 QuickBooks Online 2023 Payroll and Employee Reports Get ready to start moving on up with QuickBooks Online We're going to be using the free QuickBooks Online Test Drives Searching in our Online Search Engine for QuickBooks Online Test Drives Selecting the option that has Intuit.com and the URL Intuit being the owner of QuickBooks Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page We also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable So once again click the link below for a free month membership to our website and all the content on it Selecting the United States version of the software and verifying that we're not a robot Zooming in a bit by holding down control up on the scroll wheel we're currently at the 125% on the zoom in and the cog drop down just to note that we're in the account view as opposed to the business view we'll try to toggle back and forth between the two views so you can see where stuff is under both of them We're going to go to the tab up top to right click on the tab Duplicate it as we do every time going to be putting our reports in the duplicated tabs Right click in the duplicated tab to duplicate again back to the tab to the middle as the tab to the right as thinking reports on the left You want to open up the balance sheet as that's thinking tab to the right reports on the left this time open up the P & L profit and loss Income statement close the hamburger and then change that range from O-10122 tab, 12-3122 tab Run it to Refresh it back to the middle tab closing the buggy scrollin' up in those ranges they are changing from O-10122 tab 1232 tab, 1231 222 tab and run it to refresh it. That's the setup process that we do every time. These are the major two financial statement reports. Most other reports given more information on one or multiple line items of these major two financial statement reports. We're now gonna be looking at payroll reports and payroll reports can get quite complex due to the rules and regulations around human resources, employees and payroll taxes. There's also limited information in the sample company file I believe do impart to the fact that entering payroll into a sample company is a little difficult because it's one of those things that you kind of have to run real time. So in a future section or course, we'll be looking at payroll, hopefully being able to turn payroll on as we enter some of our data into the practice file and we can discuss it further at that time. However, our practice problem will be somewhat limited with payroll as well because it's such a big topic. We do have other courses focusing in specifically on payroll if you would like to dive into it in more detail. The first thing we gotta note with payroll every time we point out payroll is that you really wanna get it right the first time. You would like to set up the payroll in the way that you want to be able to expand with it and grow with it and move forward with it as time passes because correcting errors in payroll and switching payroll can be somewhat of a painful process. The main two ways that you can process payroll is gonna be within QuickBooks, turning QuickBooks payroll on, which is an add on feature. So you'd have to pay more to process the payroll within QuickBooks or have a third party help you to process the payroll on the third party software or the third party company doing it for you and then you just need to pull in the information necessary to get your financial reporting correct. I would recommend when trying to get advice on which route to take with payroll, you discuss it with like an accountant, a CPA who you're not planning on hiring to do the payroll because clearly if you're talking to someone that you're planning on hiring to do the payroll, you're talking kind of to a salesperson that wants to pick up the work. If you pay someone to give you advice on where to go to hire someone, then you're paying someone just strictly for advice and the advice might be a bit more reliable in that case. Now, when you process the payroll, let's just go through the flow chart and think about what kind of reports would be necessary when we process the payroll. So it would look something like this, we'd have to first set up the payroll and then we gotta track the time if we have hourly workers. We don't necessarily need to track the time within QuickBooks, but we're gonna have to track the time somewhere to put it in the system when we pay people and process the checks. And then we're gonna process the checks, which would be the paying of the employees. These are gonna be the payroll checks. It might be electronic transfers that you're going to be setting up. And this would happen periodically depending on how you set up the payroll, meaning you decide to pay them weekly, you decide to pay them bi-weekly, semi-monthly or monthly. And this would be the major kind of component of the payroll because it results in the actual payroll transactions, the lowering of the checking account. And it also is gonna deal with all those kind of withholdings that we have to take into consideration. The federal withholdings being federal income tax, social security, Medicare. And then we also have our side of social security and Medicare on the employer side. And then we have federal unemployment tax on our side, the employer side. And then the state taxes may be applicable depending on the state that you're in as well. So that becomes a quite complex transaction even if you have only like a few employees. Now, when you record that transaction and process the check, you can't still just give them the check or give them the money in their account. You also have to provide them with a pay stub in some way, shape or form. You have to inform them, this is your gross pay and this is what we took from you. And that's why your net pay is not equal to your gross pay. Here's what you got, here's what we took out. You have to do that on a employee by employee basis as well as on a year to date basis and paycheck by paycheck basis. So you can start to see that as you compile that information, that's kind of a lot of data that you're gonna need to be able to properly report that and you wanna be able to support that data with reports within the QuickBooks system which will look kind of like you can format them like a paycheck stub, right? It's gonna have all the employees and then all of the withholdings, the gross pay, the withholdings, the net pay and so on. Then after you pay them, the money that you took from them out of their wages in order to pay their taxes as well as any benefits, you're gonna have to actually pay to the government and that's when you process the liabilities forms here. So we could also have reports that would be tied out with the liabilities that we owe. Then on top of that, we've got the reporting that we need to do to the government. So on the federal side, we've got the quarterly reporting, the Form 940, we've got then the year in, I'm sorry, the quarterly's of the 941s and then at year end, we've got the 940, the W2s and the W3s. So we need reports that will help us to populate the Form 940, 941s, W2s and W3s. Now note that if you do this internally, that means you're gonna need a lot of reports. You're gonna need the reports to support your paycheck stubs, providing the information to each employee on a year-to-date basis as well as on a paycheck by paycheck basis and you're gonna need the reports that can verify and support the data that you're gonna use to populate your quarterly 941s, your yearly 940 and your W2s and W3s. Now, so that means that you're gonna have a lot of data if you're processing payroll within QuickBooks. So I'm gonna go to the tab to the right, right-click, duplicate it and then we'll go down to our reports on the left. And so I'm gonna close up the hamburger and just scroll down. And so we have somewhat limited reports in this sample file, but we've got a whole section down here which would be the payroll reports here and we've got the employee reports. They just have the contact list, the recent edit time, the time activities by employee detail. So we would also have like a register that would have to give us that information on a paycheck that you'd see in a paycheck year-to-date information as well as the paycheck by paycheck information and that's similar information that you would need in order to do the 941 quarterly reports. You'd also need a report that's gonna track our side of things so that you can fill out the federal unemployment tax reports. So if you process it within QuickBooks, you're paying for those added reports that will give you a lot more detail in here and you're gonna have help and support to populate those financial statements. If you were to export or have this reporting done by someone else like a third party, then you wouldn't need all the detail, right? In that case, what they would do is process the paychecks which would still come out of your checking account. You're still gonna have to reconcile and whatnot, but you don't need the detailed reporting that would give you all the information on an employee by employee basis. You can basically think of all of your employees kind of like as one employee and enter the transactions necessary to get your financial statements correct. So there's a couple of ways you could do that as well. So that would mean that the payroll company would be taking care of the paycheck stubs and hopefully possibly some of the human resources stuff and whatnot and then you would be entering a summary of the data into your system in some way, shape or form so that you have the correct financial statement or reporting and what would be the accounts that would have to be supported on the balance sheet? Well, clearly the checking account's gonna go down when you pay the employees. So we're gonna have to enter the data into the system so that we have the paychecks going down. We're also gonna have to have a decrease in the checking account when we pay off the liabilities for the taxes and then we might have payroll liabilities down here and the payroll liabilities will typically be when you process the paychecks, everything that you withheld will be a payroll liability. That's the money that you kept from your employees that is now a liability that you're gonna have to pay to the government. So until you pay the withholdings after the pay period, you're gonna have basically a liabilities that you'll need to be recording here until you make those payments. And then on the income statement side of things, you're gonna have a couple accounts within here, one is gonna be your payroll, I mean, your payroll expense type of form, expenses, and then you might have another account that would be the payroll taxes. So that's what you would have to be recording on the financial statements just to get your financial statements in essence recorded properly. But if you weren't doing it within QuickBooks, you might not need all that other detail, the detailed breakout on a per employee, per paycheck basis that you would need in order to comply with all the other kind of reporting needs for the quarterly reports, the pay stubs, and the year end reporting. So if you had another company doing that, then you can run it in that system. Also note that you might even be able to be kind of more in a cash based system. So you wanna think about if you're a bookkeeper, how are you gonna do payroll? How are you gonna try to get together clients that fit into a system that you might be able to increase, scale up the system? Do you want a system in which you're processing the payrolls in the system or possibly you get a network with other people? Possibly you try to run your bookkeeping on basically a cash based basis as much as you can based on the bank feeds and then possibly working with another payroll company that can help to specialize in the payroll information and then possibly working with a CPA firm that can help you in the year end, year end tax preparations and any financial statement kind of reporting needs. So on the simplest method, if you were to do something like that, you can actually wait till the checks clear the bank and just record them as payroll expense, right? As they clear the bank, you're gonna have a timing issue because really there was a withholding. So instead of recording the liabilities on the books, you're just gonna wait till you make the payments on the liability side of things for the payroll taxes and then you'll record those as in essence payroll expense in basically one account and that way you can basically be on a cash based system, you can basically use the bank feeds and you can have the other payroll company doing all the payroll reporting needs. And then there's usually a timing difference when you do that because now you're, because at the end of the year, you're gonna need to be able to report any liabilities at that point and you might need to be breaking out the payroll taxes on the expense side of things, on the income statement versus the payroll expense and you can then have your CPA or tax preparer if they are working with you in a standardized system to be able to do that journal entry as of the date that you have to prepare the taxes and or do your financial statements by taking the payroll information and then using it to determine what the payroll liability should be as of the end of the year, December 31st most likely and possibly breaking out the payroll expense account into payroll taxes and payroll expense if necessary based on the payroll reports and the end of the year reporting, the 941s, the 940s and the W2s and W3s that they get from the payroll company. So those are a couple of different ways that you can deal with it. Notice that the payroll should be basically nothing more than like a vendor section type of thing. You pay an employee, cash goes down and you have an expense form but because of the laws and regulations related to it, we have way more complexity with the payroll. And so now we've got all these reporting needs as withholding needs, there's human resources kind of needs. So then the question is, well, how can you deal without those reporting needs as efficiently as possible? Either you're gonna have to pay for it one way or the other either you pay for it within QuickBooks to process it within QuickBooks or you create a network with an external payroll provider. Try to automate your QuickBooks as much as possible and then possibly, of course, you wanna also have a CPA firm or tax firm in the mix as well. If you're mixing up the jobs properly or allocating the jobs properly, then you can create a pretty efficient system depending on what you choose to do from there.