Payroll is one of the most complicated and easily messed up types of transactions on your QuickBooks online bank feed. With so many different types of transactions coming in and each needing to go into a separate account, this can quickly go from a neat set of books to a complete horror story.
But what’s the solution? How can we make this an easier process?
Most payroll softwares integrate with QBO which makes the process nearly stress-free. Some things to keep in mind are the types of accounts needed and which transactions should be going in them. Let’s go through a brief overview of what type of transactions come through for payroll.
Wages are what you think they are: the money that gets paid to either the owners of the business or their employees or both. Any types of wages are always expenses and should be added to the books in this manner.
There are two types of payroll taxes: employee and employer. Let’s start with employer taxes which are basically the taxes that are deducted from a paycheck. Most of the time there are the state or local taxes then there are what we call the FICA taxes, which are your Medicaid and Social Security taxes. If payroll is being done manually these would be first put into a current liability account. This account should be zeroed out once these payroll tax payments leave the bank.
Employee payroll expenses are the matched Medicaid and Social Security taxes, the unemployment taxes and the benefits that have been included. Some examples of these can be healthcare insurance payments or 401K.
Finally there are the payroll fees. These are payments to the payroll provider as well as tax-related fees.
With this many transactions coming through each week/month, it’s not surprising that this is one of the first things businesses mess up on in their bookkeeping. Ultimately, the consequences of this can lead to an overwhelming mess and inaccurate financial statements. When you need to know exactly what you are paying your employees, but don’t know if what the numbers are telling you is correct, then you are in trouble.
The best solution to this headache is to integrate, or sync, your payroll with your QBO. Most major payroll companies do provide this to their customers. Once you have added the payroll accounts made in your QBO account, it’s simply a matter of inputting them into your payroll general ledger or QBO sync page. Most will automatically send over the information to your QBO but some of the smaller payroll companies might need to manually push the information over.
Have you had a payroll headache in your QBO past?
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