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Accounting Question

  • 04-07-2013 12:10am
    #1
    Registered Users Posts: 217 ✭✭ stocktrader


    Based in Ireland. VAT rate is 23% and Income tax circa 33%.

    Say a company makes 123000 euro in a year.

    23000 goes to VAT
    10000 goes to expenses
    10000 goes to a pension for an employee
    25000 goes as a net salary for an employee
    8000 on taxes of this salary

    this leaves net profit of 55000 for the company.

    so the question is.... where does the 8000 taxes for the employees salary come from and how can the company have 55000 sitting in the company account if it had to pay out 8000 in taxes?
    Tagged:


Comments

  • Registered Users Posts: 735 Alan Shore


    Turnover 100,000
    Less expenses 10,000
    Pension 10,000
    Wages 33,000
    Net profit 47,000

    The payroll taxes are paid out of the gross salary.


  • Registered Users Posts: 217 ✭✭ stocktrader


    Alan Shore wrote: »
    Turnover 100,000
    Less expenses 10,000
    Pension 10,000
    Wages 33,000
    Net profit 47,000

    The payroll taxes are paid out of the gross salary.

    I'm presuming the wages there of 33,000 is the net amount?

    so how does the company pay the taxes then? it would need say 108.000?


  • Closed Accounts Posts: 5,952 smcgiff


    The company has gross wages, it then has Employer's PRSI to calculate.

    It pays the net amount of wages (gross less paye/ee PRSI, USC) to its various employees.

    It then pays the Employees PAYE, PRSI and USC + employer's PRSI direct to the Revenue. The employees' PAYE, PRSI and USC is paid on behalf of the employees to discharge their tax obligation. The employer's PRSI is paid to discharge the employer's tax obligation.


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