Took me forever to find a video on this that helped me match the different square payroll debits weekly from payroll expenses and which account everything goes in. Thank you so much!!
Thank you Kathy! 😊 I do appreciate you doing this video, it will pay dividends in returns as we are now using a new 3rd Party payroll for my bookkeeping business and wanted to seek a different method than Journal Entries.
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Thank you for providing an excellent tutorial on handling 3rd party payroll input! This saves a tremendous amount of time spent on manually entering each employee's payment info. In a scenario where the payroll taxes are not paid until the end of each quarter and some of the paychecks are not cashed out until next month, could you advise on how to match these expenses to the bank transactions for each month when reconciling with the bank statement balance? Thank you!
Thank you for your comments! For individual / manual checks, Seth David has an excellent video discussing entering those in and how to manage that whole entire process where checks are not cashed, etc. You may also want to do a search on Shannon Theis as her specialty is all payroll, all the time. Hope this helps you!
Well done. Thank you. Great idea using recurring transactions/journal entry to pull that transaction info in from an outside payroll service. If they only have three EE's why don't they do their own payroll calculations?
Greetings Kathy!!! New to QBO. So I needed step by step on how to manually record payroll from ADP and your video is very helpful. Thank you! Question: will there be any additional step to be done if ADP generates paper checks for employees? ADP takes money out of co account for processing fee and to pay for the taxes on company's behalf.
I have not ever had to enter individual checks using this method. Fortunately, there are various videos that can walk you through the process. Seth David has one that you might be interested in. In RU-vid just use this search term and you will uncover more resources than you could ever want: “Entering third-party payroll manual checks QuickBooks”
Great video, thank you for the info. I recently hired my first employee, and so now have to figure out which way is best for me to enter their payroll into my QBO. I utilize a payroll company (which provides several services, including Workers Comp), and the invoice is all inclusive, and the total hits my bank account as one transaction. The actual paycheck is issued by their company, and they bill me for the total: wages, taxes, workers comp, etc. The paychecks bear their name. I don't know if this is common practice for 3rd party payroll companies, or unique to this one. I would say this most closely resembles what you might expect from a temp labor company billing for the use of their employees, only, the employee does in fact work for my company. Having the Workers Comp covered by their company is a lot less expensive than having a policy directly for my company, which is the whole reason I choose to utilize them as a vendor. First, should I bother to go through all these steps, or simply have an expense account for the payroll company, since the paychecks are directly paid by the payroll company, and I'm billed for the total? Secondly, if I should be breaking down payroll as described in the video despite the checks bearing the payroll companies name, is there a good way to reconcile the expense that hits my bank feed to all these transactions?
Thank you for watching the video. As for the method that I use to record third-party payroll, the main goal when recording is to match up how it appears on your bank statement so you would want to follow everything in the order in which I explain it. If the payroll company is handling Worker’s Comp, then how you record it would depend on whether or not it’s handled as a separate line item on the payroll report or if it’s lumped in to for example your payroll fees or the payroll tax remit. The main goal is to make sure that you’re matching everything to how it appears on the bank statement. As far as entry in QuickBooks you don’t need to break out the detail because you already have the detail in the payroll reports. You’re just recording the aggregate data in QBO. Hope that helps you!
@@KathyGrosskurth Very helpful. Thank you for the swift reply. I set up my QBO exactly as you laid out in the video, and it works great! As for matching up the bank feeds, it turns out I was able to assign multiple QBO entries to a single bank feed item, a feature I don't recall QBO having in the past. Thanks again!
Hi Kathy, thank you so much for this video. Makes it easier to understand how all accounts tie together. When the checks are clearing the bank and showing up on my QB bankfeed, how do I record them/clear them? They are defaulting to Payroll Expense, is that correct?
@@KathyGrosskurth thank you for your prompt response! What I am referring to is the individual checks from employees after they are being cashed. On my feed (waiting for me to select "add", they are defaulting to "payroll expense" but would that not make the expense higher than what it is? Like recording it twice? Thank you!
@@Jaimeplaz my method is recording bulk payroll. The process will be slightly different when recording individual checks. Do a search on Seth David and see if you can find some of his videos on recording outside payroll - he has one specifically dealing with recording individual checks. My suggestion: Get as many employees to opt in for Direct Deposit as you can to mitigate the issues with uncashed checks.
Hello Kathy, Thank you so much for this video, it was helpful to me. Could you please send me the link to the video payroll video you mentioned? My payroll is combined (checks-direct deposit) and I have a couple of doubts about it. Thank you in advance.
I recommend searching RU-vid using these search terms "entering outside payroll into quickbooks" and you should see all the videos that Seth David published on those topics (is channel is Nerd Enterprises). Hope that helps!
I don’t foresee the procedures changing. You’re going to enter everything as it’s recorded on the payroll reports. So use your payroll reports to make sure everything is categorized correctly. You may have to create some chart of account items for pre-payments, etc. Those line items would be the only things you might have to add.
Good morning, Kathy. I know you posted this a year ago, but I hope you are still responding. The issue I'm having is that what syncs over from the bank (I'm talking taxes only) doesn't "match" the expense I created in QBO. I use the payroll journal of Paychex, and I've done as both you and Seth suggested (easy peasy). The net pay transaction is syncing over just fine, as is the service fee, but it seems the tax payments don't equal what I've entered in QBO even though my transaction is correct. Expense/check with the EE taxes posting the liability acct and the ER taxes posting to the payroll tax expense acct. What am I missing? Thank you for any insight you can send my way. I'm sure it is an easy fix, but I can't seem to figure this out. Carrie
Hi Carrie. Without seeing what you are referring to, it’s hard for me to diagnose your issue. I would suggest possibly scheduling an hour’s paid session with me so that we can look at it together. If interested, then reach out to me at kathy@ bookkeepingcleanandsimple.com and that way we can get the process started.
Thank you@@KathyGrosskurth . I looked at the Cash Requirements report and it is broken into two-line items. One is the EFT payment of taxes and the other states that "we are responsible for paying these amts" which looks like ALL California taxes, including EE and ER. Those tax payments haven't been debited in the checking acct. So, not sure what's going on. I figured I'd need to create two "checks" for tax liability and ER taxes, one that clears out via EFT and the other they said they don't pay. However, I don't see the one that needs to be paid in my system. Maybe it is added to multiple pay periods. They get paid weekly. Do you happen to have time this week?
@@CarriePavao right now I have some time Thursday and Friday morning of this week. Just reach out to me by email and we’ll get something set up. I’ll also need to invoice you for the time have received payment prior to starting. I’m guessing it probably won’t take no more about an hour to start. My rates for training and consulting are listed on my website at this link: www.bookkeepingcleanandsimple.com/training-and-consulting
Great video! Can you tell me why I should use the check function vs. Expense function when recording in QBO when the amounts are auto debited from the bank? The check function is messing up the auto sequence number. Just wondering the rationale.
Good question... I suppose you could use either the Expense or Check transaction type in QBO. But in Desktop, there is no Expense transaction, only a Check transaction. So I tend to use a Check transaction in the video for those using Desktop, makes it easier for Desktop users to "transfer" the information when setting everything up in Desktop. Thanks for the question, hope I answered it to your satisfaction!
Hello Kathy, thanks for the tutorial, my question is this: when you enter the *Payroll Net Pay you actually add the Gross Payroll amounts of $7238.46, the problem is that the Gross Payroll, not the net payroll amount shows up as a Payroll Expense on the Profit & Loss Report, but it should be showing the Net Payroll amount, not the Gross as now the payroll expense is overstated. How do I reduce the Gross to Net on the P&L Report.
Hi there. If you follow the steps exactly and set up your recurring transactions exactly as demonstrated in the video, then your entries should match your outside payroll reports.
Hello, I am new to bookkeeping and using QBO. I have two questions. We use an outside payroll company that is listed in my Vendor list. The bank transactions are connected to our QBO account already, although payroll does not show up at all in my COA. My first question is, I have a vendor labeled "Insperity" which is our payroll company. Do I also need to create a vendor titled "Payroll net payroll? And #2, what is officer compensation?? I would really appreciate it if you did another video and went through the entire process a little slower. I need help!! Trying to get the 2020 books up to date. Also, do you have a video on reverse bookkeeping? That's what I am doing. We uploaded our bank accounts to QBO and I am going backwards. It's a mess and I am at a loss of what all to do?
Good morning, Kelly. Yes, you would need to set up the vendor names as explained in the video. You would need to set everything up initially and save as recurring transactions. Then use those recurring transactions each pay cycle to enter the payroll net pay, payroll tax remit, and payroll fees. If done correctly, then the transactions coming through your bank feeds should match the transactions manually entered. Officer compensation is separated out from regular compensation for S corps officers receiving a paycheck (consult your tax professional or CPA for more info). Hope that helps. If you need any additional instruction, on the 3rd party payroll process, then I am available for individual consult. Check out my website for my rates (www.bookkeepingcleanandsimple.com/training-and-consulting) and to schedule a free initial consultation.
I would probably think you wouldn’t have to enter it manually, but then again I am not a payroll “expert” by any means. I would suggest consulting with someone who knows QuickBooks and also works with the ins and outs of payroll who might be better give you the advice you seek. Sorry I couldn’t be of much help!
Hi Kathy! Thanks for the video! Can you tell me the best way I can track NYS Disability Insurance since it is not withdrawn from my business checking account form my payroll service. It is, however recorded in the summary. Thanks Dan
Hi Dan. Your disability insurance will most likely be handled as an expense item on the Profit and Loss. You can use an Expense or Check transaction to record depending on how it was paid (ie CC, ACH, etc.) Hope that helps.
@@KathyGrosskurth thanks for the response Kathy! It helps a little... I am a single person s Corp. The disability tax is withheld from the employee's check(me) and but not paid by the payroll service. They said that I need to keep it aside for an annual payment. I created a payroll liability account for it.... Is this correct?
If it’s been paid, then you would track it is an expense. If it has not been paid yet, then yes you could track it is a liability and then when it’s paid do a general journal entry to debit the expense and credit the liability account. That’s one of the few exceptions to use of general general entries in QuickBooks that I would recommend!
What if the payroll is ADP, they made 2 charges per month (biweekly) and have ADP wage, ADP tax and Fees 3 checks-debits , I used an AJE to record but have sometimes liabilities discrepancies
You would use the same method. Make sure you follow the steps in order as outlined in the video. Your ADP wage will be the direct deposit, your ADP tax would be the payroll tax and your fees would be the fees. Remember you only have to set up the recurring transactions once in the beginning. After initial set up, you would use those recurring transactions and just plug in the different numbers for the accounts needing debited, credited etc.
In QuickBooks you don’t need to use a general journal entry to post the payroll. It’s better to do it the way that is demonstrated in the video. Not that it’s wrong to use a journal entry, but it’s best to use the actual workflows built into the QuickBooks platform.
