PSA L&P - Import: Payroll entries when using 3rd party payroll processor

Payroll  entries when using 3rd party payroll processor

PROBLEM:  I'm not using the Payroll System, and I would like to enter the payroll I've manually calculated into the Ledger & Payables System.

You have two options.  You can enter a Journal entry (no employee information will be stored) or you can enter a bill and assign an EFT check number (click the Assign Check Number link) to it (if your payroll company has your check stock then you can enter the real check number that was used).

SOLUTION #1

Enter a Bill per Employee.

You will need to create each Employee as a vendor and then do the following.

From Ledger & Payables, click Vendors | click the down arrow at Quick Find and select the Payroll Vendor and click the Find Vendor button at the bottom. 

Click the Account Distribution link.

 Here is what each line will represent:

         Line #1 – The Gross Pay of the employee (Expense Account)

         Line #2 – The Churches portion of Social Security taxes (Expense Account)

         Line #3 – The combination of both the Employee’s and Churches portion of Social Security Taxes (Liability Account, use a negative)

         Line #4 – The Churches portion of Medicare Taxes (Expense Account)

         Line #5 - The combination of both the Employee’s and Churches portion of Medicare Taxes (Liability Account, use a negative)

         Line #6 – The Employee’s Federal Tax withheld from their paycheck (Liability Account, use a negative)

         Line #7 - The Employee’s State Tax withheld from their paycheck (Liability Account, use a negative)

         Line #8 - ?? - Each Deduction the employee has (Liability Account, use a negative)

         Line #?? - ?? - Each Benefit the employee has, you will have to enter both an Expense account line for the cost to the Employer and a Liability Line (use a negative) to record the amount owed.  This will mean you have to enter 2 lines, one each for the Expense account and the liability account.

The total at the bottom should represent the NET amount of the employee’s check.

You will then enter a bill for each employee and when you select that vendor it will alert you that the vendor has distributions, select OK to apply the distributions.

NOTE: if you have hourly employees you can opt to enter 0.00 as the distribution amount in the steps above and then you will simply type in each amount for the appropriate line item on the bill.

By entering your employee’s checks in this manner, you will book all of the churches portion of social security and medicare taxes properly, and the amounts you’ll need to pay the IRS for the taxes will be automatically waiting for you in the liability accounts.

SOLUTION #2

Enter a Journal Entry,

Click on the Journals Icon.

Here is what each line will represent:

         Line #1 – The Gross Pay of the employee (Expense Account, this would be the total gross pay for that expense account for all employee who are paid from that account, you may need to repeat this multiple times if you pay your employees out of different Expense accounts)

         Line #2 – The Churches portion of Social Security taxes (Expense Account)

         Line #3 – The combination of both the Employee’s and Churches portion of Social Security Taxes (Liability Account, use a negative)

         Line #4 – The Churches portion of Medicare Taxes (Expense Account)

         Line #5 - The combination of both the Employee’s and Churches portion of Medicare Taxes (Liability Account, use a negative)

         Line #6 – The Employee’s Federal Tax withheld from their paycheck (Liability Account, use a negative)

         Line #7 - The Employee’s State Tax withheld from their paycheck (Liability Account, use a negative)

         Line #8 - ?? - Each Deduction you have (Liability Account, use a negative)

         Line #?? - ?? - Each Benefit you have, you will have to enter both an Expense account line for the cost to the Employer and a Liability Line(use a negative) to record the amount owed.  This will mean you have to enter 2 lines, one each for the Expense account and the liability account.

        The last line will be an offset to your checking account for the Net Pay of all employees (optionally this can be your first line).

When you are done your Debits and Credits must equal.

When you  pay your tax bill, you’ll create a bill to whomever you pay the taxes to (IRS, local bank, etc.) and use the liability accounts you used for the Social Security, Medicare, Federal and State Taxes (You probably pay your state taxes differently than the others, but included it in this example just to give you an idea).

 When you pay the IRS, this will automatically lower your liability!  So paying each employee increases the Liability, paying the IRS lowers the liability!

You can even choose to Memorize these transactions and the system will automatically create them once a month or semi-monthly (whenever you normally get paid) so you don’t have to re-create the wheel each time!

 

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