follow to account for employee contributions correctly
There are four steps to account for employee costs and contributions correctly. Let's see what they are…
Use control accounts in your general ledger to maintain control of your accounts. This will help you avoid errors.
Create a monthly salary payslip, where you record the gross earnings and total income along with any deductions. Your accounting records will benefit from this kind of detail.
+++ Here's your chance to take the hassle out of tax, audit-proof your business and make the Receiver your friend!
Record any amounts withheld by the employer. Keep track of amounts withheld. This will make it possible for you accurately show how much is debited from the total salary amount and what you've paid over to SARS.
Determine the cost to company. The onus is on you to know exactly what your employees cost the company.For a more detailed look into these four steps, as well as an example, turn to E 01 page 003 in your Practical Accountancy Loose Leaf Service
Now that you have the basics on how to account for employees contributions correctly you'll never face penalties from SARS again. rvice. Not a subscriber? Sign up here today
Until next time,
P.S My new client's previous 2 accountants, (for 19 years) did not declare or pay income/income tax to SARS. I really need advice on what to do here. Find the answer
to this and other accounting and tax questions at our free Accounting and Tax Club