As a continuation of this thread, we are a startup company with an opening date within the next 1-2 months. Some construction costs that were mandated by various government agencies have caused us to overrun our original budget, so we're looking at two stop gap measures until we get some cash flow.
1) We're taking on a short-term loan as previously addressed.
2) A couple of our full-time salaried employees have agreed to defer their salary until we open.
My question is how I should account for the deferred payroll on our books. I assume that I should be making an entry every 2 weeks (our payroll is run bi-weekly) to account for the base salary and payroll taxes. Generally, the payroll taxes can be estimated but every now and then I notice some of the line items are pennies different than the prior payroll period.
Would these be the correct entries to make:
Dr: Salary Cr: Salary Liability <to account for deferred base salary>
Dr: Payroll Taxes Cr: Payroll Taxes Liability <to account for deferred payroll taxes>
Dr: Salary Liability Cr: Cash <when salary is paid>
Dr: Payroll Taxes Liability Cr: Cash <when payroll taxes are paid>
Or instead of using my standard expense accounts for Salary & Payroll Taxes, should I be creating new GL accounts specifically for the deferred portions?
Thanks for your assistance!
1) We're taking on a short-term loan as previously addressed.
2) A couple of our full-time salaried employees have agreed to defer their salary until we open.
My question is how I should account for the deferred payroll on our books. I assume that I should be making an entry every 2 weeks (our payroll is run bi-weekly) to account for the base salary and payroll taxes. Generally, the payroll taxes can be estimated but every now and then I notice some of the line items are pennies different than the prior payroll period.
Would these be the correct entries to make:
Dr: Salary Cr: Salary Liability <to account for deferred base salary>
Dr: Payroll Taxes Cr: Payroll Taxes Liability <to account for deferred payroll taxes>
Dr: Salary Liability Cr: Cash <when salary is paid>
Dr: Payroll Taxes Liability Cr: Cash <when payroll taxes are paid>
Or instead of using my standard expense accounts for Salary & Payroll Taxes, should I be creating new GL accounts specifically for the deferred portions?
Thanks for your assistance!