 QuickBooks Desktop 2023. Pay payroll liabilities form. Let's do it within two-inch QuickBooks Desktop 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 QuickBooks Desktop Sample, Rock Castle construction practice file provided by QuickBooks, going through the setup process we do every time, maximizing the homepage to the gray area in the view dropdown. We've got the height icon bar checked as well as the open windows, which we can see on the left-hand side, reports, dropdown, company and financial, looking at the P&L range change from 010124 to 123124. And we'll customize that report, going to the fonts and numbers, change the font size up to 12, okay, yes, okay. And then we're gonna go to the reports dropdown again, company and financial, this time the big balance sheet, changing the date, 1231, that's two, 3124. And then customize the report, fonts and numbers, change the font to 12, okay, yes please, okay. That's the setup process we do every time, going back to the homepage. In prior presentations, we've been looking at the employee E-cycle or the payroll cycle. We looked at the pay center, and then we looked at in the prior presentation, the entering of the form, which is the pay employee's form. Now we're gonna be moving on to the pay liabilities. Remembering that we enter the pay employee's form, we are in essence doing a similar process as if we're basically paying a vendor, right? If we were paying a vendor with a check, we would be then decreasing the checking account, the other side then going to an expense account for whatever the vendor did. In this case, it would be basically wages for the services provided for us payroll expense or something like that. But because of taxes, because of other complications with the laws and whatnot, we have a lot more going on with the employee E's because we had to take out all of the withholdings. So just to recap that, because we're gonna need to know what those are, what the process is when we go to the next step, which is to pay off those liabilities. So if I go into the pay employee E's, for example, then we can see we're in this tab. If I open up the pay employee E's window and I say, okay, continue and okay, and I look at an individual person that we're paying, double clicking on that icon, we can see everything that's involved that we went through last time, and that is gonna be the wages that they're gonna earn, the withholdings that were taken out, the net check down here, the actual impact then on the financial statements, and then our information with regards to the payroll taxes that we pay over and above. Now we looked at that in terms of a journal entry, which I put together for one of the employees fairly quickly, meaning this is kind of what you would expect to happen. You would say, well, you have the salaries expense, for the net check, for the full check, gross pay, you've got then the checking account going down for the net pay, and then this is all the stuff that we took out of their paycheck. All the stuff that we took out of their paycheck is stuff that we held on to. We didn't pay them because it's included in their gross pay that we then have to pay out to somebody else, the main component of that typically being the withholdings for the payroll liabilities that we gotta pay to the government. So that's what we need to do now. These are the increases in the payables that happened last time, as well as our side for the payroll taxes that we had to pay for the increases to the payable accounts that now we need to pay out would be the next step. So if we were to do this on like a weekly basis, you can imagine whatever the setup needs to be for our particular situation, we run the payroll weekly, and then after the payroll is run, typically, before the next week ends, we'd have to actually pay the payroll taxes to the appropriate people, such as the government with regards to social security, Medicare, and federal income taxes, for example. So if I close this back out, and I close this back out for now, we're gonna go to the balance sheet, and if we scroll down here, we can see that we have these liability accounts. These are the accounts that have been increased for payroll liabilities when we process the payroll. These accounts go up when we process the payroll every week, every two weeks, every month, or whatever, and then we're gonna have to basically pay them out when we pay them out. These will be going back down. Now, just like we saw with some other checks that we wrote, remember when we actually wrote the check for payroll, it's really a paycheck form, because it's a decrease to the checking account, but we used a special check to do it so that it would be indicating that it's a payroll check. Well, this time, we could just write a check. You might say, well, what's gonna happen now? I'm gonna go to the homepage. We could just say, well, why don't I just write a check for the amount that is owed to the federal government for federal taxes, federal income taxes, social security, and Medicare, and whatnot. We don't wanna, we could do that. It's the same kind of thing that we're gonna do. We are gonna, in essence, write a check, but we wanna do it with a special payroll liability wizard to help make sure that we're processing the payroll properly, paying the correct amount, that all the information's gonna flow through to the reports that we need them to flow through to, and therefore, we're gonna go to the pay liability icon to basically process the check for a payable that's on the books, which is similar to a payable for like a bill pay situation, up top, similar kind of process as when we entered bills, and then we paid the bills with a special check form that indicates that it's paying down the payable. Same thing here, we're paying down the liabilities with a special check form. If I go into that, it lists out the items here that we need to then be paying, because it's tracking from the pay employees to the pay liabilities. It's gonna help us to generate the proper checks, and then if I go into each of these checks, you can see the detail of the check, right? You got the check decrease in the checking account as we would expect down below. We don't have the expenses tab. We got another tab over here, which is similar to the items tab because it's paying down the special payroll items in this case, for in this case, the California withholding and the disability. So we can go into each of these and just see how it's helping us to track the payments that basically need to go out and then basically generating a check for that. So then what's gonna happen? So from a journal entry standpoint, this first journal entry increased the liabilities. Now what's gonna happen when we pay them off, it's just like paying off an account's payable. In essence, we're gonna decrease the checking account and decrease the liability account. Let's look at that on the balance sheet. So if we go over to the balance sheet and we go into, let's look at a first to cash account, if I go into the checking account and change the date from 01.01.2.4, we saw that we have the normal checks, we've got paychecks, and then we've got a liability check. I believe that's the employee liability checks here. So it's still a check form. If I double click on one of those, you can see a check form, similar process, even if it was an electronic transfer, still thought of as in essence a check form because it's decreasing the checking account. But at the bottom, instead of having the expense tab and just items tab, we've got payroll liabilities tab over here, which makes it a little bit different than a normal check, and there's the stuff. If I close this back out, if I compare that then to a normal check, it's got the expenses and the items tab. If I compare that to a payroll check, the payroll check, the paycheck, has this summary tab down below. They all do the same kind of thing. They're decreasing the checking account, but the other side is telling the other side where to go in different ways. It's nice within QuickBooks that they give us that indication by type because then I can sort my cash account by different fields, such as checks and paychecks and whatnot to give us a little bit more specificity if we're trying to filter our options in the cash transaction by type of transaction, even though they're all similar in that they're kind of checks. So I'm gonna close this back out. The other side, of course, going down to the liability account, decreasing these liability accounts. If I go into the liabilities for this one, 010124 and tab through that, then these are going up when we issue the paychecks because that's when we withheld these amounts from the paychecks increased in the liability and then we pay them down with the liability check. If I double click on that, there is our liability check. That's the similar process that we would expect to see in most payable forms. Nice, neat process. It goes up as the paychecks go up, then we pay it off, it goes back down to zero, right? It goes up and then we pay it off and it goes back down, it goes up, we pay it off and it goes back down, that being the process. If we go to the FICA account, which is the other common one, similar kind of process, 010124. So they go up with the paychecks as we can see and then we are gonna pay down with the liability checks. So here's the liability checks bringing it back down to zero. We would expect that process in all of the liability accounts and if the payroll system has been set up well, then it should be a fairly straightforward process once we get into the routine to do this on a periodic basis without too much problem. Also note that there are a lot of other reports that are kind of tied to payroll, which are subsidiary reports that I didn't go into in detail last time. We'll go into them more with the reports, but if you go into the Employee E of Reports here, then you've got a lot of information with added basically Employee E of Reports. And these are subsidiary reports, which you can think of them as being similar to like a subsidiary report to accounts receivable where we saw it broken out by customer and accounts payable where we saw subsidiary reports broken out by the vendors because if I go into the detail here, 010124, you see this is broken out by date. This is a general ledger type of report. We also wanna see it broken out in this case by vendor. Well, with the payroll, we have a similar process that we need to basically break out the payroll information by Employee E. We've got that kind of situation, but we have a bunch of other reporting kind of stuff that we have to deal with as well so that we can generate those reports so that we can make then the financial forms that we're gonna have to make the 941 forms, the reporting forms for the payroll stubs, the reporting forms for the W2s and the W3s. So the payroll subsidiary forms take on a whole new level of complexity and meaning as we're trying to meet our reporting requirements, not just to support the accounts on the balance sheet and income statement as subsidiary ledgers typically do, but also to meet the needs of the law reporting and so on with the human resources and reporting our payroll needs. So we'll talk more about those when we get to the second half of the course, we'll kind of dive into that a bit more as we go through the practice problems. So the next thing, of course, if I go to the home pages, we'll dive into the processing, the payroll forms. That's not really part of the payroll process in general in terms of just paying people. That's part of the reporting process to the government and that happens quarterly and yearly as opposed to the payroll cycle, which happens whenever we set it up weekly, bi-weekly, semi-monthly, monthly and so on.