Monday, May 28, 2012

PCLaw and Payroll Entries


Larger firms may use payroll services, but small firms usually handle all the payroll entries themselves.

The CRA website contains all the information you need to calculate payroll deductions and employer remittances.

I use the formulas in Excel sheets to calculate deductions, employer remittances, and vacation pay. The totals are calculated throughout, and the final information can easily be transferred for completing T4 slips. I customize each Excel file for each client, as everyone has different needs.

The easiest way to enter payroll is through a general cheque entry, and ideally entering all the information at once. For example:

  • enter the employee’s name, the date, etc.
  • the cheque amount is for the net payroll amount
  • explanation code pay, sal, etc. – set the code to the Payroll/Salaries G/L expense account
  • for the expense G/L amount use the gross pay
  • next line - etd explanation code – set to the ETD payable G/L liability account
  • enter the amount you have deducted from the employee’s pay
  • eie expense code – set to EI expense G/L account or Payroll/Salaries G/L expense account
  • enter the employer EI amount
  • cpp expense code – set to CPP expense G/L account or Payroll/Salaries G/L expense account
  • enter the employer CPP amount
  • etd explanation code – enter the total of the employer EI and CPP amounts

All the expenses have been recorded in one entry, and the ETD payable account contains the total amount that needs to be remitted to CRA. Repeat for each employee and each pay period. When time to remit (monthly or quarterly), issue a cheque to CRA for the balance of the funds in the ETD payable G/L account at the end of the period.

As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and Transaction Levies.