• Salary slips if salary paid from personal account

I have a company registered as private limited in 2016, May. It continues to registered today but operation is nill today. During its active period, the company had revenue less than 1 Lakh. We did not create any company bank account. We were waiting for revenue to pick speed but it never did. So we ended up paying salary from our own accounts. 

Can I provide salary slip to my now ex-employees from my company? How would this affect me during audit of the company?
Asked 5 months ago in Audit from Gurgaon, Haryana
hello,

You can show this as expenses born by director on behalf of the company and the amount is payable to director ( Loan from Director on liabilities side of the balance sheet)

Thanks 
Ruchi
CA. Ruchi Luthra
CA, New Delhi
4 Answers

4.0 on 5.0

Dear Sir,

You can issue salary slips to the ex-employees as it was an expense of company only and all the employees were on the payroll of the company during that time. The only difference is of the mode of payment which was done from your accounts and not from company accounts. It will not affect you during audit basis the above reason given by you. Auditors can ask why there is an o/s balance against you, for which you can give the same reason which is genuine and valid.

Keep all other documents with you to proove that the payment was made for salary expense only and not for other transactions.

Regards
Vivek Kumar Arora
CA, Delhi
857 Answers
15 Consultations

5.0 on 5.0

Yes, you may give the salary slips from your company but kindly check that no TDS was required to be deducted from their salary otherwise the company will be in default. 

Under audit the amount paid by you to the employees can be shown as working capital loan given by the directors to the company.
Bharat Poplani
CA, ZIRAKPUR
32 Answers

4.6 on 5.0

This is grave error at your end. you should now open a bank account and payback the amount that you have paid from your own account to the employees. Show this transaction as a loan and you would be able to give payslip to the company. But this should be an exception rather than as a norm. 
Rohit Vyas
CA, Mumbai
10 Answers

4.0 on 5.0

It will be shown as Director liability in company's books and  will be allowable as deductio. In company's book there wont be problem
Vidya Jain
CA, Kolkata
553 Answers
12 Consultations

4.8 on 5.0

Yes, you can...

Since you paid salary from your personal Bank account on behalf of your company as a promoter.. & you have full right to recover the same from the company provided you you pay as per the contracts or agreement.

Make sure, Co. name should be mention in the salary slip, not yours...
Aman Narula
CA, Faridabad
2 Answers

Not rated

Hi

You can show such salary paid from you account as loan to company. Salary slips can be issued by the company.

Check whether TDS provisions are adhered to.

Lakshita Bhandari
CA, Mumbai
1467 Answers
40 Consultations

5.0 on 5.0

Hi,

Looking at the limited information supplied by you, I have understood as below:

As company had no bank accounts, the revenues were not earned by the company. As you said the total revenues were less than Rs. 1 Lakh, they were earned either in cash or in some other person's bank accounts. Similarly, the expenses like salary were paid from some other account, like you said from your own account.

Based upon the above information, the answer is as below:

Yes, you can, rather you should, provide Salary slips to your ex-employees from the company itself, since the persons were employees of the company. During the audit of the company, the same shall be treated as loan from you to the company. If you are/ were a director of the company, the same shall be treated as loans from director(s).

I hope the query is cleared. Feel free to revert for any further clarification.

Regards,
CA. Sunny Thakral
Sunny Thakral
CA, Delhi
224 Answers
4 Consultations

5.0 on 5.0

Yes, you can provide salary slips to the employees. In that case, you should show salary as expense in company and amount paid by director as loan from director.
Harsh Kumar Garg
CA, Panipat
26 Answers

5.0 on 5.0

This is an error on your part and you should have opened a bank account in the name of the company irrespective of the revenues being generated from it.
However, you can go ahead and give the salary slip to the ex-employees. I hope there was no requirement to deduct TDS from the employees salaries. If that is the case, the company may have defaulted.
However, if you have all the supportings (Salary slips, offer letter given to the employees, etc) the amounts paid by you can be considered as loan from Director and the expenses can be allowed as business expenses.

Hope this clarifies.
Nikhil Khanna
CA, Mumbai
698 Answers
3 Consultations

5.0 on 5.0

In above case study there is two separate aspect First you paying Salary on behalf of Company and second Company give salary to employee , therefore you not direct concern to employee and company  can be provided salary slip to employee because its different transaction . you only paying company as a Loan .

As far as Audit Concern In company account your payment of employee shown in Liability Side as Advances received from Key Personal and Payment of Salary included in Indirect Expenses.  
Nitesh Jaisinghani
CA, GWALIOR
3 Answers

Not rated

Hi,

In your case you can follow the procedure mentioned below -

1) Issue salary slip in company's name 
2) Further, amount paid out of personal bank account, can be shown as Director's loan in company's financial statements and claim salary as an expense in statement of profit & loss.

Thanks
CA Shubham Jain
Shubham Jain
CA, EAST DELHI
9 Answers

Not rated

Dear Sir,

My assumptions for above query:
1. You have paid salary in cash
2. You have paid the amount from your own funds which you have saved from your previous earnings
3. I understand you have not got any share capital into the company
4. I am presuming the amount involved is less than Rs.20k per employee per month

Options available:
1. Show the amount you paid as salary as Loan given to company - show it in pre-operative expenses under assets side and unsecured loan from directors under liabilities side
2. The above will take care of all audit related issues.
Vishal Mudumba
CA, Vijayawada
15 Answers

5.0 on 5.0

Yes, you can provide salary slip to your employees. The amount paid by you on behalf of the company will be recorded as loan taken by the company from you in the books of the company.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
2929 Answers
123 Consultations

5.0 on 5.0

As you paid salary from your own account,  show that amount as loan in company books and book salary expenses..You can issue salary slips too .

Further as per applicability of company act 2013, company can accept loan from director provided a declaration is furnished by director that the amount is not out of borrowings .. its out of own fund only.
Such disclosure to be made in board's report from audit prespective.
Swati Agrawal
CA, Indore
352 Answers

5.0 on 5.0

There will not be any problem during the audit. Show the amount paid by you as loan from director in the books of the company.

Also, make sure the salary slip are issued under company's name.
Harpreet Singh Chawla
CA, Mandsaur
5 Answers

Not rated

You can provide salary slips to your ex employees. For source of funds you can show same as loan given to company
Sourabh Maheshwari
CA, Bhilwara
7 Answers

Not rated

You can book your salary amounts given to employees as unsecured loan given to the company. We can file returns for the loss of business
Kiranmai
CA, Hyderabad
10 Answers

Not rated

Hi,

First of all, how were you carrying on business without Bank account in the name of the Company? It's not advisable to pay the official expenses of the Company from Director's personal accounts.

Since you have already done that, easier way out now is to treat the same as loan from Directors and give proper disclosures in the Financials
Pradeep Bhat
CA, Bengaluru
450 Answers
28 Consultations

5.0 on 5.0

Hi,

Yes, you can issue salary slips to your ex-employees. The salary paid from your account will be shown as short terms loans to the company and the salary expense will be shown as an expense in the books of the company.

Regards,
Keerthiga Padmanabhan 
M.Com., CA, LL.B
Keerthiga Padmanabhan
CA, Greater Mumbai
784 Answers
23 Consultations

5.0 on 5.0

There are two options available:
You can show the salary paid as your expenses on behalf of the company and claim your reimbursements.
Otherwise, you can show under head Loans & Advances.

Thanks,
CA Sourabh Pahuja
Sourabh Pahuja
CA, Delhi
62 Answers

5.0 on 5.0

Hello,

You can show that you have paid the salary on behalf of the Company and show it as a loan provided to your company. 

If the transaction is for F.Y. 2016-17, then you should have filed your returns by getting your company's accounts audited by now.

Thanking You. 

Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Rohit R Sharma
CA, Mumbai
2089 Answers
91 Consultations

5.0 on 5.0

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