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Post Info TOPIC: InterCompany Salary Payments
Julie1977


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Im new to this forum and am hoping to become an active member.

I have worked as a Senior Finance Assistant for around 7 years and have recently moved to a company as a Bookkeeper.

The company I have moved to are in a bit of a mess and I feel as though I am sinking. It is the first time I have worked across 3 separate companies (all with the same owner) and am struggling with the whole inter company bit....

I am hoping somebody may be able to help. Each company is set up individually in Sage. The payroll is run externally and is all done through one company. The salary journal is therefore entered into Sage for this company. However, my boss pays the net wage to some people from this companies bank account, and some from the other 2. How do I record this so that my salary journals are correct as it is only the net pay that is paid from another company.

Hope this makes sense

Any help would be greatly appreciated 

Julie



-- Edited by Julie1977 on Friday 31st of July 2020 08:05:59 PM

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Leger


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HI Julie, welcome to the forum. 

Is your boss consistent with which bank accounts he pays the respective employees from?  eg employee a is always paid from company b and employee b is always paid from company c etc.



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John 

 

 

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Julie1977


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Hi John

Thank you for the welcome. So far, it looks as though he is consistent with which bank accounts he uses for each employee...



-- Edited by Julie1977 on Friday 31st of July 2020 09:17:55 PM

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Leger


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I've slight misread your post, sorry.

I'll come back to this when I've worked out the simplest solution (the one I have in my head may mean doubling the work when you may not need to)  



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John 

 

 

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Julie1977


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Thank you so much 



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Leger


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Hi, sorry Julie.  Wasn't as easy to work out as I envisaged.   It may be better you asking the question on accounting web or the external accountant if they have one.



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John 

 

 

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Leger


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Duplicated



-- Edited by Leger on Monday 3rd of August 2020 07:23:15 PM

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John 

 

 

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Julie1977


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Hi John, thank you anyway. Im glad its not just me!



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BudgetB


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Hi Julie,

Can I just clarify that I understand the question...so there are 3 companies, all related.  Only one of them is PAYE registered and all the staff are employed by that company. That company also makes payment of all deductions to HMRC for tax etc.  However the net salary cost is paid to different staff from a spread of the 3 different companies.  Have I understood that all correctly?  What is his reasoning behind the split of the payments?

 

EDITED to add further question



-- Edited by BudgetB on Monday 3rd of August 2020 08:00:36 PM

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Jenny

 

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Rhianrach


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My Tuppence worth.

I'm mainly wrong but on the odd occasion right and on this occasion just thinking out loud.

I would have thought that if it is as above where they all work for company A but are paid from B & C then it would have been a loan from B & C to A.

If ont'other hand the employees are spread across all 3 companies and are paid from the correct company then you would need to decrease the amount in the P&L and decrease the liabilities in company A and transfer them to company B&C maybe through A invoicing B&C or going forward operating 3 different spreadsheets.

Like I say just thinking out loud and would probably need to run a dummy to see the best way.



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Steve
BudgetB


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Hi Steve,

 

Yes if the responses panned out how I expected them to then my advice would have been along the lines of a management charge to correctly allocate the costs to the relevant companies, partially offset by an intercompany account to take into account the cash spend of the net pay.  We're clearly thinking along similar lines!



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Jenny

 

Responses are my opinion based on the information provided.  All information should be thoroughly checked before being relied on.

 
Rhianrach


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Hi Jenny

I think so but your way sounds better :)

i'd have to have a fiddle around like i say to find the best way of implementing any changes.

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Steve
Leger


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BudgetB wrote:

Hi Steve,

 

Yes if the responses panned out how I expected them to then my advice would have been along the lines of a management charge to correctly allocate the costs to the relevant companies, partially offset by an intercompany account to take into account the cash spend of the net pay.  We're clearly thinking along similar lines!

To Jenny and Steve

It was the transferring between accounts where I got stuck when trying to work out a solution for Julie

Journal done in Company A say £12k gross 10k nett.  Assume Co B + C portion are 1k nett each.  So recharge would be £1.2k per company but I got stuck trying to rework it back to Co A. to get the 2k back in nett wages.  I was overthinking it earlier I think but on a normal recharge wouldn't the £2.4k go to gross wages, which reduces it to 9.6k, then Co A meets all costs?  (Ignoring management charges) Company  B + C both incur gross of 1.2k each.

To resolve the error made you would bill them 1k each which goes back to nett wages on both sides?  I couldn't get my head round it at all last weekend.

 

EDIT:  Hastily corrects the 7.6k to 9.6k  (I knew what I meant)



-- Edited by Leger on Thursday 6th of August 2020 08:18:56 PM

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John 

 

 

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Rhianrach


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So without trying it maybe a journal 

Gross wage   CR 2400 (1200 each B & C)

Net Pay       DR  2000 (1000 each B & C)

HMRC       DR    400 (200 each B & C)

Then a bank receipt paid to Net and HMRC for 1000 each and 200 each or more likely raise an invoice to these two nominals which should square them off instead.. If A has paid their £8000 net and £1600 HMRC the liabilities are left at zero and the P&L is left at 9600 as it should be.

But of course there will likely be pensions as well :)

 

Edited because I forgot the invoice.



-- Edited by Rhianrach on Friday 7th of August 2020 08:28:37 AM

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