 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. We're gonna duplicate some tabs to put reports in like we do every time. Right-click in the tab up top so we can duplicate it. Right-click in the duplicated tab so we can duplicate it. Back to the tab to the left, accounting drop down, we wanna go into that balance sheet report. And then we're gonna tab to the right, accounting drop down, go into the income statement report. Back to the tab to the left so we can change that date range, hitting the drop down. I wanna custom date range. I'm going into 2023 and the end December 31st. That's the home on this range that we want for that date range. Then we're gonna go to the tab to the right. The range looks good here so we're good to go. I'm gonna go to the first tab and now we're thinking about the processing of payroll. So I wanna reiterate every time we look at this processing of the payroll, although it gets a little bit tedious to do so because I think it's quite important to note that there's multiple different ways that you can be dealing with payroll. And obviously payroll is one of those things that will differ from location to location, even if you're in one particular country, it could change from location to location like in the United States because the state taxes could be different and it's gonna add a layer on top of the federal taxes that you have to deal with and if you're in other countries outside of the United States, you're gonna have your own kind of laws that you have to deal with there in terms of both the accounting that you have to deal with which might include payroll taxes of some shape or form and human resources are often attached to the payroll as well which you have to be in compliance with as well. That's kind of ties in with the whole accounting process and now you've got the HR accounting side of things as well as the actual bookkeeping side of things both of which can get quite complicated. Now the two general ways that you can deal with payroll is you could do payroll within the accounting system within zero with the integration of gusto. So you can turn on gusto if you hit the dropdown here if you hadn't turned it on, there'd be gusto here and then you're gonna have a payroll up top and then here's your payroll tab which you can process within gusto. So for me personally, even if I'm not using gusto I do everything with gusto anyways just because not that gusto but like I just do things with gusto, you know but in any case you got your payroll that you can process within the zero system. Your other option is to process payroll with the help of a third party payroll processor and in the United States these are becoming more and more common because of the complexities with payroll. Payrolls become quite complex and therefore and it's tied to human resources oftentimes. So sometimes even if you don't have that many employees it could be useful to outsource the payroll to a third party in which case what do you need to do in zero? You need to get the information necessary to get your financial statements correct for reporting purposes, internal decision-making purposes and for the United States income tax preparation purposes. So a quick look over here on our flowchart. Remember that employees is basically the same as the vendor cycle. This is a QuickBooks desktop flowchart but we're just looking at it to look at the normal accounting flow. If it wasn't for the laws related to employees and withholdings and that kind of stuff paying employees would just be like any other vendor like paying a contractor. You would just shake hands and you pay them after the work is done, right? But because of all the laws and human resources and whatnot now you have the whole specialized field that has been created through all these laws and regulations and whatnot. And on our accounting side one of the major things we have to deal with is the withholdings. Now, if we do withholdings for payroll taxes and possibly other things like healthcare and whatnot then that's gonna force us to deviate from a cash-based system to an accrual-based system if we're processing the payroll within the zero accounting system because we're gonna have to track all the withholdings that we take out which are gonna be accrual activities. That's gonna be a liability that we're gonna have to deal with. We're also gonna have to store all this data within our zero system which is tracking everything per employee as well as per paycheck per employee and year-to-date information. So we're gonna have a whole lot of other reports that are necessary and they're gonna be necessary to help us also with the preparation of in the United States our tax forms which include generally quarterly tax preparation those being the 941s, yearly tax preparations form 940, W2 forms, W3 forms and so on. So again, the system can help us to do that but it puts a lot of more information if you're running it through gusto. The other way that you can do this is if you had someone in a third party processing the payroll then you don't need to pull in all the detail. You can pull in basically just what you need to create the financial statements and reconcile your bank account. So we talked a little bit in prior presentations on how to set up gusto but we're not gonna set it up in our practice problem because it requires a link to the bank accounts. So what I'm gonna do is just basically run through a quick payroll problem imagining we have a simplified version of payroll in Excel to calculate what the payroll kind of looks like and then also kind of mirror the reports that you might get from a third party processor like a paychecks or an ADP. I'm not advertising for them but those are the bigger ones and then how would you take that information and put it into your accounting system? So let's just imagine we have a payroll report that we're gonna put together in Excel. So I'm gonna create this, if you don't wanna create it in Excel you can just use the Excel worksheet here and plug this and imagine that you got this from a third party payroll processor or this is in essence what would be processed within zero with gusto if you're processing within the system. So I'm gonna do this fairly fast. I'm gonna right click on the tab here. I've highlighted the whole thing. I'm gonna format the cells. I wanna go to currency and I usually like negative numbers to be bracketed and then I'm gonna go none of that and no dollar sign and we'll have two decimals. Okay, then I'm gonna increase the size of the sheet. So I'm gonna hold control and scroll up. You can also do it down here. I'm at 120% the size and then I'm just gonna make a payroll register type of form. So I'm gonna start with the name. I'm just gonna put my headers of the register total earnings. Notice that I, or you might call it gross earnings. Let's say gross is probably better. Gross earnings. Your earnings are gross. No, you're gross. Anyway, social security, social, social, security. And then these are the taxes that are taken out for the United States. Let's start with actually federal income tax, which we can abbreviate with FIT. And then you have social security and Medicare, which are the FICA taxes. So I'll say social security and then Medicare. So that's what we have to base. We're mandated on a federal side to withhold in the United States. You might have different or similar kind of structures withholdings in other places as well. But obviously, again, taxes are gonna be part of accounting that's specific by location. And then I'm gonna make a social security adjustment because I need to tie into my bank register and I have a calculation adjustment to do that. And then I'll show you that in a second. And then we've got the income tax and then we've got the net pay. That's gonna give us the net pay. And then I'm also gonna have the employer taxes for social security and Medicare that I'll show you as well. So that's gonna be our headers. So I'm gonna select this whole thing. Why is this over here? And then I'm also gonna have a social security adjustment, again, for the employer taxes. So maybe I should pull this down. I'm gonna pull this down one and pull it down here. And then just to note, these are FICA taxes. So I'll say this is FICA taxes and I'll select these two. And I'm going to, I'm not gonna merge across like this. I'm gonna right click and then format this. And.