 QuickBooks Desktop 2023. Employee section payroll process. Let's do it within two it's 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 maximize in the home page to the gray area. This is gonna be a little bit different I'm gonna go to the view drop-down and I'm gonna hide the icon bar first and then go to the view and make sure the open windows are on and I think with the expanded size of the screen we have this side's a little bit skinnier which may make some things a little bit nicer to see and then we're gonna go to the reports drop-down company and financial profit and loss report changing the date from 0101 to 4 to 1231 to 4 customize in the report up top fonts and numbers changing that font on up to 12 okay yes please and okay then we'll go to the reports again company and financial take a look at the balance sheet standard change the date to 1231 to 4 and then customize it fonts and numbers change the font to 12 okay yes please okay that's our setup process we do every time we're gonna toggle back on over to the home page we're now moving down to the employee cycle the employee section in prior presentations we thought about the vendor cycle the customer cycle the other big cycle is gonna be the employee cycle or you might more likely call it the payroll cycle the first thing to note with the payroll process is that the reason the payroll process is more complex is because of taxes payroll taxes there's also some more complexity because you might have some other human resources kind of needs that are overlapping with the payroll needs with regards to just recording the payroll if we did not have payroll taxes for example paying employees would be similar to paying any other kind of expense we could say okay we process payroll at the end of the week we owe you so much money let's write a check which would be decreasing the checking account the other side would be going to some expense like wages expense or payroll expense but it's not that easy because we have other things tied into the payroll the main things being that the government wants us to act as the tax collector and reporter of the taxes of the employees to make sure that the employees pay their taxes therefore we've got federal income tax withholdings to deal with we've got state possibly taxes that we have to deal with we've got the social security and medicare that we have to deal with and each one of those things in and of themselves is not too difficult for one employee for example but when you start to compile them on each other and the fact that you have to basically report each paycheck that information that's when it becomes quite confusing to manage it's become so confusing that the payroll is kind of a specialty area in in and of itself you can become like a payroll professional that works in a company or a payroll professional that works in a third party that does nothing but payroll that means from a bookkeeping perspective we want to determine whether or not we want to have payroll processed within the quickbook system recording it within quickbooks which means we would typically be paying for the payroll service or we might want to have a third party payroll company do the payroll process they didn't have to deal with all the withholdings and the reportings and all that kind of stuff which kind of overlaps with some of the human resources stuff that we need to take care of with payroll and then only into enter into our system for quickbooks that which is needed to create the balance sheet and the income statement to record the proper financial statement information so those are the two options that you first want to kind of think about do i want to do payroll inside of quickbooks or do i want to be doing payroll with a third party payroll provider also note that if you are a bookkeeper you want to think about your normal system and bookkeeping you might try to set up most of your clients in such a way that you're going to be buying payroll and processing payroll making payroll part of the process that you go through or you might want to be working with a payroll provider and have that part of your normal system as your network as you as you kind of propose your bookkeeping processes and say i'm going to do the bookkeeping this is a good person that basically does the payroll and then i integrate between the two and you can kind of think about how that would work with regards to your standard bookkeeping process that you might be trying to put together here of course we're going to imagine payroll is in place within quickbooks so note that to turn payroll on you can go to the edit dropdown and go to the preferences and we would have a payroll preference on the left hand side and then in the company preferences we've got payroll so if you turn on the full payroll then you're going to be you're going to be talking to quickbooks or have to pay for the payroll it's an add-on type of feature there's different tiers of the payroll that you can basically choose which are going to give you more level of support from quickbook side to process the payroll note that in practice you normally don't want to have the manual payroll you want some kind of paid payroll because again it's really easy for payroll to kind of get get off meaning again no one individual thing is difficult to calculate in payroll it's the fact that there's a whole bunch of things that you have to calculate each time you process payroll and report on each of those things that makes it easier to miscalculate something and payroll is one of those areas that if you miscalculate something you might not catch it until the end of the year when you process w2's w3's 1040 or 940's and so on and at that time it's more difficult to fix at that point than fixing it upfront in other words payroll is one of those things where you would rather you know measure twice and cut once rather than tinker with something to kind of get to fixing it because because it takes longer to kind of use that tinkering method than doing it right in essence the first time so plan out your payroll process decide how you're going to do the payroll and then try to do it you know make sure you do it right the first time to save you time in the second half of the course we will be looking at some of the payroll items by turning on the manual payroll which is a great tool for practice because it makes you actually calculate some of the payroll calculations which helps you to see kind of what QuickBooks is doing and possibly give you a better idea of the journal entry but again you wouldn't want to do that in practice when actually running payroll live for a company typically because you want the added internal controls and checks provided by the paid payroll typically either through QuickBooks or through another company so if that is on then you're going to see this item down below and it'll have this kind of this kind of arrow through it if you don't have payroll on then you're going to see like one icon down here you're not going to see any any activity down here that's why because you don't have payroll on so let's just give a quick recap of the cycle of payroll that's going to be first we have the enter the time this may or may not be something you do within your particular QuickBooks file for payroll so if you're paying someone like hourly for example or you're using a job cost type of system you might actually enter the time try to track the time into the system and this time tracker isn't always simply used to process the payroll to pay them on an hourly basis it's also often used for a job cost system to help you build their time when you build the client so that's why it's tied to the invoice up here as well so you might just be paying people salary or you might have them tracking their hours in some other fashion using some other software and then providing that to you so that you can use that time to be processing the payroll then you'll be paying the payroll so the next step is to pay the payroll process the payroll now the payroll processing times the intervals how often they happen will be dependent on how often you set up and how often you want them to be paid in your company typical payroll cycles will be paying people weekly or bi-weekly or semi-monthly bi-weekly and semi-monthly are slightly different they have slightly different pay periods they sound similar or you might pay people monthly those are the standard cycles that means that every week or every semi month or every bi-week or every month you would be processing the payroll when you process the payroll then it's kind of like writing a check the writing of the check would simply mean you've got a decrease to the checking account the other side going to the payroll expense that's how easy the transaction would be except that you have all the other stuff that's tied to the transaction including mainly the taxes right so that means withholdings means you're going to take out of their check their federal income taxes that they owed to the government and you're going to basically pay to the government on their behalf because you're forced to do that as well as the social security and medicare which has an employee portion and then you're also charged social security and medicare on the employer portion actually paying taxes not on your income but on the income that you're paying to employees you're actually paying taxes on an expense which is kind of a funny situation but not really in a sad way in a sad way it's a funny situation but in a case so then you've got those taxes and then you also might have benefits because the benefits are something that often go through the through the employer in part because sometimes you can get you can get better benefits to your employees so anything you can give to your employees at a added benefit to them is good to both of you because you're giving them added value at a better rate which is good for you right as well as the employer because you want to pay them as much as possible meaning if you can pay them a benefit like a 401k plan and allow them to keep more of their money then then you're able to pay them more in essence in that case so things like a 401k plan that are quite common the other reason you might have benefits going through the company is because you might have group policies that have the maybe beneficial like insurance so insurance might have tax benefits health insurance but it might also just be that you have a group policy and might have better terms of the insurance for that reason as well so you might have withholdings for the benefits those possibly being voluntary withholdings meaning you're offering them to the customer as a benefit they're choosing to take that withholding as opposed to involuntary withholdings meaning withholdings for taxes that you that you have to do as basically the tax collecting arm of the government in that case that's the role that you're kind of playing there so when you withhold the money that money is going to go into a liability account because because in essence you took it from the employee if they were going to earn a hundred dollars and you only gave them 75 dollars and you kept 25 dollars they still earned 100 dollars in theory you're going to be paying that 100 dollars to somebody on their behalf and that's where the liability comes into place so you're going to then pay the liabilities this paying liabilities is similar to the managed sales tax that we saw up top where we saw the sales tax growing as we create an invoice and as we create a sales receipt because those are the things that charge sales to a customer and it increased a payable and then we paid the payable in this case we have an increase to a payable every time we process payroll because we're withholding or keeping some of the money they should have otherwise gotten in order to pay someone else that means a liability is going up and then we're going to process the liability by paying the liability at some point after after we process the payroll that's going to be the the general cycle that we will have for the payroll process and then the other process that's kind of interwoven in this this this is the kind of payroll process that will happen on a whatever you process the payroll right on a weekly bi-weekly semi-monthly and then you'll have to process the payroll forms which are reporting forms to to the government say the IRS and possibly to the state now the reporting process usually happens like on a quarterly basis and an annual basis although depending on how much payroll taxes you have you might have different basis you might have a quarterly and yearly or something like that but normally you have to process the 941s which is an information return to to the government that reports the federal income taxes social security payroll and and medicare that you withheld as well as your portion of social security and medicare it's not something that you usually pay with at that point in time it's kind of similar to like a 1040 for individual income taxes you're supposed to pay before you process the return but with the form 1040 you usually get a refund meaning we're used to not being able to pay the exact amount of tax with regards to an income tax and trying to overpay and then get a refund but if we had an easy tax system if we had a flat tax which is kind of more similar to what we have with the payroll taxes then we would pay the proper amount of tax as the tax becomes due as we process the payroll and then pay the liabilities the 941 forms then are just an information return if everything has been done properly just double checking telling the iris this is how much i owe you recalculating it this is how much i paid you hopefully there will be no refund or amount due at that point in time just an informational return we do quarterly obviously quickbooks is quite useful to generate reports to help us to generate the tax forms if you have the paid quickbooks that's one of the things we were paying for the other forms at the end of the year will be a 940 form that we have to do at the end of the year that's for federal unemployment tax which is fuda and then we also have the the w2s of course and the w3s that we have to process again at the end of the year that's when everything comes everything hits the fan right we hope the stuff that hits the fan smells nice right so we don't want the problems that if there's any problems in the payroll process they usually kind of get weeded out or they usually kind of kind of come to fruition at the worst time right that we have to fix it because we're really busy and that's going to be at the end of the year so you want everything to kind of run smoothly so that you can process those forms at the end of the year the w2s and the w3s and again the software is quite useful to be able to be processing those forms so we'll dig into a little bit more detail in terms of the center here in the payroll center which is another way to get to that item in future presentations and then we'll take a little bit of a look at the actual processing of the payroll and what that looks like