Hi, first time preparing an LLP set of accounts and having run the disclosure check I seem to be left with one query to resolve. The partnership agreement states that the partners receive a salary of X plus the partnership pays the tax on the salary. I appreciate that the salary is treated as members remuneration charged as an expense but what do I do about the tax element which is paid after the year end. Do I debit the salary expense and credit a tax reserve in the accounts or simply reflect the tax elemant in the profit allocation and debit the salary to drawings when paid. Essentially if I credit a tax reserve I end up with a lower capital account.
Any help would be greatly appreciated.