Examples of salary slips
We have created three examples of salary slips, which are purposely complex. In practice, payments as complex as these are very unusual.
Accounting of salary slips
2-4. A Automatic accounting of salary slip
Salaries in money, Non-working hour salaries and salary types of Monetary compensation are posted to accounts for Normal working hour salaries.
Per 5000 (Normal working hour) salaries (gross salary paid in money)
Possible itemisations by salary type (e.g. salaries for overtime work or normal working hour salary and non-working hour salaries) can be retrieved from salary statistics. Therefore, you should not itemise them.
withholding tax, excluding VAT, including VAT, including VAT, meeting rewards /
Company car allowance, fringe benefits
Per 5400 fringe benefits (taxing value of fringe benefits)
Per 5990 Contra-account of fringe benefits (taxing value of fringe benefits with a minus sign)
The purpose of this accounting entry is to provide information on the total amount of salaries (salary in money + fringe benefits) and enable matching between annual salary reports and the general ledger.
Withholding Tax
Employers' social security contribution Employer’s contributions
Per 6300 Social security contributions (employers' social security contribution)
an 2920 Tax withheld and social security contribution payable (Tax withheld and employer’s social security contribution calculated from salaries, to be paid to the Finnish Tax Administration)
Employers’ Pension Act contribution Employer payment
Employers’ Pension Act contribution (TyEL)
Per 6100 Pension insurance fees
an 2950 Accruals and deferred income
The employer’s and employee’s shares of pension insurance fees are posted as a joint entry in accruals and deferred income, which allows immediate entry of the total salary payment cost independent of the date, when the pension insurance fees will be paid. See 13. Invoice from the pension insurance company
Accident insurance payment
Group life insurance charge
Employer’s unemployment insurance charge Employer payments
Per 6400 Obligatory insurance fees
an 2950 Accruals and deferred income (obligatory insurance fees related to salaries, to be paid by the employer)
Other obligatory insurance fees of the employer and the employee’s share of unemployment insurance charges are posted as a joint entry in accruals and deferred income, which allows immediate cost entry of the total salary payment cost independent of the date when the pension insurance fees will be paid. See 14. Payment of the group life insurance fee, 15. Payment of the accident insurance, 16. Payment of the unemployment insurance charge
Employee’s Pension Act contribution Employee payment
an 2950 Accruals and deferred income (employee’s share of the Pension Act contribution, to be deducted from the net salary)
See 13. Invoice from the pension insurance company
Employee’s unemployment insurance charge, Employee payment
an 2950 Accruals and deferred income Siirtovelat (employee’s share of the unemployment insurance charge, to be deducted from the net salary). See 16. Payment of the unemployment insurance charge
Trade union fee, Employee payment
an 2940 Other creditors (Trade union fee withheld from the employee)
All trade unions’ fees are consolidated in Other creditors. Invoices and payments to trade unions are posted as opposite entry in this account. See 11. Payment of trade union fees.
Advance salary set-off
an 1760 Other receivables (advance payment of salary returned to employer)
Entry of advance payment of salary, see 1. Advance payment of salary.
Paid compensation for use of home phone
Per 8700 Other operative costs (Compensations paid to employees)
Compensations paid to employees in connection with payment of salary but not as part of salary, such as compensations for use of a home phone or other private tool for working purposes, are entered as cost directly from the salary slip.
Distraint, Employee payment
an 2940 Other creditors
The distraint withheld from the net salary is posted to Other creditors. When the withheld sum is paid to the enforcement authority’s bank account, the receipt is posted as opposite entry to Other creditors. See 7. Payment of distraint
Luncheon voucher payment
an 2940 Other creditors
If meal payments to the canteen at the place of work or payments to the employer for luncheon vouchers to avoid taxation as fringe benefit are withheld from the net salary, the salary type is posted to the Other creditors account. The counter entry is made with a separate receipt, which eliminates the debt in the Other creditors account and respectively increases the income or reduces the expenses of the company, depending on the type of charge.
Payment to bank account
an 2880 Payment transaction account (net salary)
The net salary is posted to the Payment transaction account. The counter entry comes from the bank statement. See 5. Payment of salaries.
Other accounting entries related to payment of salaries
1. A/M Advance payment of salary
You can make an advance payment of salary in salary calculation, as an expense invoice or e.g. by transferring money directly to the person’s Internet bank account.
The salary calculation creates the automatic accounting entry
1760 Other receivables an Payment transaction account
and from the bank statement Per 2880 Payment transaction account an 1910 Bank account
The withdrawal from the Internet bank is posted
1760 Other receivables an 1910 Bank account
5. A Payment of salaries, from the Bank Account
Salary transactions from the Bank statement are posted automatically against the Payment transaction account
Per 2880 Payment transaction account an 1910 Bank account
6. M Payment of restraint sum withheld, the Enforcement authority
You should create a purchase invoice of the sum withheld for the Enforcement authority and post it as Other creditors. The you should change the default “per” account.
Per 2940 Other creditors an 2880 Payment transaction account
7. A Payment of restraint sum withheld, from the Bank Account
Payment transactions of restraint sum withheld from the Bank statement are posted automatically against the Payment transaction account
Per 2880 Payment transaction account an 1910 Bank account
8. A Employers' contribution notice, Salaries in January
When you create an Employers' contribution notice, the system creates a receipt with automatic accounting entries. Both the withholding tax and social security contributions are managed with the same ledger account.
Per 2920 Withholding tax and social security contribution payable an 2880 Payment transaction account
9. M Payment of withholdings for meal payments, January
The canteen’s receipt,
Per 2950 Other creditors an 7000 Optional social security expenses
10. A Payment of withholding tax, Salaries of previous month
Payment transactions of tax withheld and social security contributions from the Bank statement are posted automatically against the Payment transaction account
Per 2880 Payment transaction account an 1910 Bank account
11. M Payment of trade union fees, for the Salaries of the previous month
A separate purchase invoice is created for each trade union for accounting and payment of the fees. The accounting entry of the purchase invoice is
Per 2940 Other creditors an 2880 Payment transaction account
12. A Payment of trade union fees, for the Salaries of the previous month
Payment transactions of trade union fees from the Bank statement are posted automatically against the Payment transaction account
Per 2880 Payment transaction account an 1910 Bank account
Accounting of insurance fee payments, etc.
13. Invoice of the pension insurance company Invoice for advance payments
The invoice of the Employees’ Pension Act insurance company for the employees’ and the employer’s insurance fees on the basis of the advance information (1-4 times/year) is posted as decrease of Accruals and deferred income.
Per 2950 Accruals and deferred income an 2880 Payment transaction account
Thus, the Employees’ Pension Act insurance fees are not entered as cost, because the cost entries had already been created in the salary slips.
The Employees’ Pension Act insurance company’s invoice to small employers for the insurance fees of the month’s salaries is entered
Per 2950 Accruals and deferred income an 2880 Payment transaction account
The self-initiated Employees’ Pension Act insurance fee payment is entered
Per 2950 Accruals and deferred income an 2880 Payment transaction account/1910 Bank account
14. Payment of the group life insurance fee Invoice based on the advance information
Payment of the insurance company’s invoice based on the advance information is entered
Per 2950 Accruals and deferred income an 2880 Payment transaction account
Thus, the insurance charge is not entered as cost from the invoice, because the cost entries are created in the salary slips.
15. Payment of the accident insurance fee Invoice based on the advance information
Payment of the insurance company’s invoice based on the advance information is entered
Per 2950 Accruals and deferred income an 2880 Payment transaction account
Thus, the insurance charge is not entered as cost from the invoice, because the cost entries are created in the salary slips.
16. Payment of the unemployment insurance fee Invoice based on the advance information
Payment of the insurance company’s invoice based on the advance information is entered
Per 2950 Accruals and deferred income an 2880 Payment transaction account
Thus, the insurance charge is not entered as cost from the invoice, because the cost entries are created in the salary slips.
Annual salary reports
17. Employees’ Pension Act-notice December Annual payment
An annual notification is to be given to the Employees’ Pension Act insurance company, to enable the calculation of the actual total sum of pension insurance fees. In the annual calculation, the insurance company subtracts the advance payments and possible rebates. Based on the calculation, additional insurance fees are to be charged or credited to the customer, depending on the accuracy of the advance information on the salaries.
An additional payment is entered:
Per 2950 Accruals and deferred income an 2880 Payment transaction account
A return is entered:
Per 1760 Other receivables an 2950 Accruals and deferred income
At this stage, a correction is made because the pension insurance fees calculated on the basis of salary slips do not match the invoices sent by the insurance company due to the refund system.
The correction balance is entered:
Excess entry in Accruals and deferred income is corrected Per 2950 Accruals and deferred income an 6100 Pension insurance fees
Insufficient entry in Accruals and deferred income is corrected Per 6100 Pension insurance fees an 2950 Accruals and deferred income
You can make the correction by selecting the calendar year as the transaction period and the salary slip as the receipt type in Procountor’s general ledger. Then you can compare the sum of the transactions in ledger account 6100 to the total sum paid by the employer in the insurance company’s calculation. Enter the possible difference as described above.
18. Unemployment insurance fees December Annual payment
The advance payments are subtracted from the annual payment and the insurance company charges/returns the difference.
An additional payment is entered:
Per 2950 Accruals and deferred income an 2880 Payment transaction account
A return is entered:
Per 1760 Other receivables an 2950 Accruals and deferred income
19. Accident insurance fees December Annual payment
The advance payments are subtracted from the annual payment and the insurance company charges/returns the difference.
An additional payment is entered:
Per 2950 Accruals and deferred income an 2880 Payment transaction account
A return is entered:
Per 1760 Other receivables an 2950 Accruals and deferred income
19. Group life insurance fees December Annual payment
The advance payments are subtracted from the annual payment and the insurance company charges/returns the difference.
An additional payment is entered:
Per 2950 Accruals and deferred income an 2880 Payment transaction account
A return is entered:
Per 1760 Other receivables an 2950 Accruals and deferred income
18-20 Correction of the insurance fees
At this stage, a correction is made to ensure that mandatory insurance fees calculated on the basis of salary slips match with the invoices sent by the insurance company. You can make the correction by selecting the calendar year as the transaction period and the salary slip as the receipt type in Procountor’s general ledger. Then you can compare the sum of the transactions in ledger account 6400 Obligatory insurance fees to the total sum paid by the employer in the insurance company’s calculation. Enter the possible difference as described below:
Excess entry in Accruals and deferred income is corrected Per 2950 Accruals and deferred income an 6400 Obligatory insurance fees. Insufficient entry in Accruals and deferred income is corrected Per 6400 Obligatory insurance fees an 2950 Accruals and deferred income.
Accrual of salaries
The accounts for changing accrual of salaries and social security costs in the basic chart of accounts are recommended for use only when entering accruals of the holiday salary payable.
Default salary postings
You can change default postings by salary type in Management > Accounting info > Default accounts > Posting defaults > Default salary postings (new).