Payroll expenses

kw5 · ‎April 30, 2019

We currently use an outsourced payroll service that charges our bank account for employee and employer payroll taxes in one lump sum and we handwrite checks to our employees. The monthly cost of using the payroll service is charged on it's own. I don't record any of this in quickbooks until it hits our bank account and shows up under "For Review" in the "Banking" tab. When the payments show up here, I categorize the lump sum expense of employee and employer taxes as "payroll expenses," and I categorize each payroll check as either "Officer Salaries" or "Staff Wages." The monthly payroll service fee is categorized as "Payroll Fees." So, Officer Salaries and Staff Wages aren't shown in Quickbooks until the employee cashes the check. And I know that payroll taxes should be broken down into employee and employer taxes.

What is the best way for us to record payroll in quickbooks, or is the way we are doing it correct?

GlinetteC · ‎April 30, 2019

Hi there, kw5.

You can create a Journal Entry. Record both employee and employer's portion as payroll expenses. Then, separate them as sub-account.

You can use this hierarchy:

Parent account: Payroll Expenses Employee's portion.

sub-accounts: SS, Medicare, State tax and etc.

Parent Account: Payroll Expenses Employer's portion.

Sub-accounts: SS, Medicare, State tax, and etc.

Once done, split them based on the tax breakdown from 3rd-party that handles your payroll. Do this from your Banking page.

You can check this out these helpful articles:

You can also reach out to your accountant with regards to recording your payroll.

Feel free to visit again in the community. We're always here to help.

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