AccountRight information, hints and tips

[TLC]

Hi All

My situation is I want to record the purchase of something in the Purchases module under the suppliers card, but the payment was made by an employee and I want to reimburse him via electronic payments (.aba) file for generously paying it for us. 

Is it possible / reasonable to record it in Payroll under deductions as a Reimbursement linked to a Liability Code then it will be paid and recorded on his payslip and record the payment of the purchase in the Purchase module to the Liability Code if I create it as an Account Type of a Credit Card.  Thus balance each out and everyone should be happy?

Or is there a better way of dealing with these situations.

Ta Jo

[Julie_A_C]

Hi Jo

Because of people getting entirely confused by what they are doing and what goes on payment summaries and what doesn't I always find it very wise to keep any employee reimbursement entirely out of payroll.

Keep payroll for payroll.  If you want to reimburse for an expense via payroll, firstly you end up missing out on the GST.  At least you have got a good start and entered the purchase in purchases so you can claim back the GST.

You could have done it via spend money attaching to the employees card, group with electronic payments, expensed it to the correct account and written in the notes that it was a reimbursement for invoice from Joe Blow. (This would enable you to locate the tax invoice if audited.)

If you want to leave the purchase in the purchases register you could pay it from a clearing account, then do a spend money to the employee with the allocation account being the clearing account and they will cancel each other out.

Was it a mistake when you said you were going to set it up as a deduction?  You want to give him the money back, he hasn't bought something off you, which is what this category is for.

[Andy_Robert]

Hi Jo,

I agree with Julie to process the employee reimbursement outside the Payroll module.  It does save a lot of confusion.

However, to keep things simple, process the reimbursement via Purchases using the employee card (not via Spend Money) and allocate it to the appropriate expense account.  You can take advantage of the GST credit, but more importantly you also create a creditor/liability in the event you somehow get distracted and forget to process the electronic payment.  A review of the Aged Payable Report or Purchases Register will raise the necessary alarm bells should this situation arise.

Good luck!

[TLC]

Thanks Andy,

I like the idea of putting it thru purchases module (more room for explaination) - but how am I able to select the employees card if only the suppliers come up in Purchases.   I you suggesting I change the card from an Employee to a Supplier and then change back to Employee after the pay  bill has gone to electronic payments.  Or is there another tricky way I haven't come acrosss. 

Jo

[Julie_A_C]

You will not be able to change the card from employee to supplier for this payment you will need to make a card for the employee as a supplier if you are going to use Andy's method.  I would still though suggest that you use my method of actually entering the purchase as from the REAL supplier and using the clearing account.

[Andy_Robert]

Sorry Jo, misled you about using the Employee Card.  Create a supplier card and post thru the Purchases.  If a drama with multiple employee reimbursements (and provided payment is not electronically) you could create a generic card entitled "Employee Reimbursements".  The use of a clearing account is not necessary as it adds another process to the transaction.

Have fun

[Julie_A_C]

Hi Andy and Jo

The reason for the clearing account is that in the first post Jo mentioned she wanted to pay electronically.  This could be achieved without a clearing account if the supplier is done as the employee but filing the invoice would then need to be done under the employees name or notes made on the purchase that the expense is from such and such.  In the event of a tax audit, or just for warranty, reference you need to know where the invoice is filed so it can be located.  If you file under the employees name then notes will need to be put on the invoice of why it is filed there, in case some one comes along later, sees it, thinks why is it filed there and refiles it.

Lot of scenarios, and most that I have seen happen around the place and the reason I said to put the purchase through as from who it is really from and use the clearing account to pay it to someone else.

[Georgia]

Hi Everyone

In case its of any help to anyone -

I work in a small business and have small regular incidental expenses to reimburse to employees.

I worked through MYOB Support Note 9280 (employee reimbursements) in order to set up a process for reimbursing employees via the payroll.

Part of this process was to set up a liability account called "employee reimbursements" where you enter expenses incurred by employees. ie. Cr employee reimbursements, Dr the appropriate expense account. Use the particular employee card for the employee that you are paying. This account is a credit card type account and collects GST but is exempt from wages expense, PAYG and superannuation.

I've already been through an end of year and had to do payment summaries and I can confirm that reimbursements did not end up on Payment summaries.

Recently, the plot thickened when my manager reimbursed an employee directly by just paying them straight from the company bank account after they had incurred a larger than normal expense for work. Naturally I could not use my payroll method to record this transaction after the reimbursement had taken place.

I found that I could however, enter the expense into the liability account "employee reimbursements", just as I normally do if I am going to reimburse it via the payroll (using spend money screen). I then just used the Spend money screen again, with the card as the employee again, and recorded the transaction to reimburse the employee. It went like this and seems to work -

Initial recording of expenses incurred by employee -

Dr Expense account (in this case travel - records the cost and GST)

Cr Employee reimbursements (sets up a liability)

On reimbursement fo the employee from the company bank account -

Dr Employee reimbursement (zeros the liabilty)

Cr Bank account

Georgia