QuickBooks may create a couple of payroll accounts when you create a company file. In this video, learn how to identify the payroll accounts in place and others you need to create.
- [Narrator] When you create a company file, QuickBooks creates a couple of payroll accounts for you. To track more detail about payroll, liabilities, and expenses, you can set up additional payroll accounts. I'll show you a few examples, but it's a good idea to ask your accountant, what accounts make sense for your company. On the homepage, I'm going to click chart of accounts. If we look in this list, you'll see that there's a payroll liabilities account, and it's in other current liability type. This is for things like payroll taxes and withholdings that you send to tax agencies. This is the account that holds them until you actually remit them. If we scroll down to expenses, there's also a payroll expenses account. These are for things like employer payroll taxes, or any other kind of payroll expenses that you have. With the payroll liabilities account, you could break that out, into federal withholding, FICA payable which is social security, state withholding, and employer health insurance payable. But, it's totally up to you. To show you how this works, I'm going to create a liability account for the company's 401k match payable. So this would be the money that the company will have to pay for the 401k matching, but hasn't sent it in yet. To create that account, I'm going to go down to the bottom of the chart of accounts window and click account, and then choose new. Or you could just press Control N. I'm going to select the button for other account types, and then choose other current liability. When I click continue, I go to the page where I can put in the account name, and I'm going to call this 401k match payable. I'm going to turn on the checkbox for sub-account of and I'm going to choose that payroll liabilities account, to be the parent. Now, I'm going to click save and new, and this time I'm going to create an expense account. This is going to be the expense account for the 401k matching. And this is once it's paid, it will go into this expense account. So I'm going to call it 401k match. I'll turn on the checkbox of sub-account of, then click the down arrow, and I find my payroll expenses expense account. Here I'm going to go to the tax line mapping, click the down arrow and I want to find deductions for retirement plans. So I'm going to scroll down until I see that entry and select it. That way, it will go to the right tax line on the tax form. Let's click save and new one more time, and I'm going to create another expense account. We'll call this one Gross Wages, and I'll turn on the sub-account of checkbox and then click the down arrow, and I'll choose payroll expenses so that everything about my payroll is going to go under the same parent account. For this one in the tax line mapping, I'll click the down arrow, and go to deductions, other salaries and wages. Now I can click save and close, and you can see that I have sub accounts underneath these parent accounts for both expenses and payroll liabilities. Those are a few examples of additional accounts you might want to set up to track your payroll.
Note: This course covers only the US versions of QuickBooks Desktop and Payroll.