For instance, when you pay your FICA taxes, you’d book half of the amount to the FICA payroll liability account and the other half as payroll tax expense. Hi- I have recently began consulting at a company that uses Quickbooks. When you pay your payroll liabilities, you book the employee-paid portion to the associated payroll liability account and the portion you pay as a payroll expense. Salaries & Wages, FICA and Medicare are expense accounts, the accounts for employee deductions others are current liabilities: Account You will probably need to add a few accounts. Memorize the following journal entry and enter it each time you get a payroll report from your payroll service. This entry will not have any effects to the Profit & Loss report as there isnt any entry to the income or expenses account. Go back to your Balance Sheet report, you will find that your Salary Payable account will be reduced. Journal Entry If Your Payroll Service Handles Payroll Taxes Double entry for this Write Cheque transaction is debiting Salary Payable account and crediting Bank account. For instance, when you pay your FICA taxes, you’d book half of the amount to the FICA payroll liability account and the other half as payroll tax expense.
Salaries & Wages is an expense account, the accounts for the employee deductions are current liabilities: Account Journal Entry If You Handle Payroll Taxes These things are not payroll expenses because your employee is paying them rather than you. This is a mixture of payroll expense and payroll liabilities that need to be paid sometime in the future–things like state and federal payroll taxes, medical insurance, 401(k) contributions, etc. Net payroll is what your employees are paid after deductions. Gross payroll is the total amount you pay your employees before deductions. The key to entering your payroll correctly is to understand the difference between gross and net payroll. If your payroll service handles your payroll taxes, the amount you pay is higher because employer-paid payroll taxes are tacked on.If you handle your own payroll taxes, the amount you pay your payroll provider is lower than your salary expense because of employee deductions.The problem is that the amount deducted from your checking account for payroll never matches up to your total salaries paid.
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Others want to save time by entering it as a journal entry, but don’t know how to enter it correctly. Some choose to re-enter the entire payroll in the Employee Center. But this often leads to confusion about how to enter payroll into QuickBooks. Even though QuickBooks offers several integrated payroll services, many businesses choose to continue using an outside payroll service like ADP or Paychex.
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