wages..

[ajbird]

Hi there,

We are going a bit loopy and could do with some help!

We have a straight forward installation of Sage line 50 v 12 with default nominal codes.

We are a simple 2 person partnership.
We have finally reached the point where we are taking a wage.
How do we record this in line 50?
I am fairly sure that we need to record this in 2 places ie 2220 and make payments against this from the bank against 7004?
If this is correct how do we actually do it? Do we edit 2220 direct in the Nominal Legder window and then make the payment from the bank as usual?
As there are only the 2 of us do we need (should we?) to record the wages to each person in a seperate nominal? (does that even make sence?)

On a slightly different note: We initialy put in £xxx to start the business and this ofcourse is listed in the Owner equity nominal. Are the wages we take paying this back or are they classed as normal wages?

Any help in this matter would be appreciated. We have got the hang of entering products, selling and taking payments but the wages side of things has lost us.

Thanks

Andy

[brucedenney]

Are you

a/ taking drawings as partners of the partnership

or

b/ getting wages under PAYE as employees of the partnership

[ajbird]

Thanks for your help.

We are

a/ taking drawings as partners of the partnership

Andy

[--andrea--]

Hi Andy,

This is more of a 'bookkeeping' problem than a Sage problem, and I would suggest you speak to your accountant to ensure you understand the dynamics of a partnership, drawings and wages.

But, if you are doing it yourself, as many of us usually are to save costs, I would suggest that the money you and your partner are taking is drawings, and you post it from the bank against your 'owners equity' nominal codes (I imagine there are two, one for each of you? Sometimes people call these 'Directors Loan Accounts'. This will reduce the liability the company has to you (i.e. how much it owes you). If you have set these up in the 1200 range you will have to do a bank transfer, otherwise a bank payment.

Broadly speaking you do not pay tax on your drawings, you pay tax on your profits!

So regardless of how much you do or do not take out of the company in the form of drawings, you pay tax on the profit the company makes for the year, (for instance even if you didnt take any money out, you may still have to pay tax because it is on the profits). If you pay yourself under paye, the tax deducted from your wages will contribute towards your tax bill calculated on your profits.

It may be prudent for you to have a quick read up to appreciate the difference between Profit & Loss and Balance Sheet, or ask your accountant or someone to explain it to you.

Hope the above helps, it is a complicated topic. There is a wizard in the help menu for wages, which you will see includes lots more nominals than just 2220 and 7004! So drawings is probably the best way for you to go at the moment!

Good luck,
Andrea