Employee training costs are an important investment that helps businesses improve their team's capacity and maintain a competitive advantage. However, Where is the cost of employee training accounted for? Optimizing finances while complying with accounting and tax regulations is something that many accountants and business owners are concerned about.
This article will provide detailed instructions on how to account for employee training costs in accordance with current accounting standards. Understanding Where is the cost of employee training accounted for? not only helps businesses easily manage costs while also maximizing tax benefits.
Index
ToggleEmployee training costs are expenses that businesses spend to improve the qualifications, skills and expertise of employees, in order to meet job requirements and develop the business. According to Clause 3, Article 62 of the Labor Code, training costs include:
Understanding tax regulations will help businesses know Where is the cost of employee training accounted for? to enjoy tax incentives
Conditions for deduction:
As prescribed in Article 4 Circular 96/2015/TT-BTCExpenses for vocational education and vocational training for employees are included in deductible expenses when determining taxable income for corporate income tax if they meet the following conditions:
Specific example (Case Study):
Quote:
“Expenditures for vocational education and training activities for workers include: costs for teachers, learning materials, equipment used for vocational education activities, practice materials, and other costs to support learners.”
Deduction conditions:
According to Article 14 of Circular 219/2013/TT-BTC, input VAT of goods and services used for production and trading of goods and services subject to VAT is fully deductible.
However, Clause 13, Article 4 of Circular 219/2013/TT-BTC stipulates that teaching and vocational training services are not subject to VAT. Therefore:
Specific examples:
Quote:
“Input VAT of goods and services used for production and trading of goods and services subject to VAT is fully deductible.”
According to Clause 2, Article 2, Circular 111/2013/TT-BTC, benefits in cash or non-cash other than salary and wages paid by the employer that the taxpayer receives in any form must be included in personal income taxable income.
However, Point d.6 Clause 2 Article 2 Circular 111/2013/TT-BTC regulations:
Specific examples:
Quote:
“For payment of training fees to improve qualifications and skills for employees in accordance with the employee's professional work or according to the unit's plan”
According to Circular 200/2014/TT-BTC, the Where is the cost of employee training accounted for? will depend on the extent and nature of the expenditure. Employee training costs may be recognized directly in business management expenses or allocated gradually through prepaid expenses, depending on the level and nature of the expense.
Explain “costs incurred that provide future economic benefits”:
Costs that generate future economic benefits are expenses incurred by the business now but that will generate benefits in subsequent accounting periods. In the case of employee training costs, if the training program is expected to improve the skills and performance of employees over several accounting periods, the business may consider amortizing the cost over time rather than recording it in full in one period.
Method 1: Direct recording
When training costs are insignificant or primarily affect the current accounting period, the enterprise can record them directly in business management expenses.
Entry:
Accounting chart:
Account | Interpretation | In debt | Have |
642 | Business management costs | xxxxx | |
133 | Deductible VAT (if any) | xxxxx | |
111/112/331 | Cash/Bank/Payables to Vendors | xxxxx |
Note: For this expense to be accepted when calculating corporate income tax, there must be full invoices and valid documents such as decisions to send employees to study, training contracts, financial invoices and valid payment documents.
Method 2: Gradual allocation
For large training costs that bring economic benefits over many accounting periods, businesses should record them as prepaid expenses and gradually allocate them to the following periods.
Accounting entries when training costs arise:
Periodic allocation entries:
Accounting chart:
Account | Interpretation | In debt | Have |
242 | Prepaid expenses | xxxxx | |
133 | Deductible VAT (if any) | xxxxx | |
111/112/331 | Cash/Bank/Payables to Vendors | xxxxx | |
642 | Business management costs | xxxxx | |
242 | Prepaid expenses | xxxxx |
Note: The maximum allocation period shall not exceed 3 years from the date the expense is incurred.
Criteria | Live Recording | Gradual Allocation |
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Choosing the method Where is the cost of employee training accounted for? These factors need to be carefully considered.
Choosing the right accounting method will help businesses manage their finances effectively and comply with current accounting regulations.
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To account for employee training costs In order to comply with regulations and in a reasonable manner, businesses need to prepare all necessary documents and certificates. Below is a list of important documents and corresponding forms:
Preparing the above documents completely and accurately will help businesses account for employee training costs reasonably, while ensuring compliance with current tax and accounting regulations.
In business operations, employee training costs can arise in many different cases. Accounting for these costs must comply with accounting and tax regulations to ensure validity. Below are special cases that businesses should pay attention to:
When a business has not yet officially started operating but has incurred employee training costs, these expenses are considered long-term prepaid expenses. The business can gradually allocate these expenses to business expenses within a maximum period of 3 years from the date of starting operations.
Accounting:
When training costs arise:
When allocating costs:
Training costs to improve the qualifications of current employees are included in the reasonable expenses of the enterprise if they meet the conditions of practicality, are related to business activities and have full legal invoices and documents.
Accounting:
Training costs for new employees may include expenses such as the cost of hiring instructors, learning materials, training support equipment, etc. These expenses are considered reasonable expenses if they directly serve the employee's work at the enterprise.
Accounting:
When a company sends employees for training abroad, the costs incurred may include tuition, travel, and accommodation. If these expenses are directly related to the job and meet the requirements of invoices and documents, the company can include them in the reasonable expenses.
Accounting:
Choosing the method Where is the cost of employee training accounted for? The factors and circumstances listed above need to be carefully considered.
If a business sponsors or supports training costs for employees but does not directly serve business operations, these expenses will not be included in reasonable expenses when determining corporate income tax.
Accounting:
Step 1: Identify training needs:
Step 2: Set training goals:
Step 3: Choose training methods and forms:
Step 4: Detailed planning:
Step 5: Estimated training costs:
Calculate expenses such as:
Create a detailed cost estimate table to control your budget effectively.
Step 6: Approval and implementation:
Step 7: Evaluation of training effectiveness:
Below is a sample Training Plan that businesses can refer to:
During the operation, training and improving skills for employees is an important factor to help businesses develop sustainably. However, management and optimization employee training costs is always a challenge for managers and accountants. Below are some methods to help businesses control and optimize training costs effectively.
Bizzi Expense is an advanced cost management solution that helps businesses automate processes and control budgets effectively. Applying this software brings many benefits such as:
With the above features, Bizzi Expense not only helps businesses optimize training costs but also improves overall financial management efficiency.
Businesses can sign up for a trial of Bizzi Expense at: https://bizzi.vn/dang-ky-dung-thu
By applying the above methods, businesses not only optimize employee training costs but also ensure the quality and effectiveness of training programs.
Accurately accounting for employee training costs helps businesses control finances effectively, ensure transparency in accounting books and comply with tax laws. When businesses invest properly in training, employees will have the opportunity to improve their skills, contributing to improving work productivity and increasing value for the organization. At the same time, tracking and fully recording training costs also helps businesses take advantage of tax incentives, reducing financial burdens in the long term. Therefore, business owners and accounting departments need to clearly understand current regulations, plan reasonable training and perform proper accounting to optimize the budget, improve operational efficiency and maintain sustainable development.
In short, the precise determination Where is the cost of employee training accounted for? is crucial to effectively manage finances, comply with accounting and tax regulations, and help businesses take advantage of tax benefits.
If the training service is subject to VAT and the business has a valid invoice, the input VAT is deductible. However, many training services are not subject to VAT, so there is no input VAT to deduct.
Signing a training contract with employees is necessary, especially when the company is sponsoring the training costs. This contract helps define the rights and obligations of both parties, including the commitment to work after training.
If the training contract or commitment between the two parties contains a provision on the refund of training costs when the employee leaves the job before the committed period, the business has the right to request the employee to repay according to the agreement.
If the training cost is of large value and brings economic benefits over many periods, the enterprise should record it in the prepaid expense account (TK 242) and gradually allocate it to the corresponding accounting periods, not exceeding 3 years.
The dossier includes: decision to send employees for training, training contract with the service provider, valid financial invoice, payment documents and commitment of the employee after training (if any).
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