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.

• Payroll deductions calculator: https://apps.cra-arc.gc.ca/ebci/rhpd/startLanguage.do?lang=English
• Payroll deduction tables: http://www.cra-arc.gc.ca/E/pub/tg/t4032on/README.html
• Payroll deduction formulas: http://www.cra-arc.gc.ca/E/pub/tg/t4127-jan/README.html

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.

Clyde

PCLaw and Can. Deposit Insurance Corporation

 

If you have a trust account, by now you have no doubt received a notice from your bank requesting information on the clients’ trust account balances. Why are they doing this? Your account is covered by deposit insurance, but only up to $100,000. If your practice involves estates or real estate, your trust account probably contains an amount much larger than this. Listing the trust beneficiaries separately allows for $100,000 in coverage for each of your clients.

The banks give you the option of reporting client name and address, or you can maintain your clients’ privacy by providing only a client code (in PCLaw it is known as client nickname).

Reports – Client – Trust listing – date April 30, 2012 – select Totals only – This will produce a list showing the client, their address, and their trust balance.

To get a list with only client codes - Reports – Client – Trust listing – date April 30, 2012 – select Totals only – then select Change to modify the report template. Change the report name at the top – for example “banklist”. In the right-hand box, highlight the client name – click remove – highlight client address – remove – then OK to save the template – change banklist to default – NO – then OK to generate the trust listing.

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

Clyde

PCLaw and Work In Progress Disbursements From Trust

 

Pursuant to By-law 9, s.9.:

9. (1) A licensee may withdraw from a trust account only the following money:

1. Money properly required for payment to a client or to a person on behalf of a client.

2. Money required to reimburse the licensee for money properly expended on behalf of a client or for expenses properly incurred on behalf of a client.

3. Money properly required for or toward payment of fees for services performed by the licensee for which a billing has been delivered.

4. Money that is directly transferred into another trust account and held on behalf of a client.

5. Money that under this Part should not have been paid into a trust account but was through inadvertence paid into a trust account.

This week we are discussing number 2 on the above list. PCLaw can be set to “Allow Trust transfers for WIP” in Options - System Settings – Banking tab.

For example, when you pay the Minister of Finance for a court cost with a general cheque, you are permitted to transfer this amount from trust to reimburse the general account.

When you review the client ledger, you should find the disbursement and a general retainer for the same amount.

Billing – be sure retainers are selected on “Other” tab, so that the general retainer receipt and the disbursement cancel each other out.

Be aware that expense recovery items are sometimes not true disbursements. For example, photocopies may cost you 2 cents but you bill the client 10 cents. This mark-up represents income, and should not be paid from trust until billed.

As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and Can. Deposit Insurance Corporation.

Clyde