[RAND]

Is Health, Dental,Vision & Life Insurance a liability or a cost of sales? I always thought that is was a payroll liability, but now I have seen it as a payroll fringe. I know that it is included as a fringe when you are calculating fringe benefits for certified payroll, but listed as a payroll fringe/cost of sales in the chart of accounts is a little confusing

[morgaine300]

I think you are confusing how payroll is actually done with how you might record something on the books. What is recorded on the books is what will end up on your financial statements. But doing the payroll itself is internal work and there may be things done there that have nothing to do with your books.

(If your certified payroll is something going to an agency of some sort, that is a separate requirement and has nothing to do with your books. It's sort of the same as when you have to file payroll tax reports to the IRS and such, but that isn't the same as recording the payroll on your books.)

Something can be a cost of sale AND a liability at the same time. The insurance itself isn't a liability. A liability is either money due or some obligation that must be met. If you haven't actually paid for the insurance yet, then you still have the liability of paying for it. It doesn't represent the insurance itself - it represents the amount still due to be paid. If this is something being paid to the employees as part of their wages, and therefore is paid and not still due, then it should be credited to cash along with everything else.

The expense you charge it to is a little up to you. If you want to lump everything into Fringe Benefits as an expense account, you can do that. Or you can call it what it is: Health, Dental, Vision & Life Insurance Expense. (A little long.) Or just Employee Insurance Expense. Whatever works for you - as long it's logical and you can tell what it is.

As for "cost of sales" - um, that's a cateogory. If the employee's wages are under cost of sales, then put the insurance there too. (Anything like taxes or benefits like insurance, vacation pay, etc. should go in the same category as where the wages themselves are.)

You have to keep in mind that your certified reports are following that agency's rules. Your books are following GAAP's rules.

This is all based on my understanding of your question. I'm also assuming this is a small company or it's doubtful the same person would be doing payroll and the books. If this is not answering the question, then clarify a bit more.