Accounting & Bookkeeping & Small Business Forum

[Maliks]

how to post general entry for employee and employer taxes and payment of payroll cash

[dp1903]

If this is for QuickBooks, you don't want to make a general journal entry for such transactions, but use the screens for this function provided for within QuickBooks.

If this is homework, this is too simple for you not to know. I suggest you at least attempt the transaction so we can help you. You ain't gettin a free lunch from me on this one. It's in your book!!!!!!

[Maliks]

thanks anyway....im doing quickbooks

[dp1903]

Posting cash receipts or payments of any type within QuickBooks are provided for at specific screens within QuickBooks. QuickBooks has the capability to calculate payroll taxes, federal and state, for you automatically if you use it's payroll functions. Even if you don't, a payroll should be done at the Write checks screen instead of a general journal entry. Making journal entries for cash transactions of any type can mess up your cash basis accounting within QuickBooks. That applies to cash receipts also. You can't use it like a manual accounting system on cash basis and expect the results to come out right. You have to use its built in functions. Just warning you.

I'd recommend getting a Quick Books book for your version. Else you're flying blind without instruments. You will crash. Here's a forum for asking questions about QuickBooks. You'll get expert guidance there.

http://quickbooksgroup.com/

[Maliks]

thanx alot for your guidance

[dp1903]

Looking this up in my QuickBooks book, I see that if you are writing the checks manually and calculating the taxes manually you can go to Write Checks within QuickBooks to record the info by check. That way reconciling your bank account will be easy.

If you have an outside payroll service writing the payroll checks then a journal entry is the correct method to use to get the info into QuickBooks.
To Record the Payroll
Go to Banking | Make General Journal Entries.
Click in the account column and click the arrow to see a drop-down list of your chart of accounts.
Select "Salaries and Wages" [Expense] or whatever you have termed your expense account. Debit it for the Gross Payroll.
Click in the account column again and select "Federal Withholding Payable" [liability]. Credit it for the amount of federal withholding.
Click on the account column and select "FICA Payable" [liability].
Credit it for the amount of FICA withheld.
Continue to select the other liability accounts and credit those accounts, i.e. medicare taxes payable, any state income taxes payable, 401(k) contributions payable, other deductions payable.
Lastly, credit your Bank Account or Payroll bank account [asset] for the Net Payroll paid out.

Click in the memo field at the start of the journal entry to record a comment about the reason for the journal entry.

Check to insure the debits and credits equal. Then record the transaction.

The entry should look something like this:
SALARIES & WAGES EXPENSE__________________Debit
FEDERAL WITHHOLDING TAX PAYABLE________________Credit
FICA TAX PAYALBE________________________________Credit
MEDICARE TAX PAYABLE___________________________Credit
STATE INCOME TAX PAYABLE_______________________Credit
401(k) CONTRIBUTIONS PAYABLE____________________Credit
OTHER DEDUCTIONS PAYABLE_______________________Credit
PAYROLL BANK ACCOUNT [Asset]____________________Credit


If the payroll service takes care of remitting employer expenses, these payments can be journalized also. If you do the employer reports yourself and send the checks directly you will need to use the Write Checks function to record the payments.

Entry for payroll service remitting employer expenses

Use a General Journal Entry:
EMPLOYER FICA TAX EXPENSE____________________Debit
EMPLOYER MEDICARE TAX EXPENSE_______________Debit
FEDERAL INCOME TAXES PAYABLE________________Debit
EMPLOYEE FICA TAXES PAYABLE__________________Debit
EMPLOYEE MEDICARE TAXES PAYABLE_____________Debit
EMPLOYER STATE UNEMPLOYMENT TAX EXPENSE_____Debit
EMPLOYER FEDERAL UNEMPLOYMNT TAX EXPENSE ___Debit
ANY EMPLOYER CONTRIBUTIONS EXPENSE__________Debit
PAYROLL BANK ACCOUNT [ASSET]_______________________Credit

The entry should be in balance. Record a Memo at the start of the entry for the reason it is being made.

[Maliks]

thanx alot

[dscofever]

Is it ok to post employer paid taxes and employee paid taxes? I am using an outside payroll service and QB pro 2008. They handle all of my payroll taxes each pay period.

Does it matter? Or should I just bite the bullet and go ahead and do it?

Here are my concerns:

1.Banking reconcilation at the end of the month. (They take the money out of my account every pay period in one lump sum)

2.I do contracting and my insurance is based on my payroll. Is the employee paid taxes a cost of goods sold or an expense? Seeing as I am paying it to the employee, I would assume that it's a cost of goods sold (that's how I classify the labor). Do you know if that is correct?

3.I am assuming that the employer paid taxes are expenses...right?



Thank you so much for the help...the quickbooks forum is horrible...It took me 2 minutes of searching here what took me 2 months of asking questions at the other site.

[dp1903]

Quote: Is it ok to post employer paid taxes and employee paid taxes? I am using an outside payroll service and QB pro 2008. They handle all of my payroll taxes each pay period.

Does it matter? Or should I just bite the bullet and go ahead and do it?

Here are my concerns:

1.Banking reconcilation at the end of the month. (They take the money out of my account every pay period in one lump sum)

2.I do contracting and my insurance is based on my payroll. Is the employee paid taxes a cost of goods sold or an expense? Seeing as I am paying it to the employee, I would assume that it's a cost of goods sold (that's how I classify the labor). Do you know if that is correct?

3.I am assuming that the employer paid taxes are expenses...right?


The guidance I gave above is for general payroll expense only, not for cost accounting.

Any employees and/or yourself working directly on a product for manufacture is considerred direct labor. Such direct labor includes Employee and Employer FICA and Medicare tax expense. However, in some cases, due to complexity or to software limitations, the employer FICA and Medicare tax expense is charged to Overhead instead of Direct Labor.

Normally, when manufacturing a product, you will have Direct Labor, Direct Materials, and Overhead which make up the cost of the item being manufactured. All of these items are usually charged [deibted] to a Work in Process Inventory account [asset] until the item is finished. Once it is completed and ready for sale, all charges to the Work In Process Inventory account are transferred [debited] to a Finished Goods Inventory account [asset] and the Work In Process Inventory account is relieved [credited] for these charges. Then, when the product(s) is sold the Cost of Goods Sold account is charged [debited] and the Finished Goods Inventory account is relieved or reduced [credited].

In my opinion, QuickBooks Pro or Premier does not do an adequate job for cost accounting. That has been my experience. That is probably why you did not received an answer from their forum. The software is simply not designed to handle cost accounting.