 QuickBooks Online 2022 pay employees payroll get ready because it's go time with QuickBooks Online 2022 here we are in our get great guitars practice file that we set up with a 30-day free trial holding down control scrolling up just a bit to get to that one to five percent we're currently in the home page otherwise no one is the get things done page and the business view as compared to the accounting view if you wanted to go to the accounting view it's something you can do by going to the cog up top going down to the accounting view we will be toggling back and forth between the two views either here or by jumping on over to the sample company file which is in the accounting view going back on over we're gonna open up a few tabs that we can put reports in going to the tab right clicking on it and duplicating it two more times let's go to the tab to the left right click on it again duplicate it again tab to the left right click on it again duplicate it again as those are thinking jumping back on over to the sample company to see where the reports are located in the accounting view which is on the left-hand side fairly straightforward it says reports right there that's where they're at going back on over to the business view it's still thinking we're gonna be on the second tab my computer's a little slow give it some give it some time give it some time and then we're gonna be in the business overview on the left-hand side and then into the reports open it up our favorite reports let's cool let's close up the hamburger and then go on down to the balance sheet report one of the faves and then we'll go up top and do a range change from 010122 to 123122 and run it then we'll go to the tab to the left and we want to go to the business overview again looking at the reports and then we'll close up the hamburger opening up the profit and loss this time the P and the L profit and loss doing the ranging of the changing the ranges they are changing 010122 to 123122 and then run it did I do 2022 on this one I did okay tap to the right one more time business overview closing up the ham well let's go to the reports first reports then close up the hamburger and then we're gonna type in this time to the trial balance to find it the trial balance type in it in to pick that one up the trustee TV and the range in the ranges they are a change in the ranges are a change in 010122 to 123122 and then run it so there we have it okay so now we're looking payroll we're gonna go back to the first tab here we set up the payroll remember that we're in the free 30-day trial version so we have the setup on the free 30-day trial payroll set up payroll is going to be an add-on type of features you want to make sure that if you're setting up payroll do it right the first time because again it's one of those things it's not it's not the tinkering type of thing it's set it up right the first time we'll save you a lot more time measure twice cut once do you want to do the payroll in QuickBooks or do you want to be doing the payroll by a third party like an ADP or a paychecks and if you're doing it within QuickBooks what kind of payroll setup do you want to have in other words there's different tiers of payroll that you could set up okay that said we're processing the payroll here just to see if we go to the cog up top here and we go into our accounts and settings just so you can see what we are currently running on the payroll we're in the QuickBooks online the payroll premium seven days left on the trial we better get going we've got to get going closing this up and then so that's what we've got so we set up the payroll in a prior presentation which is down here in the payroll area setting up the payroll and now we're going to go through the processing of pain noting again the payroll setup is often one of the more difficult parts different companies are going to have different items they're going to set up including how often they're going to pay are you going to pay monthly are you going to pay bi-weekly semi-monthly weekly and so on and so forth what once it is set up it becomes much more easy just to process basically the payroll which is what we're going to take a look at at this point so on the payroll tab where in the overview versus the employees and contractors information the contractor information by the way isn't actually really payroll in the same sense but you have some reporting needs with regards to the taxes okay so let's go on over here and say we're going to go to the pay employees or pay my team whatever whatever you want to call the button that's the button and here we've got our payroll layout so pay so we're going to say that coming from the checking account so notice that sometimes you might actually set up a different account that you're paying from you might set up like a payroll account just to put money into the payroll account and then pay it out and what that does it it has less clutter in the payroll account which can make it easier to kind of reconcile or identify problems noting that payroll is one of the areas that if you're going to have like a lawsuit or some kind of problems the employees area is one of the most likely areas that will take place so it's nice to try to try to get that information as accurate as possible one way you could try to do that is to transfer the money that is needed and just the money that is needed and to the payroll account in essence every pay period and then pay it out of there so you have one account with it just payroll in it or you could pay it from your standard checking account we got the pay period that has been set up here and we could see that it was set up when we created our schedule of the pay periods and note also that you're somewhat limited when you're using a practice problem in the online version in terms of how far out the payroll periods are going notice that pay it basically listed it out up until 2000 up until 2000 January 2022 here that we can that we can go to up till May 2022 so if you're working a practice problem you might be somewhat limited in terms of what what the pay period that you can work with is because it's going to build everything around the current time frame which which it could be a little bit more difficult for a practice problem situation it's perfect for real life type of situation so we're going to say the pay date has already been set up it's going to be January 31st 2022 which is the end of our month in our practice problem and then we've got the employee information on down below our two employees and we've got the salary information and the regular hourly wage information and the memo if we want to drill down on and see what is actually happening which I do we're going to go into the pencil hold on a second we filled in some regular pay hours to save you time we filled in the default hours you set up for your employees this first employee in other words is a salaried employees that's pretty straightforward they filled in the hours basically for the the hourly employee okay let's take a look at the first one I'm going to hit the pencil over here to take a look at the detail so let's take a look at the detail that we have so up top we've got Adam Hamilton employee named the address the pay period and so on and then we've got the pay up top so this is a salary salary employee on a monthly basis so that's where we're getting the four five eight three thirty three that should be straightforward if it's a salary basis easy set up there and then we've got the employee taxes so these are the items that are going to be coming out of the payroll so in other words they earned this amount in theory and this are their taxes not our taxes as the employer their taxes we are the ones that are forced to be the tax collector meaning they would have got this money we're going to pay this money either way but instead of paying it directly to them and them then paying their own taxes we're forced to keep their taxes so you can imagine it as if we gave them the four thousand five eighty three thirty three and then they gave us back the amount for taxes which we're going to pay on their behalf to the government entities you can think about it in the same kind of situation for other withholdings as well such are voluntary withholdings like a 401k plan or something like that but instead of us exchanging the money them giving it back we obviously are withholding it we're not giving it to them at all so then we're going to go down here it calculated the federal income tax it did this is the most complex calculation because this is what's going to show up on their W2 for the federal income tax withholdings basically at the end of the year and it's trying to estimate what the taxes will be on the form 1040 individual income taxes for the employee which is impossible to do exactly because the tax code system for individual income taxes is way too complicated to do it exactly so we try to overshoot it a little way a little bit and we have to use the tables in the W4 in order to do it and so on now I'm going to try to make this a generic problem as much as possible so I'm going to actually adjust this to to try to match my generic problems so that we can tie it out to to a problem we did in excel and so on into our bank reconciliation so I'm going to adjust this according to that practice problem we also have the California tax the California tax is going to be something that could mirror the Fed in the way it works but that will of course be more localized on the California level I'm going to try to make this a generic problem by removing the California tax so we only have the federal taxes I'm also not going to get into the voluntary benefits like a 401k plan and so on all that stuff there's many different variants they can go into that stuff we have a payroll course that gets into it in a lot more detail but we just want to get the idea of the withholdings that you would need to be putting in place here and then of course all those different variants are things that you can do you can grow from there once you have the general idea of how the payroll is going to be working what other things are going to apply to you so this is the concept of the withholdings the social security is usually a straightforward kind of tax so in other words if we had the 700 if we had the 700 or the 4583.33 social security is currently but at 0.062 on the employee side so that's where we get the 28417 and so that's unlike the federal income tax it doesn't have a progressive rate although it does have a cap and some other confusions it's more of a flat tax in other words it's actually easy to calculate and so that's that and then we've got the Medicare which is 720 times point 0145 at this point in time hold on to six that's 4583.33 times point 0145 which is the 6646 and we're going to adjust that a little bit on our practice problem later so I'll show you how we do that just so we could tie it out to our other practice problems so we could do some mixing and matching but that's the general idea we're going to remove these these are the taxes of the employee that were withholding from them that they have to pay these two fairly easy to calculate the system can do that the state tax also is the system's getting a lot better at doing that but it's going to be more confusing typically because state by state locale by locale and then the federal income tax confusing but universal in that everybody has the federal income tax withholding however it's a very complex progressive tax system and therefore you got to use the you know that the tables and whatnot and that's why this tax is one of the big ones that we really want to pay for payroll to help us out with because it's confusing right so that's where QuickBooks is earning their earning their money and I'm going to then hit the plus button then we also have the employer taxes you could think of this kind of like the matching on a 401k plan or something like that these are taxes we pay over and above as the employer so one more time this tax up top or this is what the employee earned so that's what they earned we're going to pay that money either to them or on their behalf to the tax agencies in this case and that means these withholdings are what we are paying on their behalf we withheld it not to keep it to pay it to the to the government on their behalf these are taxes that we incurred not on our income actually on our expenses that we paid to the employees that we have to pay over and above the earnings of the employees that's why these are going to be actually the payroll taxes now when you think about the impact on the financial statements you could think of the impact on the financial statements as as if it was for all the employees as a whole or employee by employee what's going to be the impact on the financial statements from this transaction and just realized that if it was if we didn't have all this confusing with withholdings it would just be like any other expense right we would just say oh payroll happened so I'm going to pay out cash is going to go down by the four five eight three thirty three and I'm gonna have a payroll expense of the same amount it would be very straightforward but it's so muddied up by taxes and laws and so so forth this at this point that we have complete specialized industries that do nothing but payroll just to try to keep people in compliance with it so what's going to happen with at least the journal entry it's going to be payroll expense going to be debited by the four five eight three thirty three but cash is going to be affected by by the this minus this amount right that the net check is that they're going to get is going to be the four five eight three point three three minus the one oh seven oh point six three and so the different and so that's the and so that that's what's going to decrease cash the difference then is going to be going to the liability of some kind for payroll liability that we're not to oh and we have the employer taxes which are going to be payroll tax expense of the three fifty sixty three and the other side hasn't not yet been paid so it's going to go to a liability so let's say okay on that one so that looks good let's check out let's check out Erica Smith in a bit more detail going into that one and we're going to say the hours for Erica is that what we want to keep on the hours now I'm going to change the hours to 160 so I'm going to change the hours to 160 the rate is 20 so now we've got the the total of the three thousand two hundred three thousand two hundred actually hold on I'm going to change her rate to 15 I think I had it 15 so I'm going to close this back out and let's close this back out and I'm going to go into the employee information and I'd like to adjust her rate because I think I had it at 15 in my other practice problem so I'm going to edit I'm going to close this out sorry Erica hold on a second though it was at 15 so I'm going to go down here into the pay area and then change that to 15 and then save it okay let's go back in let's go back in Erica is going to be pissed but it's just a practice she's not really real Erica it's just it's just a practice problem so it'll be okay so we're going to go into the overview up top and let's let's pay the team paying the team okay so this one we're still good on this one let's go into Erica now and I'm going to change then the hours to 160 there it is so 2400 that's what I want okay so then on the employee taxes we've got the federal income tax again this is calculating from the W for information I want to make this one 360 for our practice problem and I'm going to delete the California taxes again to try to make it as generic a generic problem to tie out with our other worksheets that we've been working with in our bank reconciliation we'll do later and so now this number is based on tables or would be and this number up top the 2400 times 0.062 is going to be the 14880 and then we have the 2400 times the 0.062 is going to be the I already did that 2400 times the 0.0145 is going to be the 3480 and then we've got down here the employee taxes which is going to be the social security and the Medicare same kind of scenario what's going to be the impact on the financial statements you can think of it as employee by employee or you can think about our two employees together in that this amount is what they earned if this is the individual for her you can think about them both together as they're going to increase the payroll expense then this is what we withheld so we withheld this amount which is going to be increasing a payable account the difference between what they earned and what they withheld it's going to increase the or decrease the cash account and then we're going to have the employee or taxes which is going to increase in a tax expense and then the other side is going to increase the the payable account okay let's save it and close it save it and close it so there we go and then we can preview the payroll I'm just going to run it but wait a sec I got to check up I got to look at Adams again because we changed some stuff in Adam and then I wouldn't changed Erica's thing so let's make sure Adam I wanted this one at I wanted this at 720 and we don't want anything here and so there we've got that okay so then I'm going to say okay for Adam I think that's good okay so now I can hit the drop down or rise up or let's say preview let's preview it so now we've got the preview pretty straightforward okay let's go ahead and submit it let's do it here we go we're going to submit the payroll it says help us make it no I'm not helping not help not right now we're we're busy not using direct deposit no and then the check number that we can assign the check number I'm going to just auto fill the check numbers enter starting check number will be okay if we were to take a look at the paystubs here going into the paystubs it's going to look like this now note that you have to give this kind of information in one way shape or form because that's going to give the information you're probably familiar with this kind of paystub the current information in terms of the withholdings and the year to date information so again this requirement for us to track this on an employee by employee basis for the current and the year to date information is what is another thing that's going to make payroll a lot more difficult in that sense just to get it into the financial statements is fairly easy because if we think about them as all like one employee we could see it you know you can combine the transaction together but the requirements to give the paystubs track everything part by part year to date and the current period and to have to deal with the basically progressive tax system and the caps that come involved yeah I get somewhat tedious so I'm going to say finish this up let's make sure your taxes get paid set up taxes now I'll do it later so let's do that okay so there it is let's go into our register sometimes I like to check this out and see what happened with regards to the register so I'm going to go to the bookkeeping on down below if you were in the accounting view it would be in the accounting and we're going to take a look at the register so I'm going to close up the hamburger well hold on a sec opening up the hamburger I'm in the chart of accounts is where I want to be chart of accounts and then close up the hamburger and I'm looking at the register for cash so I'm going to go into the viewing of the register so I'm going to go into the register and there we have our checks for Erica and Adam so notice you can't really change these checks as as if there's a problem you basically had to void it and process the payroll again so there are our checks I can go into the checks here so let's see if we can click on one and then if I was to edit the check it's going to give us the details so here's the detail information for it and so here's Adam and so on and so forth with our detailed information similar to what we saw in the data input screen closing that back out so now I'm going to go back to now it took me to the employee list I'm going to go back in here go back into the bookkeeping and then back into our chart of accounts closing up the hamburger open up the register so opening up the register and let's see if I can add I should have had a check number here for these two is that kind of caused me a problem because when we do the bank reconciliation if I edit this I'm going to say that this is going to be let's say this is for Adam I'm going to give it a check number of 1 0 1 2 and say okay and then go back on over to Erica I'm going to do this again keeps on taking me out of out of my register so I go back into my register and do this one more time and say that we're going to go into Erica here and then edit that and then I'm going to say that this one is going to be 1 0 1 3 1 0 1 3 1 3 so that'll match our bank our bank reconciliation that will see future in the problem hopefully everything will work out like it's supposed to let's go to our financial statements and let's freshen these up and see what it did to the financials so we're going to say cash is going to go down if I go into the checking account or the cash account we're going to see that it went down by the net check for Erica Erica and Adam so there we have those items by the net check if you were to drill down on it it's going to take you to this information and then again back into this paycheck format so it is a check but it's indicating a special check of course I'm going to go back to and then it keeps kicking me out whenever I go into the check I'm going to stop going into the check I'm going to go back into my in my reports business overview we're going to go into the balance sheet close up the hamburger ranging of the changing 0 1 0 1 2 2 2 12 3 1 2 2 12 3 1 2 2 and run it so the other side you would think is on the income statement profit and loss report and let's make sure this is fresh and then we're going to go down we've got under the payroll they have a sub-account the wages the wages represent the total that was earned so not not the net check but the total that was earned are included in here scrolling back up and then the difference between those two is going to be on the balance sheet if I go into the balance sheet and the liability section we're going to have now a liability a liability down here for payroll liabilities California PIT SDI liabilities and then the federal we're looking federal right here I'm not I didn't I deleted the state stuff so the federal includes both the employer and employee portion of the payroll check taxes that are included here and then I'm going to go back up top and back to my reports and then we also have the employer taxes are on the income statement which are going to be down here under the taxes so this taxes area does not include the withholdings that we took even though the withholdings that we took from the employees are for the employee taxes because this tax line represents our taxes that we owe not the taxes that we have to pay because we withheld it and are going to pay on the employee ease behalf but the taxes that we actually owe over and above what we agreed to pay the employees so I'm going to go back on over now I'm going to jump back over to the trial balance and refresh that report running it and I also want to note that you could take a look at payroll reports at this point in time now that we have some payroll activity we can right click on the tab up top to do that to duplicate that tab again payroll can get quite complex in terms of the reporting requirements the 941s quarterly the 940 at the end of the year the w2s and the w3 and so on so you can have a good deal of reports here for the payroll reports but it's in the business overview and we're looking at the reports closing up the hamburger if we scroll on down all the way down here employees that's not what we want we want the payroll information so we got the the contractor payments employee detail the employee directory the multiple workers the paycheck history report the payroll billing summary the payroll deductions payroll detail payroll summary by employee let's take a look at that one let's take a look at the payroll summary by employee report and then I'm going to shade the time frame that looks good we'll keep it there and so we have our information for the hours here for total on the left hand side we've got uh Hamilton Adam and then Erica on the right hand side and we got the gross pay here and notice again you can see this this is the nice report to show that you can kind of think of this information as how something would be recorded on a paycheck by paycheck but you can also see how you can combine it together and think about all employees kind of like as if they were one here's basically the gross pay as if they were one here's the withholdings from all of them kind of like as if they were one here's the net pay as if they were one here are them broken out and so if you were to get this and then here's the employer taxes so if you were to get this information say from a third party like an ADP or a paychecks that was giving the employee all of this information doing the human resources and so forth then our goal would simply be to enter this information into the system to get the financial statements correct which is different than doing all the human resources kind of needs right so so keep those two things in mind if we go back to the trial balance this is where we stand at this point in time we're going to do a slight adjustment to payroll and the following problem due to an error we made in the bookkeeping when we made the worksheets and we already have constructed the bank statement so we'll take a look at that later but this is where we stand right now if your numbers tie out to this numbers that's great if not try changing the date range it's often the date range issue and then we'll be doing a transaction detail reports at the end of the sections which often help to diagnose what any differences are