 QuickBooks Desktop 2023. Change payroll item for payroll taxes reported on the financial statements. Let's do it within 2-its 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 get great guitars practice file we started up in a prior presentation going through the setup process we do every time maximize in the home page to the gray area going to the view drop down noting we've got the hide icon bar and open windows list checked off open windows open on the left hand side reports drop down company and financial let's open up the profit and loss change the range from 010123 to 123123 customizing the report up top founting and numbering changing the font team and let's bring it down to 14 and okay yes please and okay let's just open up the other report as well that being the balance sheet and the reports drop down company and financial the balance sheet report we can customize it with the change range 010123 to 123123 founting and numbering changing the founting and numbering to 14 okay yes please and okay that's the setup process we do every time last time if we jump on over to the home page last time we processed payroll by selecting the pay employee form which generated multiple check type forms forms that decreased the checking account for the payment of the employees and also have an impact on other accounts for the withholdings related to the payroll process let's go up to the profit and loss here we're looking at the P and L the account impacted is the payroll expense now we want to think about different kinds of accounts that we might want to have impacted in other words setting up the payroll slightly differently possibly breaking out the payroll taxes versus the expenses that's a common type of breakout that we can have the reason everything is going to the payroll expenses is driven is because of the way we set up the items the items for the payroll items like the items for inventory and service items which drive which accounts are going to be impact impacted for the sales types of accounts the payroll items will impact which are of the accounts will be impacted when we process the payroll so now we're going to adjust that so we can break out the payroll expenses versus the payroll tax expenses which is the most basic and common kind of breakout that you would likely want to have but there are other things that you can do as well once you have the concept down you might for example want to break out the payroll for the hourly wages versus the salary wages you might break it out by location or by admin versus non admin and that kind of stuff as well and you can also do a similar concept on the balance sheet on the balance sheet you'll note that the way we have set up the items we put everything in to the payroll liability account that payroll liability account includes then all for us the payroll taxes which includes the federal income tax the social security and the medicare social security and medicare for both the employee and employer side of it we could set up a separate account for the the social security the medicare and the federal income tax for example using a similar method so you can keep that in mind but our main focus is going to be here on the payroll expenses also just realize that you would like to be able to tie out what you have on your payroll accounts here to the year end and quarter end reporting so at the end of the quarter you're going to be reporting 941s for example typically that's the quarterly payroll tax reporting and at the end of the year you got the 940s and you've got the W2s and W3s the reports that help you to process that are into the reports drop down payroll and taxes and you've got for example the payroll summary report let's make this for 010123 to 123123 and so this and let's customize this fonts and numbers and let's change the font bringing it up to 12 let's say okay yes and okay so we saw this in a prior presentation where we've got our two employees and then in essence the total payroll when we're trying to tie out to what we have on our financial statement we might want to look at the total payroll item here and for example be considering the adjusted gross pay the 6983 you would think that's what should be on your balance sheet right that's I mean what should be on your income statement here it's not because we have the payroll expenses in here as well and you would think that then the payroll expenses should just be the employer expenses of the 474 because that's a common way to break it out and that's a common way to think about it when you're trying to do when you're trying to tie out your financial statements to the the W2s the W3s in the 940 the 941 so for example if I took the pay right here the 6983.33 and added the 474.23 that 745756 should be what's on the profit and loss so you can see how you can kind of try to tie those things out so that everything that you report to the government should match out right your W2s should tie out in essence to what you're reporting on the income statement there could be a cruel kind of adjustments to it and so on but you want to know what exactly those things are in the event that they come out in an auditory or something or just so that you know that you have everything tied out correctly so let's go to the item what I'd like to do is break these out then between those two items so I'm going to go up top and go to the lists we're going to go to the payroll items list here and then these are the items driving where we're going to go so if I go into like the salary item we can see that the expense account that will be hit is that payroll expense we could have a different account we could set up an account for salaried employees we could set up a different account for hourly employee advanced earn income we've got the federal unemployment we've got the federal withholdings this is in a withholding tax which is going to be going to the liability account now we could instead of having one account we could break it out to a different account a liability account for federal withholdings this is the Medicare for the company Medicare for the employee the Medicare for the company we would like to break out to its own expense account for that particular item so what I'm going to do is right click and let's see if we can edit the payroll item then we'll go through the little widget here so we're going to keep this the same and I'm going to keep this the same I probably should enter the name of the agency but I won't do that now you got the liability accounts so the liabilities I'm going to keep those going to the payroll liabilities because I could break it out into its own liability account for like a different liability account for the Medicare stuff but I'm going to keep that the same what I want to do is change the payroll expense I don't want it to go into payroll expense because I just want that to be the expense for the earnings not for our payroll taxes so I'm going to add a new account here and I'm just going to make it an expense account and I'm going to call it payroll taxes account and so there we have it and so sometimes you might want to have a parent account for payroll and then break out the payroll expense versus the taxes for example or but I'm just going to make it separate and they'll be side by side because of alphabetical order so I'll keep that as is and I'll say okay and okay and next and everything else I want the same so it says you have changed the expense account associated with payroll please choose an option to continue update all existing transactions to use this new account I want to do that because I want all transactions even though I already processed payroll to include that or I can choose the date here which would which would be still good because it's January normally if you choose this one you want to do it for the whole year you want all of your stuff to be consistent for the entire year if you want to change it you'll typically want to change it in like January so that you have a whole year worth the stuff that's the same because the point is that you want to be able to tie out as easily as possible your w2s your w3s your 940s and with your financial statements so I'm going to say okay and so that looks good let's just check that one to see if it's doing what we would expect thus far so it is so there's the payroll taxes so let's do the other one now back to the payroll item we need to do social security social security for the company this one so I'm going to right click on that one edit the payroll item same thing this is the same I'm not going to change the liability account I want to change the expense account to the one that we now have set up which is payroll taxes next next finished and then I'll do it this one again and say okay boom back to the profit and loss so now we've got the payroll expenses and if I tie this out to my payroll item list or your payroll summary which is similar to a report that you might get for example from a third-party payroll provider if you were doing it outside of QuickBooks and just entering the data into the system you're going to say okay the expense if I was thinking about all my employees as if they were one employee to look at the financial statements to see if they make sense I would think of them as okay the payroll expense the 69833 is what should be on the profit and loss as the expense that's what they earned in total even though we didn't give them that much in cash because we had to take their money from them for payroll taxes so then we took from them the the withholdings of the 155423 that's how much we took out of their withholdings and then we had our payroll taxes that we had to pay we have to match the medicare and the social security so although these three items up here are considered are kind of payroll taxes they're not really payroll taxes to us as the employer they're just they're the employees payroll taxes which were required to collect as if we're the tax collector on their behalf these are our taxes that we had to pay over and above what was earned by the employees that's why they're broken out kind of separately 47425 that's going to be here there's the 47425 so that looks good and then if I go back to the balance sheet we could say the payroll liabilities then if I tied that out to my summary would then be the the amount that we had for 474 474.23 our payroll taxes we have not yet paid and the federal income tax medicare and social security plus the 5429 that we took from the employees because we're forced to and and we're going to have to pay to the employers so that comes out to then the payroll liability hold on a second doesn't seem right wait a second here we've got then the let's do that again it was because I took the total here it's really the 1554.23 plus 474.23 there we go back to the balance sheet so there's the 202846 now what you'd like to be able to do is be able to do that even if you're processing payroll using QuickBooks or third-party provider because that's kind of your double check to make sure that everything's kind of tying out you should be able to look at be able to look at your 941s and kind of see how that ties out to your payroll summary report and how that then ties out to your balance sheet and your income statement and at the end of the year you'd like to be able to do the same thing with your W2s your W3s your 940 if there's something that doesn't tie out then of course it usually happens you if you don't discover that till the end of the year that's like the worst time because now you got to fix everything before you send out the W2s and all that kind of stuff so you'd like to get that stuff correct basically as you go but the general idea here is that we can take that same concept of breaking out our our items that we did here between the payroll tax payroll expenses and payroll taxes using the items we can use those items to break out further if we wanted to we can break out the payroll expenses to payroll expenses for hourly versus salary or admin versus non-admin or whatever we want to do and we could do the same concept on the balance sheet for the payroll liabilities if you're breaking out payroll expenses also notice who's kind of line up just because of alphabetical order but you might also think about having a parent account which would be payroll and then under the parent account all the payroll items that you break out such as any payroll expenses possibly multiple categories and the payroll taxes that you can then condense to one account the payroll account you can collapse it or expand it if you so choose okay let's just take a look at our at our trial balance to check our numbers we haven't really changed anything except just breaking out part of the expenses from payroll to the payroll taxes 010123 to 123123 let's customize it fonts and numbers changing it on up to 16 and okay yes please and okay so you can check your numbers if anything doesn't line up you can then double click on it drill down see if it's a date range thing making any changes you need to at the end of the month of data entry which is coming up shortly we will be taking a look at the transaction reports which can help hold in drill down figure out any discrepancies