 zero accounting software payroll and employee reports get ready to be an office hero with zero here we are in our custom zero homepage we set up in a prior presentation scrolling in a bit holding down control up on the scroll wheel currently at 175% zoom in opening the demo company by selecting the reset item resetting the data and opening the demo at the same time we're going to open or duplicate a few tabs so that we can put our reports in them major financial statement reports as we do every time right clicking the tab up top duplicating it right clip the duplicated tab to double duplicate another duplication that is in the middle tab we're then going to go to the accounting drop down we're going to go to the balance sheet and open it up tab to the right skip to the left and tab to the right we're going to then go to the accounting drop down and this time the income statement the P&L the profit and the loss back to the middle tab we want to go to the date drop down customize the date and bring it up to 2022 and as of the end of 2022 update that's the setup process we do every time 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 so now we're going to look at some of the payroll reports payroll is a little bit tricky for a couple different reasons one is that it's kind of hard to run in a demo type of file because it's something that kind of needs to be updated and up to date all the time it's also usually an add-on type of feature and most accounting software not just zero as it is here in zero as well if you go to the drop-down and scroll down here you can see that you have you payroll powered by gusto options it's like an add-on type of feature that we talked about in a prior presentation the other thing is that payroll oftentimes in the United States for example is going to be combined with a whole bunch of tax and regulation obligations as well some of those might be linked together with kind of like human resource obligation other kind of laws related to employment as well and therefore can be complex to the point that it's not just an accounting challenge but it's its own kind of specialty area so generally you would want to if you're going to be processing payroll through zero to obviously pay for the payroll and not try to do the payroll by hand because it's one of those types of things that usually you want to not tinker with you want to get it right the first time because tinkering with it often it's going to cost a lot more than the adage of major twice cut once there's sometimes the one adage is good sometimes the other adage is good I'm arguing here that the adage of get it right the first time major twice cut once is the way to go typically here now the other option that you have is to hire a third party payroll provider like a paychecks or or an ADP I'm not advertising for them I'm just saying and they can then help you to process the payroll and keep in alignment with possibly some of the human resources requirements as well as the reporting requirements and then our job would would simply be to make sure that our financial statements are reported properly in that event so let's just take a quick look at the flow chart before we look at the payroll items note that we cut this out by the flow so vendor section meaning we're paying for goods and services cash is basically going out at the end of the day customer section we're selling stuff we expect goods we expect money to be coming in at the end of the day the employee e-cycle at its simplest form is really just part of the vendor cycle we're paying for goods and services however once again because the law gets in and kind of tinkers with stuff or messes stuff up forcing us to be a tax collector we got payroll withholdings in the united states and we also might have benefits that's why it becomes more complex the general process for payroll so we can understand the forms that we would need to generate is that we track the time we might not need to do that within zero but we're going to track the time in some way if we've got to use time in order to process the payroll from an accounting standpoint we process the payroll here and we issue the paycheck so we basically issue the paycheck whenever we decide to do so typically weekly semi-weekly five monthly uh or monthly and when we process the paycheck it's not just a decrease to cash and recording payroll expense but we're also withholding things in the united states payroll taxes federal income tax social security medicare as well as our portion of payroll taxes social security and medicare as the employer and then we might have federal unemployment tax futa type of tax as well and then we're going to have to pay the stuff that we took from the employees and our taxes over above their taxes and paid them to the institution we also might have things that we need to include which are in benefits like a 401k plan health insurance which are often run through the payroll and are voluntary as opposed to mandatory withholdings so on top of that in order to track all this kind of tax reporting the government the federal government wants quarterly reporting and yearly reporting quarterly reporting being the 9 uh 41 forms typically reporting social security medicare federal income tax and then the yearly reporting reporting forms 940 federal unemployment tax act futa as well as uh the w2s and the w3s so hopefully we're either paying a third party or we're paying zero to help us to do all that right to track the pay stubs to track the reports to help us to to prepare the reporting reports that we need to do for the for the federal government the quarterly the yearly as well as possibly state obligations which could have their own state taxes depending on in the united states which state you're in because the state taxes will differ from state to state because they have the capacity to tax and their own however they want to tax so it starts to get quite complex is the point now knowing that then the accounts that are going to be on the balance sheet and the income statement because we've talked before that the all other reports are basically giving more detail about one or multiple line items on the balance sheet and income statement that will be the case with payroll reports as well but they're they're going to have this added feature of also having to account for for all these reporting requirements in terms of reporting on the pay stub year to date as well as the current period and for reporting the external forms quarterly and yearly so what you would expect on the balance sheet and income statement which we don't have here because it's just the demo version but we do have some sample payroll reports is possibly payroll liabilities down here which would be representing what we would have withheld but not yet paid for withholdings like federal income tax social security medicare and uh and voluntary withholdings for like benefits ira and health insurance and that kind of stuff and then on the income statement we would have uh payroll expense we have we have payroll expense right here on the income statement and possibly breaking out the payroll taxes as well so those are going to be the expense items generated through the payroll okay given that let's right click and duplicate a tab again and look at our payroll tax reports accounting drop down reports and let's go i'm just going to type in payroll well we could scroll down i think it's in its own section and so we've got the payroll for payroll reports we've got a payroll run by employee so this is going to give us an employee by employee break out and i could run this for multiple periods let's take it for the full year here and let's just just to be consistent with what we have in our income statement so we'll go from january 1st to december 31st and then we got over our employees down below so we've got the time and this is similar layout that you might imagine on like a paycheck stub and i'll pull out the trustee calculator just to so we can kind of think through what's happening we've got the the ordinary time the five four seven two plus if they worked overtime which you might have different regulations on how you have to report overtime vacation which might be broke out differently there's the total on the time the federal withholding this number is going to be determined by some kind of tables that you're going to have to look up which is why it's quite nice to use software they can do that automatically based on the w4 information which includes things like marital status and and other kind of complicated stuff but that's what we have to follow in order to do our obligation as the employer to get that number correct and then we've got the FICA which is usually just a six two six oh times point oh six two so so it looks a little bit different here i'm not sure exactly maybe the maybe but in any case that's the it's usually more of a flat tax so it's usually more of a straightforward kind of tax uh but there it is and then you got the payroll tax payable then we've got the FICA employer this is all this is the FICA tax which includes social security and medicare so social security is point oh six two plus point oh one four five or point oh seven six five times the six two six oh and it's still not getting it there but in any case that's that's the FICA is the medicare and social security and then you've got the employer this is what the employer has to pay over and above matching in essence the social security and medicare generally and i got the right number on that one so something is a little bit different in this something's not something in the incomes not being included in the FICA for the employer so that's unusual but in any case whatever it's just an example we'll might dive into this more in the example problem and then federal unemployment tax at futa is going to be the employer tax which is usually fairly small but it's only paid by the employer not the employee it's not pulled out of the wages suites state unemployment tax same thing but on the state side so this is the the employer contribution on the total now the net pay that the they're actually getting is six two six oh minus what we pulled out from their taxes minus the one two nine two point six nine and that's the four nine six seven thirty one so from a pay stub standpoint this person got this much wages minus this so the pay that they should have gotten to their bank account is that and then we paid the six ninety seven ninety nine over and above for the employer portion of the payroll taxes which is social security medicare futa employer portion suites state taxes if necessary and and futa which is an employer tax now you could do this for each employee which you would need to do to report this information to the employees because we have to give each paycheck a stub that tells them how much we took from them in terms of withholdings on a year to date basis as well as a period by period pay period by period basis but say if you had some external person like an adp or paychecks doing that then then in your books what you what you can kind of do is think about the payroll as if all your employers were kind of one big employee right and you can add all these together and think about okay the wages for a total total wages as if they were all one employee six two six oh plus the the wages for this person plus five eight nine oh plus the plus the five seven three five is would be your your wages for as if they were all one employee and then you could subtract out what was what was withheld for all of them in other words you can think of the journal entry in essence on an employee by employee basis or you can kind of aggregate and think about the journal entry in aggregate for the full payroll usually works out quite nicely to think about it that way okay if i right click and duplicate this again let's take a look at another report going to the accounting drop down reports let's go down to the payroll let's run it by a pay type let's do that one and bring it from january january and through december and you've got all the pay types here so so we've included we could filter by the pay types so we've got the wages so now we've got the full there's that 17 that i added up before 17 885 does that tie out to the income statement you would think it would but i think so they kind of they didn't they're doing funny stuff to the income statement as they rule for their practice problem i think because the payroll oh yeah it does it's right there there's the 17 885 and then in the payroll tax expense would add up if i added those three up for the payroll taxes should tie out as well so that's nice okay so then we're going to go over here so then the taxes are at the 36 uh 36 9 3 25 if i go back on over here to the taxes notice it that doesn't tie out because this tax over here is is is looking not just at the employee or portion of the tax so what we break out is only the employee or portion of the tax and down here is the employee or contributions okay let's take a look at another look i'm going to right click on this one again duplicate again and let's see the other reports for payroll checking them out scrolling down we're going to we're going to go into this run run by item so you can think of the payroll items the items being those underlying things that we have to set up for payroll similar to the items for inventory items when we and enter like invoices and stuff so i'll say that's that one okay so now we've got it broken out by federal withholding the faika employee portion the faika employee portion futa tax so these are you know the the inventory or i'm sorry the payroll items which can be useful this report to kind of tie out to the different kinds of of of quarterly reports that you would be doing meaning the 941s have the federal income tax and faika both employee or an employee the 940 has the futa so if i was looking at the employee or taxes then this is an employee tax this this is then employee or tax right there so i could take the 1368.2 plus the futa is an employee or tax plus the four meaning it's not coming out of the the employee's checks and then overtime payroll tax payable suit to employee or contribution so that looks like it's an employee or on suit on the state side that's the 482.9 and so that's the 199418 let's see if that ties out to the income statement for the taxes it doesn't they got a one they got 133744 payroll tax 1337 so that's interesting not sure exactly why that doesn't tie up but it's a practice problem i'm not gonna you know i think they might have changed the data here due to the fact that they're rolling up the data but in any case i won't i won't dig into it too much here we'll just overview them at this point maybe when we go to the practice problem we're going more detail but just note that the payroll is a whole field in and of itself just due to the complexity of the taxes and reporting and human resources and whatnot so let's go to this one and run this from january january through december so and this one you've got kind of like a ledger a look for it a payroll kind of ledger so now where you've got listed on a horizontal kind of fashion the gross pay and then the taxes and then the net pay so meaning you've got the gross pay the 8797 minus the taxes with holdings 2144.95 gets the net pay so this is kind of what you would expect reported in essence on an employee paycheck but you're doing it kind of in aggregate as if all employers are like one employee if i drill down on this because we have the capacity to do so then it's going to pull me into the summary page so those are the major payroll kind of reports payroll is a specialty area you want to make sure if you're a bookkeeper that you're deciding how you want to deal with payroll do you want to be working with an outside provider of payroll do you want to be processing payroll within the system and picking up clients that need that or or not and and when you're setting up the payroll you want to do it right generally from the first time because oftentimes if you're doing it wrong it doesn't come to light until the end of the year when everything falls apart and you're trying to do everything at at that point it's no good because now you gotta do w2s w3s the the 940s the 941s and taxes for the all at the same time so you don't want it falling apart at the end of the year if at all possible