 QuickBooks Desktop 2023. Process Payroll Forms. Let's do it within two weeks. QuickBooks Desktop 2023. Here we are in QuickBooks Desktop sample rock castle construction practice file provided by QuickBooks going through the set of process we do every time maximizing the home page to the gray area. Going to the view drop down noted we have the hide icon bar and open windows checked off where you can see the open windows on the left hand side. We're going to go to the reports drop down company and financials. Look at that profit and loss income statement tab. A one oh one two four twelve thirty one two four January to December the date range customize it fonts and numbers change the font twelve. Okay. Yes. Okay. Then we'll do the same thing with the reports drop down company and financial but this time the big balance sheet changing to twelve thirty one two four on the date. Customize in the report bringing it on over to the font size of twelve. Okay. Yes. And okay. There's our setup process we do every time going back to the home page and prior presentations we've been focusing in on the employee cycle or payroll cycle. We started out with the pay employees. We might take a look at the time entry later but remember that's not like a crucial component because we might track time elsewhere outside of the system or we might have salaried employees. Really the payroll process we're saying it's going to start here when we process the payroll which will be dependent upon the cycle that is on whether we pay weekly by weekly semi monthly monthly and so on. That will happen at the same interval we've talked about in prior presentations it being similar to basically paying a vendor entering basically a check right for a vendor except that we had to take away. It'd be like paying a vendor and saying hey we're going to take away all the stuff that you owe people and then we're going to pay them on your behalf because the people that you owe money to forced us to do that the people they are employees owe money to of course be in the government primarily and possibly we take out other stuff that are voluntary such as the benefits for health insurance and that kind of stuff. So we process the paycheck here and then after that all the stuff that we took out of their paycheck whether they be voluntary or involuntary we then have to pay to the people that we are required to pay it on their behalf to typically the government of course and possibly the benefit programs like a health insurance company that's when we pay the liabilities. These two things are really the cycle that is routine that will happen on a routine basis meaning we pay the employees biweekly semi monthly so on and then we pay the liabilities at some interval after that depending on our particular situations like within the next week or whatever to pay off the liabilities to the government. So that's the general process but then we have our reporting cycle now the reporting cycle isn't really tied in generally to our payroll cycle because it's got its own cycle it happens usually quarterly and yearly. So in other words we process our payroll weekly or semi weekly or whatever the forms that we process to the government and possibly to the state are typically on a quarterly basis or yearly basis. Now that's not always the case because if our liability is below a certain threshold the government might say hey look we'll let you process the forms just on a yearly basis or something like that but generally you want to be thinking of the general process being the liability forms are going to be processed quarterly and yearly. Now these forms you can think of as basically being similar to your individual form required to be processed that being the 1040 form that happens at the end of the year so normally when you look at a 1040 form the year ends and then by April 15th of the following year you filed the reform for the previous year that's how it usually goes and usually you do so and hope for a refund at that point in time. But note that what you normally would like to happen if everything was set up you know well or everything went perfectly you would say I wouldn't want to refund or to owe money it should just be an information report that's what the 1040 kind of should be or is designed to be meaning you're supposed to pay your taxes as you go as we've seen when we take when we take the money from our employees and pay it to the government they're paying their taxes as they go and then the W2 form that is filed after the year end. Should just be an information form telling the government look this is how much I earned this is how much tax is going to be on that based on my earnings I already paid it to you. I'm just verifying the fact that it's been paid no refund no about do that's how it should be you can't do that on the income taxes because income taxes are too complex because we have a a progressive tax system multiple tax rates and we have all these deductions and credits and so on. That is way too complex even for a basic tax return to get exactly the taxes correct when you pay them during the year even though you still have to do that. If you had a flat tax which is more like what we have on some of the payroll taxes like Social Security and Medicare then you can actually do that generally or this closer to it right and that's what we're doing on the payroll side so you can think of the same kind of process. We're paying the payroll taxes as we process the payroll but then we have to file an information return the difference between it and the form 1040 as you typically have to process the information return on a quarterly basis as opposed to a yearly basis. The government typically saying I want to know what's going on now I'm not going to wait for a full year. I want to know what's going on on a quarterly basis. I want you to verify to me that you have been doing the process properly on a quarterly basis instead of a yearly basis that being the form 941. So if I click on this form then it's going to take me to this tab which is in the payroll center where we have the three tabs run the payroll tab run the third tab over here. Now it's not allowing us to process the forms here because we're in a practice file and the payroll forms are a little bit more tricky to look at because you can't really look at one cycle because the payroll forms will differ from quarter to quarter. You have four quarters that are kind of the same in that you process the form 941 and then at the end of the year you've got something totally different where you have to process the 941 but also the 940 and you've got to process the W2s and W3s. So you really have to go into a kind of like a course in and of itself to try to play out a full year of payroll to really get an idea of payroll. That's why payroll can be a little bit complex. But so let's just kind of consider the forms that will be filled out. And before we do so notice the reports that are going to be subsidiary to the subsidiary reports to the balance sheet in the income statement. In other words if I go to the balance sheet here we saw that we process the payroll and then we've got the payroll liabilities and then we paid off the liabilities. You have some supporting reports if you go to the reports drop down and you go to the employee and payroll these might be somewhat limited depending on what payroll you're paying for. Remember that payroll is an add on feature within QuickBooks. But if you look at the payroll summary report for example then let's make this as of 010124 to 123124. It gives you kind of some summary data breaking it out to kind of like you would see it on like a paycheck stuff. Right. So we've got the employees and you've got the earnings per per employee and you can also think about it in terms of the total for in all employees. As if you had one employee like all employees kind of combined together. You've got then the gross pay over the time frame above the taxes withheld which include the federal income taxes the Medicare the Social Security and so on. Which gets us to the taxes that we withheld then you got the other voluntary withholdings in this case the health insurance and then the employee or taxes. So this is a nice report that can be useful to kind of populate the or think about how to populate the reporting forms the 941s the 940 the W2s and the W3. Now note that these forms that the reporting forms are not having any impact typically on the financial statements unless there's something that is due at the end of the day unless we have to actually pay something. But usually we do not because they're just reporting forms. So QuickBooks is going to help us take the financial data and populate the reporting forms which aren't going to actually have a financial transactions into this into the system unless we have to write a check at that point in time. Which typically we do not if we list the reporting forms just to kind of get an idea and I found these on irs.gov. I'm just looking at the forms in general just to get an idea of them so you can see the task that needs to be taking place. Then you can just search for 941 on the irs website irs.gov. So the 941s you can see here are filed quarterly so the first quarter January February March every three months 12 divided by four every three months. January February March you're usually going to have to file that sometime by April right because you got the three months that passed. You got to file it by the end of the next month and then quarter two you got April May June and then quarter three and quarter four. So you got to tell which quarter they are in instead of a yearly reporting as is done with the like form 1040 and then basically you're going to have to populate this out. You've got the wages here and then you've got the three kind of federal income taxes that are going to be paid that you're going to be populating. We've got the federal income taxes that we have to deal with remembering that this is not our federal income tax as the company. We do have federal income tax as the company we will have to pay depending on the company structure that we are in for sole proprietorship. It'll be part of the schedule see the bottom line flowing into our taxes on the 1040. If it's a C corporation we have to pay at the C corporation level but this is the federal income taxes of our employees that we took from the employees withheld from them to pay on their behalf. Then we have the Social Security and Medicare and notice here when we do the calculation it's a little confusing because this calculation is based on the employee and employee error. So you'll recall when we did this kind of calculation in our paycheck we used the .062. Here we have .062 times 2 which is the .124 because we're including both the employee and employee or portion same with the Medicare which is .145 times 2. That's where they're getting the .029. So we're adding up then all of the taxes that are going to the federal government the federal income tax Social Security and Medicare in theory. Even though those are going all to the federal government in essence the federal government should be putting them in different funds and whatnot and treating them differently and whatnot. That's why we kind of have to break them out and even though they're going to the same you know place generally and then we're going to have to tell them how much we actually we actually withheld. And then the difference is going to be that the the taxes that are going to be paid or more taxes that are due right but it should be netting out so there's going to be nothing. That is going to be paid or due because it should be just an information reform. Now I won't go through all of it and basically more detail here but that's the general idea and then you've got the recap of the liabilities on a monthly basis that you may have to put down below. So it's a generally an informational reform. Notice it can get quite complex especially if you have other stuff going on such as like some of the laws that went in place with regards to COVID and whatnot with regards to payroll taxes and deferring when you have to pay them with all that kind of stuff can get quite confusing. Quite useful to have something to help to process that like a third party processor or like QuickBooks helping you to process the forms. Okay and then yearly you've got the form 940 so that form 940 you would think would be a summary of the 940 once right but it's not because really the 940 is there to calculate the FUTA tax Federal Unemployment Tax Act. So so it's basically a different tax it's another federal income tax this one only being the tax on on the employer side of things. So it's a smaller tax it's less known of a tax because it's smaller but it can actually be quite complex but because it's smaller the government doesn't require you I believe it's because it's smaller that's my idea. The government doesn't require you to report it on a quarterly basis but simply on a yearly basis. So then you've got this added thing you got to do at the end of the year at the end of the year you've got the you've got the last quarter that you're going to have to do for the 941s and you're going to have to file that form 940. And then of course you've got the W2 forms which are reporting forms that are going to go out to the employees. The summary of all the W2 forms will be at a W3 form which you can think of as if you're thinking about all of your employees as if they are one kind of employee. All these kind of tax forms should to some degree match tie out be able to be understood as complying with each other and they also should be able to tie out to in essence the reports in QuickBooks and the financial statement reports in QuickBooks on the balance sheet and on the profit and loss with regards to how much was paid and the payroll taxes to the employees down below. So all that should tie out and again it's a lot easier to get that stuff to tie out if you have like the paid payroll and you're helping and that's helping you to kind of populate everything so all your stuff matches out. If something doesn't match if something gets out of whack then that usually falls into line. You really usually realize that even though you do the quarterly 941s at the end of the year when you do the W2s and you try to tie everything together. That's when you usually find out if something went wrong that it went wrong and by that time it's kind of a problem. It's because then you got to you got to go back and fix it. So you want to get everything straight as you're entering the information into the system major twice cut once is the general idea with payroll as opposed to tinkering until you kind of figure it out is the general idea. I would recommend the theory to be going with with the payroll. So that's the general idea with payroll to go back to the home page. You've got you've got the payroll cycle weekly by weekly monthly. You got the liabilities you pay after you pay the employees and then you process the payroll forms which hopefully QuickBooks will help you to do which doesn't enter a transaction but helps you to give you the informational forms for the requirements necessary for your government requirements. You also might have state forms depending on what state you are in for the payroll forms that can help be processed as well. QuickBooks can is getting better at better at meeting state and local needs with regards to those kind of specialized reports as well.