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Not sure if I said that right But this is the DT770 Pro 250 OHM Studio Reference Closed Back Headphones I wear headphones basically every day for a large part of the day They are important to me Therefore, I've gone through many different kinds of headphones I've had these for some time and they've worked quite well They fit over my ears But I'm still able to put my glasses on under the headphones The headphones not pinching too tight on the glasses to give me a headache Which is nice The quality of the patting is good And it has lasted for some time I've had these for some time now And they haven't gotten all torn up on me or anything like that I also like that I have a cord when I'm doing my recordings As opposed to a USB centered headphone Because that frees up a USB port And I find the USB headphones to be less reliable They come with an audio jack that looks like this Which is useful for me because that plugs into my audio interface However, if you want to use the headphones for some other purpose I believe it's fairly easy to get a converter to other types of audio jacks If you would like a commercial free experience Consider subscribing to our website at accountinginstruction.com Or accountinginstruction.thinkific.com Where we have many different courses You can purchase one at a time Or have a subscription model Giving you access to all the courses Courses which are well organized Have other resources like Excel files And PDF files to download And no commercials Here we are in our custom zero home page Going into the company file We set up in a prior presentation Get great guitars Duplicating some tabs to put reports in Like we do every time Right click in the tab up top so we can duplicate it Right click in the tab up top again So we can duplicate again Back to the tab to the middle Accounting drop down We want the balance sheet This is a slightly modified balance sheet But if you don't have that one You can open the standard balance sheet tab To the right accounting drop down Income statement We want the comparative income statement But if you don't have that one You can open the normal income statement The comparative income statement Showing the current month, February And the prior month of January Let's go back to the balance sheet We're now going to be thinking about paying off The payroll taxes that we have collected In a prior presentation Which we can see down here as a liability Now let's take a quick recap Of the flow chart for the payroll The process of payroll because it is complex Mainly because the government steps in And makes it so So if we go over to our flow chart Which is a screenshot of a QuickBooks desktop flow chart But we're just using it to look at the flow Of the forms here We're on the payroll or employee E-cycle remembering that If it wasn't for the government If it wasn't for taxes Paying our employees would basically be Just another vendor type of activity We would shake hands We would come to an agreement Based on the trust and faith In each other's good names Once the job is done Weekly we would pay the employees But it's way more complicated Than that for most locations And the complications Will differ from location To location because There's generally going to be a lot of laws Related to employee Employee or interactions Human resources side As well as possibly a payroll tax Side So I'm generally looking at the United States Here And looking at the federal side of things Noting that even in the United States The states will have different state laws But When you look at the taxes in general Remember that There's no really new taxes If you learn basically all the kinds of taxes Then it's just a matter of Which one does the government think Would be best for a particular situation Right so In our case We're going through the payroll cycle Which starts out with us basically Paying the employees Either whatever we choose Weekly, bi-weekly, semi-monthly Or monthly, we are paying monthly And we're going to imagine In our situation That after paying the employees And withholding the taxes from them Or paychecks and our tax responsibilities Now being due At the point in time we've processed the paychecks That we are then going to Pay those taxes and we're going to Pay them by the end of the next month Normally you would pay them Pretty soon after you process The payroll So that's going to be the general system So we're going to say we pay monthly in our case So we've paid one month Of payroll And now we're going to pay the taxes In February for January's Payroll that has been processed And then if we were to continue This in March we would pay off The February withholdings that we had That's going to be the cycle we have Notice that that cycle could differ Depending on where you are What's the rules for that particular location And what's the payment structure that you have set up And possibly based on how much Actual payroll taxes That you owe Okay so that's the General idea Now note that if you were processing The payroll through The payroll system, gusto Would help you with that process And also just to note on top of that You also have the quarterly forms Which should be just reporting forms 941s quarterly The 940 at the end of the year And then your W2s and your W3s At the end of the year Which is kind of piled on top of The normal kind of accounting That you need just in terms of logistics To get the payments out and comply with Human resources laws and the withholdings Alright so if you have like a Like gusto integrated Then it may help you out to kind of process The calculation Of the payroll as you have it Have it due but if you have a third party That's processed in your payroll Then You have to think about how you want to pull That stuff into your accounting system And sometimes there's different ways that you can Get more simplified of a transaction Before we do that though I'm going to make a quick adjustment To the payroll transaction We entered last time Because I want this to be tying out To what we have on our Bank reconciliation And so we need to make a little bit Of an adjustment here So we're going to say the FIT For Adam Hamilton Is going to be 720 And then we had an adjustment For social security As well that we have to pick up here The social security on both The employee and employer Side so I'm going to go into this check for Adam Hamilton and just make that Adjustment and so I'm going to go back On over here and say let's drill down Into the checking account and find That check now again This is a kind of adjustment that Is fairly easy to make if The actual payroll is being Processed by a payroll processor Of the system if you were using Gusto internally to process The payroll then you would probably Have to like delete void the check And re-enter it to make sure that all Of your reports are tying out Properly so we're going to scroll On down and say where Was that check There it is Adam Hamilton spent Money form so we'll go Into that and make a slight Adjustment here so here's A new journal Entry for Adam So payroll expense should be 4583.33 So we're going to say at 4583.33 That's the same Payroll liability the sum Of these three is now 107062 So But I have to add this one to it Hold on to say let me change my formula here I did add that to it I have to go to these four with that Adjustment 103462 Okay 103462 So this is going to be Payroll liability I'll have to edit it Hold on edit the transaction Now I can't remember the number Negative Come on my memory Can't remember this one Oh here it is negative 1034 Point Uh 62 I knew that 1034 Point So now we've got a net check Decreasing the check and count 354871 So that's going to be 354871 The payroll liability 103462 and the 4583.33 Of the expense Alright I'm going to update that And we're also going to update the Journal entry so let's go Accounting drop down back into the balance sheet And I'm going to drill back down To find the journal Entry that we entered And that's going to be this little Transaction we did down here for this 36 side on this side So the one we just adjusted Adjusted for the FIT Which was 700 before now we made it 720 and the $36 adjustment Adjusting the net check Alright so now let's go back in and say The journal entry Uh was An adjustment let's take this from the Income statement side of things Cause we had down here The payroll tax expense That'll be the easiest place to find it So let's go into those payroll taxes And We're going to say that here's A manual journal entry let's go into that And see if we can Hit the drop down and edit That thing If I may And we'll just change that number to So this needs to pick up The total let me sum up the total this way Here so it picks up that adjustment Sum of those three Boom some of these three Okay 498.22 498 498.22 And then this one needs to also be 498.22 Alright slight adjustment apologies For For that But that should help us out when we Get to our bank reconciliation Course or section back to the accounting Drop down let's go back Into our income statement I'm going to pick up the comparative income Statement report And so there we have it so now Now we're going to be paying off the Payroll liability going back Balance sheet tab And we have withheld withholdings And we need to go in And pay off these payroll Liabilities that we have withheld Now we're just going to be paying off The first month of payroll liabilities And in the second month of Payroll liabilities we will be paying In the following month If you have a payroll provider doing a lot of the payroll services Like the 941's, the 940's The W2's, the W3's and so on Then our question here On the bookkeeping side is What do I need to put into my system And how is the easiest way I can do that To make the bookkeeping process As easy and automated Possibly as possible So remember that if I go back To my worksheet I could enter this information From the third party provider As they give me this information In basically a worksheet format As I enter the information into the system I could record The payroll liabilities as we are doing here As we enter them As the payroll process Goes by However I might come up with an easier system Remember that you could say I'm just going to try to automate everything On the zero side of things Make it a cash based type of system Even though payroll usually forces me Outside of a cash based system Because of the withholdings But I'll just wait till everything clears The bank account possibly And then just record it as An expense When it clears the bank account So everything related to payroll Once it clears the bank account I record basically as an expense And that way when these payroll liabilities Actually get paid You're just going to record it When it clears the bank account As an expense at that point in time Therefore you'll have a timing difference Between when the actual Taxes were accrued Or incurred and when you paid them But at the end of the day It'll clear the bank And then at the end of the year You might be able to shore up any problems You have as of a period of time For example for taxes or external Reporting purposes with a CPA firm Or tax firm so that's your Network of people that might help Your bookkeeping system To be formatted in such a way Where you can try to automate everything And be more in a cash based system And still making periodic adjustments Possibly at the end of the year For taxes Or financial reporting But we're just going to write the check here So we'll just write the check And we'll make a couple checks Because we want to basically Tie into once again our bank Reconciliation reports So I'm going to hit the drop down And we're going to say We're going to have a spend money form And we're going to say One more thing if I go to the balance sheet Over here This liability account If I go into payroll liability And I go into This item Then We are basically Going to be paying off everything that happened Up through January So we're going to be paying up Up through here Here's the running balance So we'll pay a couple checks Depending on whether it was FIT or Social Security Medicare, but we'll pay basically This amount and then we'll be left with What was accrued in February. That's going to be the idea Alright, let's go back on over Checking account, we're going to write a check And I'm going to make a new Vendor, I'm just going to call it IRS If you were Set up, you'd have to pay The IRS in whatever way They want to be paid which would probably Be some kind of electronic Type of system So just be aware of that We're going to write a check for our practice problem 228 And we'll make a check number for it And Then we need an account down here Which is going to be that payroll liability account That's a description We'll say the amount is going to be 108.0 Payroll liability Payroll Wages payable No, payroll Tax, no Federal payroll liability That's the one, so we're going to have Two checks that will then tie out To the amount that was due at the end of January, and this was basically Kind of breaking out the FIT And the, which is the federal Income Tax and the Social Security And Medicare, the FICA taxes So I'm going to say, let's say Save and add another Check number I think it should be 1024 So I skipped a couple Checks again if you don't have the check number That's Hold on a sec, I don't have the right date here What happened to the date? I swear I changed it. I'm going to close this out This should be as of 228 Feb 28 Don't do that again Get the date right And another And then 1024 Okay And then we'll just save it And let's do another This one, I'm just also going to say It's going to the IRS, the government And let's get the date right this time 228 Feb 28 And then I'll make it a check And then we're going to say This is going to be for 82.52 The account once again is going to be the Payroll Liability Account Payroll Tax, Payroll Wages Payable, Federal Payroll Liability That's the one we want Now that was basically That's basically going to be for the Medicare side of things And then we'll do one more for the Social Security So I'm going to say Save and add another May I have another Thank you May I have another Price needs to be there Okay, this needs to be 82.521 And 82.52 Okay Okay, let's try it again Save and another I think the check number is correct Date looks correct Let's save it Alright, IRS one more time Let's do it again And let's make this Feb 28 Get the date right If we could And then we'll bring it on down And say this is going to be for 865.94 Account Payroll Liability Federal Again I just clicked on it and it didn't do it You saw me click on that Federal Payroll Liability and it just disappeared Alright, so then that looks good Let's go ahead and just save this one And then we'll check it out So we'll say Save it And then let's go to the balance sheet And Let's go back to the balance sheet Here so we can update The balance sheet before we start Drilling down Update, we're going to have our three checks In the checking account So that should be fairly straight forward So we're going to go into there And we've got our three Checks that we wrote down here On 328 These two are in June again For goodness gracious Spectrum Let me see if I can change those That's going to bother me That's going to mess things up So let's see if we can Adjust that Edit And then And It won't let me change the date Oh Alright, I'm not going to worry about it right now That's not where I focus On the task at hand We're going to go down And say that we wrote These checks to the IRS So there's one That we wrote to the IRS Here's an IRS And there's the IRS Okay, let's go back And then We're going to go down To the liabilities Payroll liabilities And go into that And let's check out these Three amounts that we wrote Down here, there's the three checks If I pull out the trustee calculator For some calculations We've got We've got this one 82.52 Plus This one 865.94 Plus the 1080 And that adds up to The 2028 And you can see that That is where we stand at the end of January So the general idea is We Process payroll for January We incurred liabilities That we withheld Of 2028 46 That we're just looking at the federal taxes At this point, Social Security, Medicare And federal income tax for the employee Then we paid And then we processed the second payroll Adding more liability And then we paid The amount that is due So we paid January's liability Leaving us with just What is left in February That has been incurred for the liability Which is of course This one The 1034.62 Plus The 498.22 Plus The 543.6 Which gets us to the balance of 207.644 The liability that we still owe At this time And so no impact on the income statement Because We were just paying off the liability We processed the payroll And affected the income statement Last time So we made an adjustment But this General entry didn't affect the income statement Those checks didn't affect it Let's duplicate it and let's open up The reports and the dropdown We want to go into the reports We want to open up the trustee trial balance I'm going to type in trial balance And open that one up We'll change the range Up top drop down Custom range bringing it up To 2023 The end of it and update So this is where we stand At this point in time If you were on last time Your numbers tied out but they're off this time Then try changing the date range Often it's a date range kind of issue We made some adjustments to The checking account Some adjustments to the payroll related accounts Which include The payroll liability account And The tax account for the wages And the payroll Tax expense