Staff Salaries

This Overheads code records the cost of staff salaries incurred in running the business. As an expense account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, correcting an error or a refund received).

Real-world examples

Office-based professional services

A design agency's entire team is salaried and paid monthly — the whole £32,000 monthly payroll runs through 7003 (Staff Salaries), since there's no hourly or casual workforce to split out into 7004 or 7005. The entry is a debit of £32,000 to 7003 and a credit of £32,000 to 1200 (Bank Current Account), with no VAT involved, since salary payments sit outside its scope entirely.

Retail with mixed pay structures

A retail chain pays store managers a fixed monthly salary through 7003, while the much larger pool of shop-floor staff is paid hourly through 7004 (Wages — Regular) or 7005 (Wages — Casual) depending on their contract. Because 7003 only captures the smaller salaried cohort here, it's a much smaller number relative to total payroll than in an office-based business where salaries are the whole picture — worth remembering when comparing staff cost ratios across different types of business.

Commonly confused with

Because code 7002 (Directors' Remuneration) sits right next to this one in Overheads, it's a common mis-posting target. Code 7003 is specifically for staff salaries, while 7002 covers directors' remuneration — similar in nature, but keeping them separate is what makes the overheads section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Staff Salaries won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.

Other codes in Overheads