Making Entries for Salary payment (Simple case)

sanjeevnutssanjeevnuts Member Posts: 18

I have an incorporated Canadian company with a sole employee - myself. I want to pay myself a salary of X dollars monthly.

As per my accountant, the Gross salary would have 3 components -

1- The Net Salary - Transfer from Corporate account to Personal Bank account
2- Employee Personal Income Tax deductions - Pay to CRA through Bank Transfer from Corporate account to CRA
3- CPP Deduction (Employee Contribution part) - Transfer from Corporate account to CPP Account.

Under which expense headers will these 3 items be recorded?
So far, I have logged 1) under Expense > Payroll Expense > Salary

Should I create below two to account for the others?

Expense > Payroll Expense > Taxes sent to CRA
and
Expense > Payroll Expense > CPP ?

Comments

  • AlexiaAlexia Administrator Posts: 3,314 admin

    First and foremost, @sanjeevnuts, welcome to Wave!

    You are best to trust your accountant on this. We can't give advice on tax accounting, so they might be your best bet.

    Your division of expense accounts makes sense to me. The most basic way to handle paying your own wage would be through a journal entry that looks like this:

    • Debit Wage Expense Account X
    • Debit Employer Contributions Expense Account Y
    • Credit Bank X+Y

    You can always break down a part of that journal entry further for the sake of your bookkeeping, but that's what it should look like.

    With that said, we do offer Payroll services in Canada and the United States, which handles a lot fo that accounting for you. It costs a few dollars a month, but I know of a few users who use it just to pay themselves. If you're curious, you can read more about it here.

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