How To Enter Payroll Into Quickbooks

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How to Enter Payroll into QuickBooks. Is the question I get most. what is the solution?

The Complexity of recording payroll:

Entering payroll is one of the top 10 errors I see as a professional bookkeeper. How many of you knew the following facts:

Salaries and Wages should be recorded at the Gross level and not the amount of the employee check.
Employer taxes should be added to the profit and loss under payroll taxes.
Employee taxes should not be entered on the profit and loss. They should be recorded as a payroll liability.
Checks written outside of payroll should be called into the payroll company and added to their system.
Manual checks should not be coded to Salaries and Wages in QuickBooks unless they are a part of the payroll companies figures.
Subcontractor checks should not be coded to Salaries and Wages.
Garnishments should not be recorded on the companies profit and loss.
Employer taxes should match the payroll companies figures in QuickBooks.

It is true there is a level of complexity with the payroll entry. The main point is that your salaries and wages lines match what your payroll company has reported.

The employer taxes need to match what the payroll companies reports are reflecting.

The employees take home pay needs to be accurate so the bank account can be easily reconciled.

The Payroll Journal Entry:

The payroll journal entry is the way your bookkeeper will record payroll into your financial software. It is an adjusting entry. The basic entry will:

Debit Salaries and Wages $4,003.08
Debit Officer Salary and Wages $3,076.92
Debit Employer Taxes $541.62
Credit Payroll Liabilities $2997.55
Credit Bank $4624.07
Total $7621.62
Employer Taxes are recorded on the companies profit and loss.
The payroll liabilities show the amount of taxes to pay as a debt to the company.
The net amount of the employees check is matching what is sent to the bank.

The figures are for illustrative purposes and are not reflective of an actual payroll. They show the principal. Salaries and wages are at the Gross level. ( Not the amount of the employees check)

In Summary:

The “How to Enter Payroll into QuickBooks” problem is easily solved. Take your time and be sure to balance your entry. Payroll needs to be at the Gross level. Payroll to salaries is a debit Employer taxes – Fica ( Social Security and Medicare) are debits

The credits are for the net amounts at the bank and payroll taxes.

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