 Zero Accounting Software 2023 Payroll Setup Get Ready to Become an Accountant Hero with Zero 2023. 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. Here we are in our custom zero homepage going into the new company file we set up in a prior presentation that being get great guitars. Thus far we have set up the new company file we've entered beginning balances imagining pulling that information in from a prior accounting system as we did so we also set up some of those foundational items necessary for data input to be as easy as possible going forward. Now we want to look at another one of those foundational items that would be necessary in the event that we have employees that being payroll. Now payroll is one of those things you really want to think about before you start to implement something because you want to get it basically right the first times. It's one of those things where the strategy is better to follow the adage of measure twice cut once rather than basically saying you're going to tweak something as you go. In other words there's some kind of things that are best learned by putting them in place and then tweaking them until you hone down the process to get as as good a process as you can get. Other types of things are much better to get right the first time because the tweaking of them could be quite costly and payroll is generally one of those items you'd like to get it right the first time it's kind of a pain to adjust your payroll over time and because there could be taxes involved with it as well that can also add to a level of confusion. If you are a bookkeeper then you might want to think about your general strategy for payroll. Do you want to be taking on clients that have employees or focus on sole proprietors if they have employees do you want to be recommending doing payroll through the zero system or have an external payroll that would be set up and then you can have a network that you are working with other companies and therefore you can try to streamline your system in that way. So let's just take a quick look at that on a flow chart type of basis. So if I look at the flow chart this is a QuickBooks desktop flow chart but I'm just looking at the flow chart because the accounting cycles are represented I think in a fairly straightforward way. So we want to be thinking about things in cycles so we took a look a little bit at the vendor or pay payment cycle or expenses cycle when we set up the vendors the customer cycle when we set up the customers and now we're thinking about the employee cycle when we think about payroll. So if you're trying to set up an accounting system where you're trying to automate everything possibly trying to do everything on a cash based system to the extent that you can possibly through the bank feeds to the extent that you can and the United States the payroll kind of throws stuff off and it also throws things off in other areas as well because taxes get involved with payroll. There's often more government involvement with payroll than other areas. If there were not then the payroll system would be just as easy as like a vendor meaning your employees would be just basically like a vendor and you would just be paying them whatever you agreed to pay them for the work that they did on a weekly basis monthly basis bi-weekly basis or whatever but usually with an employee employer situation there's going to be possibly taxes involved with it and the United States definitely taxes involved with it and you're going to have possible other rules like human resources rules related to employment rules that you need to to be aware of that aren't in place typically for other types of vendors. So therefore from a from a bookkeeping and accounting standpoint the question is how do we want to deal with those added complexities do we want to deal with that with an integration within the accounting system that will help us to do the payroll internally and hopefully especially in the United States which is I'm going to focus on here there's going to be multiple withholding taxes that are kind of required to be withheld for the federal payroll taxes you've got the social security you got federal income taxes and and then you've got Medicare and then on the state level you could have other taxes that would need to be withheld. So hopefully the software then will give us the capacity to to properly input the information for calculating those withholdings we also have the necessity to give our employees a W2 form as well as pay stub forms that accurately show the year to date information as well as the paycheck to paycheck information both gross pay and what was withheld from the employee. Now on top of this because we have this kind of tax situation with the payroll oftentimes benefits could you could have tax benefits in the United States like a 401k plan and these would be voluntary type of withholdings or possibly health care for example being tied in with the employer. So once again we would be taking money out of their paycheck and putting it towards in this case voluntary benefits that we're providing that go through the employer because of tax benefits like a 401k plan so you can see it gets quite messy quite fast to be dealing with the payroll so we want generally something to help us even if you're like have only a few employees you probably don't want to be calculating payroll manually so if you're going to get help with the payroll then the question is do you want the internal help within the software or do you want to hire another company external that's not really not related to the software that does just payroll and then pull that information into your accounting system those are going to be your your options now also in the United States we have to do reporting on payroll on a quarterly basis usually that would be nine forty ones and then on a yearly basis nine forty w twos and w threes hopefully the software can help us out with that if we would rather hire someone external then the external provider can help us out now notice if you're going to integrate payroll within your accounting system then you're going to have all this other payroll report all this necessary stuff to calculate the payroll within your accounting system so that it can generate the help you generate the nine forties the nine forty ones and w twos and the pay stubs and all that kind of stuff so it kind of and it also makes it so you can't just be in a cash based system I can't wait I can't just wait till I pay someone electronically like I would with a vendor and then when it comes through the bank feed I'll just record it as payroll expense I can't do that if I'm generating payroll within the accounting system because the accounting system has to record the gross pay and then the withholdings and the net pay and all that detail so the other option that you have as a bookkeeper or accountant or for your business to have a third party payroll provider that does all the payroll externally the big ones in the United States are like an ADP or a paychecks but there's a lot of lot of them just be make sure you have a legitimate payroll provider if you're if you want to look into that route and then they would be doing all of that stuff hopefully and what you would need to do in the accounting system is simply record the the net information necessary to get your financial statements correct you wouldn't need all the detail that you need to report on a paycheck by paycheck and cut an employee by employee basis and you could even imagine a system where you can set that up and do it on a cash based system you can wait till the money clears the bank and then you're gonna record it as just one account payroll expense and then possibly do an adjusting entry to tie out to the payroll reports whenever you need to possibly monthly or for United States income tax reporting purposes you might need to do that on a yearly basis so you're so you get everything properly reported on a periodic basis using adjusting entries tying into the payroll reports at the end of the year okay so that's that's the general idea all right so now that we have that let's go on now if you hit the drop down here they use gusto if you haven't clicked on it yet though there's usually a there's usually a thing over here that says gusto I clicked on it already so if I go so if I go over here into this payroll tab which I have now we've got the gusto so this is gusto they've partnered partnered with to integrate the payroll within the system it says here we've updated your terms of privacy and so I think there's a 30-day trial for gusto so you can kind of test it out so I'm just gonna take a look at the walkthrough here who is your company planning to pay I'm gonna say employee ease and remember I am thinking about this from a United States perspective and it'll differ from place to place country to country and even state to state that's again one of the problems with payroll because the law is related to employee ease and payroll taxes kind of are quirky so what's your desired first pay pay day let's say it's the first pay day is gonna be 0131 2023 choose a date that is least one business day after today okay I can't work I can't do it in the past that's not good for our practice problem but I'll say June 20 30th will this be your company's first pay day in 2023 I'm gonna say yes notice that if you're pulling it in from another accounting system in the United States again you would like a whole year's worth of payroll in one payroll system because there's caps on things like federal like a futa federal unemployment tax and social security for example so you would like you need to put the past data in in order to properly allocate for those caps and the payroll calculations so will this be the first payroll ever for this company I'm gonna say yes submit setup experience is ready all right let's go let's do it all right so I'm just gonna enter an address so I'm gonna just choose 2650 Benedict Canyon in Beverly Hills $48,000 mansion I don't actually live there by the way this is gonna be let's go do any of your W2 employees work at this address I'm gonna say yes no this is just a mailing address okay let's save it let's let's accept the cookies save and continue what address should gusto use if we need to send you physical mail I'll do the same one and add any other physical addresses your physical address I've added all that I would like to add and then it gives you a little piggy walking so add your account and bookkeepers to do you have an accountant or bookkeeper helping your business yes I use external accounting bookkeeping I have an in-house accountant or bookkeeper I'll just say no if you are interested in contacting okay save and continue and then I will use your checking account info debits verify your bank account so we use plaid to secure connect your bank account to gusto at any time so your gusto account must be linked to a checking account so notice this is gonna be a stopping point for us here on our on our our process because I can't I can't connect a bank account in the practice problem but it says but then you would have the federal tax info the health benefits the third-party apps and choose a plan back on over to zero when we enter the payroll as we work through our practice problem will basically do it manually and we'll put together an Excel worksheet and talk about the withholding system typically in place in a general sense in the United States obviously in practice again you would want some kind of help typically with payroll either through the integration like Augusto connecting it to the zero or with a third-party provider note that when you're trying to choose what your payroll options should be you might want to talk to of course your accountant about it but you probably want to talk to an accountant that is not the one that you're actually going to be paying for payroll so that you can pay just for advice about what the best payroll setup would be in other words if you're gonna hire someone to do the payroll and you talk to them about what you should do with the payroll they of course have somewhat of a biased opinion because they want your business to be running payroll what you would like to do is talk to an accountant say should I do the payroll internally do I need help with payroll beyond that what Gusto can provide would it be better for me to have a payroll provider external and so on those types of questions and again if you're a bookkeeper then your general thought process you want to think about what's your specialty do you do you want to be running payroll within the system as your general kind of recommendation and the types of clients you want to be dealing with or do you want to have a network kind of system and possibly you're specializing in such a way that you work with payroll providers as well as bookkeepers and tax professionals so that you can try to automate your system more in a cashed based maybe type of thing and then use of use dedicated third-party payroll providers as well as tax professionals like in the United States if you got to deal with the federal income tax at the end of the year that kind of system can work quite well but you have to have all of your network nodes working together for it to work well