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Sage 50 - What nominal code should I use for ...

Firstly, there is no definitive answer to this sort of question, as some people make drastic changes to their standard sage nominal code structures.  The answers offered here ASSUME you are using a normal chart of accounts, as always, we offer no warranty that this information is correct in your circumstances.

• What nominal code do I use in Sage 50 for Directors Loans
• What nominal code do I use in Sage 50 for Dividends
• What nominal code do I use in Sage 50 for Sales of Shares
• What nominal code do I use in Sage 50 for VAT
• What nominal code do I use in Sage 50 for PAYE Income Tax NI National Insurance and Payroll
• What nominal code do I use in Sage 50 for Corporation Tax
• What nominal code do I use in Sage 50 for Something Else

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What nominal code do I use in Sage 50 for Directors Loans

Directors loans are normally money that is lent to a member of staff who happens to be a Director.  It is money that is owed to the company and has to be repaid.  However, Directors loans can also be the other way round, where a Director who is also and owner lends money to the company.

The "direction" of the Loan is critical.

If you think this is "Pay" then it is probably a loan from the company, that will be repaid (probably by a dividend of equal or greater value at the end of the year)

If this loans is from the company then it is owed to the company just like your Sales Ledger (Debtors) so it will start with the number 1 in the standard Sage layout. 

the 10XX codes are for stock and work in progress which will need to be sold before turning into cash.

the 12XX codes are for bank accounts which can be considered as cash.

the 13xx codes are for long term loans (lasting more than a year)

the 11XX codes are between the two, thing that can be turned into cash pretty quickly (short term) and without any extra work, things like the Sales ledger (Trade Debtors) are in this area.

This is a short term loan like a Staff loan so a nominal code adjacent to staff loans would be a good idea, I suggest 1110 for Staff loans (Subs) and 1120 for Directors Loans

If this loan is to the company then the company owes it to the lender, these start with the number 2 in the standard Sage layout.

the 21XX and 22XX ranges are used for short term credit which needs to be repaid within a year.

the 23XX is used for long term loans lasting more than a year.

The Directors loan could go in either group depending on the length of the loan 2250 or 2350 would probably do fine.

You can end up with several separate accounts for different directors and potentially having both loans to and from the company of different sorts.

What nominal code do I use in Sage 50 for Dividends

You don't have a code, you have 2!

In a typical scenario a dividend is proposed and then at some later date paid quite possibly in the next financial year.

To account for this we have a Proposed Dividend account and a Dividend Liability Account.

The dividend liability account acts as a control account to ensure that when all the shareholders have been paid their individual dividends, the whole amount has been used and that there have been no duplicated or missed payments. Your situation may be much more simple than this but understanding the complex situation explains why we do it this way.

The Dividend Liability Account you might expect to be the same area as the other control accounts on monies the companies owes such as VAT/PAYE/NI/Wages. However, this is owed outside the financial year so typically is is put in the 23XX section 2340 is a popular choice.

The Proposed Dividend account is next to the Reserves account 3210 is a popular choice, typically this is moved into the main P&L 3200 at year end.

The process comprises of a journal to set up the liability, then one or more bank payments to clear the liability and then a journal to deduct the dividends from the retained profit and loss.

1/ Journal - Credit Liability (2340) - Debit Proposed Dividend (3210)

2/ Make payments from the bank account* of your choice and check the Liability account is zero and that all payments have been made and non duplicated.

3/ At year end Journal - Credit Proposed Dividend (3210) Debit Retained earnings / P&L (3200)

* You might not actually pay all dividends, some owner/directors may offset borrowings during the year in their directors loan accounts against the dividend, if this is the case

2b/ Journal - Credit Directors Loan Account (1120) - Debit Liability Account (2340)

What nominal code do I use in Sage 50 for Sales of Shares

Income from the issuing of shares are typically recorded against 3000 however, in some circumstances you may have different types of shares in which case codes between 3001 and 3010 may be used to represent the different types of shares.

What nominal code do I use in Sage 50 for VAT

Depends on what you are doing!

If you are raising an invoice for JUST vat, then it doesn't matter because the net amount is 0.00

If you are paying or receiving VAT then the amount goes against the VAT Liability Account 2202

READ the VAT Return guide for more info

What nominal code do I use in Sage 50 for PAYE Income Tax NI National Insurance and Payroll

The Payroll journal will have entered the Cost of employment into several sections of the Profit and Loss account and left the liabilities in the appropriate control accounts in the Balance sheet for you to may your payments against.

NOTE: NI and PAYE are shown separately here, however it is fairly common practice to use one account for both items

The journal creates balances on the following accounts each representing money that you have to pay.  All the bank payments relating to these go against the appropriate nominal code and should CLEAR the account balance, IF YOU DO NOT HAVE A ZERO BALANCE AFTER POSTING then you have made a mistake.

2202 - VAT Liability 

2210 - PAYE Liability

2211 - NI Liability

2220 - Wages Liability

2230 - Pension Liability

Payroll Journals are typically fairly complex to calculate, if you split wages between two departments, you also have to split the tax, ni, and pensions costs as well, this is where a payroll program pays dividends, it can do all the sums for you and many even do the journal as well.

What nominal code do I use in Sage 50 for Corporation Tax

You don't have a code, you have 2!

In a typical scenario a Corporation tax is calculated and allowed for but not paid until some later date paid quite possibly in the next financial year.

To account for this we have a Corporation Tax account and a Corporation Tax Liability Account.

The Corporation Tax liability account acts as a control account to ensure that when all the payments to the revenue have been made, the whole amount has been used and that there have been no duplicated or missed payments.

The Corporation Tax  Liability Account is typically at 2160

The Corporation Tax account is near to the Reserves account 3290 is a popular choice, typically this is moved into the main P&L 3200 at year end.

The process comprises of a journal to set up the liability, then one or more bank payments to clear the liability and a journal to deduct the dividends from the retained profit and loss.

1/ Journal - Credit Corporation Tax Liability (2160) - Debit Corporation Tax (3290)

2/ Make payments from the bank account of your choice and check the Liability account is zero and that all payments have been made and non duplicated.

3/ At year end Journal - Credit Corporation Tax (3290) Debit Retained earnings / P&L (3200)

What nominal code do I use in Sage 50 for Something Else

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