 QuickBooks Desktop 2023. Enter transaction for payroll using bank feeds. Let's do it within two weeks. 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 then 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 Bank Feed Practice file going through the setup process we do every time view drop down we got the hide icon bar open windows list checked off open windows they're open on the left reports drop down company financial let's open up the P to the L the profit to the loss change the range from 010122 to 123122 customize it so we can go to those fonts those numbers and change them on up to 14 okay yes and okay let's go to the reports ultra vase one more time company financial this time the balance sheet and then customize it to change that range from 010122 to 123122 and then the fonts to the numbers and we'll bring it up as has been our custom to 14 okay yes and okay let's also open the bank feeds that's where our focus is banking drop down bank feeds you got the bank feed center which would only be there if you turn the bank feeds on which we did in the prior presentation then I'm going to go to the unrecognized items we're focused now on the payroll so we got to give it just a general overview of the payroll to think about the complexity of complexity related to it with regards to the bank feeds so let's go back on over to the homepage and there's two primary ways that you can set up your payroll this is important for you if it's your business it's also important for you to think about how you might structure your bookkeeping system and who you might work with in order to structure your bookkeeping system so and you want to also make sure that you if you have employees or you're starting or you're thinking about taking on employees one do they need to be employees or should they be contractors and if they are employees then should you be accounting for them inside of quickbooks which means you usually have to turn on quickbooks and usually pay more for quickbooks to do its thing or do you want to be paying an outside service to help you handle payroll now if you're a bookkeeper also you want to be thinking about that and say okay do I want to try to automate my system with the bank feeds possibly and work with outside third party payroll providers so I can then have a system that will be automated and then have a nice networking system with an outside party which will be my go-to kind of setup or do I want to do the payroll within quickbooks no matter how you set it up if you put the payroll within quickbooks you're going to be deviating from a simple cashed based system based on the bank feeds you can't just record a transaction for payroll from the bank feeds and use that as as you're recording of the transaction as you can with other outflows in other words the payroll you can think of it as just like the vendor cycle money's going out if you were on a cashed based system with money going out you would be using the bank feeds to write in essence a check form checking account going down with it the other side going to some expense account like telephone utility so on and so forth that would be the same thing with employees you would just be saying here's a check and that's for payroll expense but then you got the government that came in and just totally messed everything up requiring things like withholdings and whatnot and other human resources requirements and reporting requirements and 940s and 941s and W2s and W3s that need to be reported and so on and so forth so you have a whole lot of added complexity so much so that payroll has become kind of a specialty in and of itself so that means that if we do the payroll within quickbooks we would have to process the payroll and then match it to the bank feeds as the things as the payroll clears the bank or we could try to stay in a like a cashed based system and see if we can work that out with a third party provider as they process the payroll deal with the human resources deal with the W2s and the 1090 and the W2s and the 940 the 941 and so on and so forth okay so first how would you turn on payroll you go to the edit drop down preferences and we can go into the payroll items which is right there and then company preferences now normally you're going to have you're going to have to pay for payroll and I won't go into the detail for the tiers of paying for payroll but just note that you're going to want to if you run payroll within quickbooks pay for the payroll because this although there's no one thing in payroll that's come complex meaning calculating social security withholdings isn't hard FIT calculations are harder but not that hard for each individual but when you add all those calculations up the the likelihood of making a math error or something like that becomes quite high if you don't have software to help you out the software also helps out with the quarterly reporting and the yearly reporting that being the 941s quarterly typically the 940 yearly typically the W2s yearly typically and the W3 yearly typically just so you can see how it works though without having to pay for the added item let's just turn on the manual payroll and we're going to say no I'm just going to say next and activate and then manual payroll has been activated so if I close this now we've got this line down here if you don't have that arrow that line or that arrow then you don't have payroll turned on if you do then you've got some kind of payroll turned on now if you process the payroll through the quickbook system then what's going to happen is first you can enter the time it's not a required to enter the time because you might track the time somewhere else with regards to the payroll processing and then you're going to process the payroll which means at the end of the day you're going to make the payroll checks or the electronic transfers to the actual employees and you might do that depending on how you set up the payroll whenever you choose the common way to do that would be weekly you know biweekly semi monthly or monthly this will at the end of the day generate the decreases to the checking accounts which would be a type of check form but a special type of check form and also give you the withholdings which usually create a liability so those liabilities become a cruel kind of things which means they're going to mess up our bank fees right so they're going to be liabilities over here for social security medicare federal income tax for the employees f it so so then we're going to have to then after we process the payroll pay off the liabilities which is the pay liabilities form which is going to then once we do this make a check form basically but it'll be a special widget form check form that will decrease the checking account and then lower the liabilities that we increased when we processed the payroll so if you have everything set up properly that can run pretty smoothly but it doesn't doesn't it means that we can't just use the bank fees to record the transaction how does the bank feed fit into that process well we're going to pay the employees and then after we pay the employees at some point afterwards we're going to then pay the liabilities to the government and whoever else we have to pay liabilities for like a like health and health insurance and so on and then those things are going to clear the bank so if I go into the bank feeds we're then going to have to match the payment here using the matching item which will often kind of do this automatically if everything ties out properly the system will kind of be able to to see the match and it'll tie it out and we could just match it therefore the bank feeds are being used not to create the financial transaction but rather just to help us out in essence with the bank reconciliation process tying out our books to the bank's books so we'd be more in a full service accounting system with regards to payroll there's no way really around that due to the complexity of payroll and the need to use the widgets and so on if you're going to process payroll within QuickBooks now the other way you could do it is say okay maybe I'm going to try to say I want to make my internal books on a cash-based system as best I can and then with regards to payroll I'm going to work with a payroll provider to do all the other stuff meaning provide the stubs to the employees W2s W3s 1099s or I'm sorry 941s 940 preparation and so on and then they're going to give me the information just that I need in order to make any adjustments periodically so how might that work so just so you can get an idea of this for your own business or possibly if you're a bookkeeper how much you work with a third party and try to keep everything as simple on a cash-based system as you can and then maybe make periodic adjustments for small businesses possibly only at the end of the year so that your financial statements are correct on whatever basis is needed either a financial basis if you have financial reporting but possibly just for a tax basis so you can properly record your taxes so you might say if we process payroll usually you get you get a form looks like this something like this that this is a simplified kind of register or payroll register and let's say we have these two employees Adam and Erica here and Adam earned on this payroll 4583 33 and then we took from Adam social security medicare and their income tax these are the common three federal taxes we would take we could also take from Adam voluntary withholdings like insurance and and so on an IRA 401k I mean so this is so this is the calculations I won't get into the calculations but the net pay would then be this minus these three meaning what Adam earned minus social security medicare and income tax therefore the net check that would go out is 3512 71 that's what Adam would get and then we on our side also have to pay another matching of the social security and medicare for our payroll taxes as the employer and then Erica let's say our other employee made $800 social security withheld medicare withheld that means she's going to get a net check of the I'm sorry and then the income tax withheld a net check of this 628 80 and then we have to pay social security and medicare on top of her payment that is in place and so and then we can total these up now note that you can kind of imagine when we record this into the system as if it was a journal entry by journal entry transaction in other words if I enter the transaction for Adam we would say payroll expenses for the full amount but he only got 3512 71 that's the decrease to the checking account and then we would increase the liability of the 1070 which represents the withholdings that we're taking out and then Erica received 800 payroll expense account then she only got the the 628 80 the difference being social security medicare federal income tax in this example or we can think of them as kind of clumped together as if they're just one employee so I can use the total column and I can say well the total payroll expense should be five thousand three eighty three thirty three and then the amount that came out of my checking account in total was four thousand one forty one fifty one and then the difference is the total withholdings that that were taken out the one thousand two forty one eighty three so so I could like periodically make adjustments based on these registers that are given to me and put them into the system to make my financial statements correct but still not have to deal with the with the recording of the pay stubs to to to each of the employees and they should be able to process then the quarter nine forty once in the nine forties now if I wanted to be at a cash based system I might say well why don't I just wait till everything clears the bank because it's only basically a timing difference meaning I have the third party person process the checks I'm going to see this check and this check clear the bank feed right so when they clear the bank feed I will see them over here in the bank feeds and possibly I just record them like I normally would if it was just a as if I was paying a vendor and that would just say okay there's going to be a decrease to the checking account the other side is going to go to payroll expense right and so that will not be exactly right on an accrual system because what actually happens you'll note here when when when this person got a check is that even though the check is that amount we actually had a liability and a cruel component of this this liability that increase or in total this liability that's going to increase but then we're we are of course going to pay off that liability shortly so if I have the third party payroll provider processing the payroll when they pay off the liability then of course that will clear the bank and I'll record I'll record that as basically payroll expense again at that point in time that can group them both into basically payroll expense not breaking out payroll expense and payroll tax expense so that would be the simplest thing to do on on our and just be dependent on the bank feeds we just wait till everything clears the bank and then record it as basically payroll expense then at the end of the year what we're going to have to do is at least for taxes record our books that would be appropriate for taxes so if there are any adjustments that need to be made on a yearly basis we can provide our tax preparer or our accountant with the registers that are given to us by the third party provider and they can adjust for any accrual components any payroll liability that needs to be recorded as well as any any breakout between payroll expense and payroll taxes if that's necessary based on the reports just periodically right at the end of the year so we can think of of the adjustments from an accrual component to from a cashed basis to an accrual basis or to a tax basis whichever is needed periodically we can do that at the end of the month or the end of the year and that allows us if we wanted to try to make our books still comply with a cashed based system and try to just automate the whole process as easily as possible and then just do those periodic adjustments at the end of the year so that's a system that you could think about setting up if you're a bookkeeper that might be an easy kind of system to set up so that you can you know automate everything and still have a workable process to make any periodic adjustments at the end of the year and then work with a solid payroll provider that you trust and then work with a solid accounting firm to help do the tax preparation and make any adjustments at at like the end of the year so that's one way that you might think or a couple ways you know you might want to think about how you can then set up the payroll and then of course when you enter it into the into the system here let's just see a payment maybe I won't enter it but I'll just look at one and I say we have a payment let's say this was like a payroll check even though it's a small dollar amount we can then just record it to payroll expense right we'll just record the other side to payroll expense and and even though this is a net check and not the gross check and then when the payroll liabilities are paid let's say this was a payroll liability I will still just record this basically to payroll expense because when I pay off the payroll liability I note that when I pay off the payroll liability it includes both the employee and employer portion of the payroll taxes and really the only part that I should break out as the employee is as payroll taxes versus payroll expense is the employer portion so so it's not going to be easy for me to break those two things out between payroll expense and payroll taxes on a cash based system but I don't really need to because again I'll just I'll just put it all to payroll expense and then I'll let my accountant at the end of the year do the adjusting entry and at the end of the year to adjust it to whatever basis is needed I'll let the payroll provider deal with any human resources providing the payroll stubs and making the making the quarterly payroll tax returns and the yearly returns and the w2s and so on so that's one system that that you can think about payroll often throws a wrench into the into your whole process so you want to make sure that you set it up right the first time if it's your own business and if you're a bookkeeper you want to think about what's my default system that I can that I can set up and what kind of network can I be working with to make this as efficient you know as possible