What is a G-account

For SMEs that work with a G account, the problem is that there is money on it that may only be used to make payments to the tax authorities and social security contributions. In other words, you may have sufficient liquidity, but you may not be able to use it to make ‘normal’ payments.

This is because a G account is a special blocked bank account that may only be used to make payments of sales tax, payroll tax and premiums to the tax authorities or to the G account of your subcontractors. You cannot make other payments from a G account.

Who is the G account intended for?

The G account is used in companies that use staff hired from a temporary employment agency or payroller. In that situation, the ‘main contractor’ is responsible for paying payroll tax and social security contributions. If this is not paid by the employment agency or payroller, the tax authorities will hold the main contractor responsible.

For this reason, a certain percentage of the turnover (often varying from 35 – 45%) is reserved on the G account.

Why do you need a G-account

You need a G-account if you work with subcontractors and want to be sure that you cannot be held liable for non-payment of payroll taxes and VAT by your subcontractors.

The system of these G-accounts ensures that sufficient cash is reserved for the payment of social security contributions based on the realized turnover. Because nothing other than VAT and social security contributions can be paid from this G account, you can be sure that this is 100% arranged.

With this account you are not allowed to:

  • Transfer to other accounts
  • Have a negative balance
  • Make cash deposits or withdrawals

How to open a G-account

Applying for a G-account starts with the tax authorities. By completing an application form you can obtain approval and receive a so-called ‘G-account agreement’. You can then open a G-account at the bank with this agreement.

What is the correct percentage for the G-account

The percentage that you must reserve of your turnover on the G-account can be determined in mutual consultation with your subcontractor and is between 25-55%. When hiring personnel, this quickly amounts to 50% (payroll taxes and sales tax) and for subcontracting 30% (payroll taxes) of the invoice amount. You should also check whether the lender has a NEN certification. In that case, a fixed percentage of 25% of the invoice amount including VAT is sufficient to be exempt from the WKA.

Is there too much money in my G-account?

A percentage of 25-55% is often sufficient to meet payroll tax and social security contributions. In fact, this percentage is often too high rather than too little. And if the percentage is too high (which means that an unnecessary amount of money goes to your G-account), this can lead to too little money for normal business operations.

If you see that too much money is going to your G-account, you can submit a request to the Tax Authorities to unblock this. However, in practice this is often a hassle and you would rather avoid it.

To prevent this, you can use the G-account extension in CashController. This allows you to see exactly how much money goes to your normal business operations. For example, if you look at the total cash flow planning in the practical example below, there seems to be no problem:

Cashflowplanning inclusief G-rekening

There appears to be sufficient room in the account until the end of the year to meet the obligations.

In CashController we can split this cash flow into the part that concerns the G-account. In the picture below we see that sufficient reservations are being made.

Cashflowplanning G-rekening

And that in itself would not be a problem, unless too high a reservation means that too much goes to the G-account and therefore too little ends up in the normal bank account, as you can see from the example below:

Cashflowplanning normale bankrekening

In this screenshot you can see that there is not enough money left in the normal bank account to meet the obligations. Based on this, you can see exactly when you are (unnecessarily) reserving too much money to your G-account. And when you see this, you can then choose to reserve less money on the G-account.

This can be done in total (a general percentage for everything), but you can also set this percentage per customer:

g-rekening-percentage-per-klant

By lowering these percentages, you can assess the effect of this adjustment before you implement it in your business operations. This way you can determine in advance which reservation percentage will leave sufficient money on your normal account, while you still continue to meet your social obligations.

In short, with CashController’s Module G-account you can:

  • See if too much money goes to the G-account;
  • Assess how you can adjust the G-account % so that you can also meet your normal obligations;

Would you like to know more about CashController and the G-Account? Then request an online demo without obligation!

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