 QuickBooks Online 2024. Pay payroll taxes. Get ready and some coffee because we're doing some quick thinking with QuickBooks Online 2024. Here we are in our jick-gray guitars 2024 QuickBooks Online sample company file we set up in a prior presentation, opening up the major financial statement reports like we do every time the reports on the left in the favorites we're right clicking on that balance sheet to open a link in a new tab right clicking the profit and loss also opening link in a new tab same thing with the trustee trial balance let's tab to the right close up the hamburger and change the range we're going from 010124 tab 022924 tab and then let's see it month by month side by side run it and then we'll tab to the right close up the hamburger again and range change 010124 tab 022924 tab first a word from our sponsor yeah actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is is better than their stupid stuff anyways like our crunchy numbers is my cardio product line now i'm not saying that subscribing to this channel crunchy numbers with us will make you thin fit and healthy or anything however it does seem like it worked for her just saying so yeah subscribe hit the bell thing and buy some merchandise so you can make the world a better place by sharing your accounting instruction exercise routine if you would like a commercial free experience consider subscribing to our website at accounting instruction dot com or accounting instruction dot think of it dot com and month by month run it one more time repeating the process tabbing to the right close on the hamburger and the times they are changing 010124 tab 022924 tab dropping it down to months refreshing the report let's go back to the balance sheet and discuss what we're going to do next which is the pain of the payroll taxes you will recall in a prior presentation we processed payroll for the second time in our practice problem and now we have all these these liabilities piling up here that we need to be paying to the government so quick recap of the process of the payroll process if we look at the flow chart this being a desktop flow chart that we're using for online purposes just so we can see the flow of the forms which will be in essence the same for the payroll process so payroll down below first we have the time entry which might not be something you do for payroll you might be using that to generate invoices if you have salaryed employees then you might not have to enter the time at all because you're paying them salary then we process the pay you might do that weekly semi-weekly bi-weekly or semi-monthly or bi-weekly or monthly we're doing it monthly so we have two months we've processed two payrolls at this point in time so when we process the payroll as we saw last time we have an increase to a liability as a result of us having to withhold money from the employees as though they're babies so we have to pay the taxes on their behalf because the government makes us do that and we had our payroll taxes that we had to also pay and we have not yet paid it so it's in the liability account now now sometime after processing the payroll we will have to take the money that we took from the employees as well as our payroll taxes and pay them to the government reducing the liability and then that's going to be when we pay the liability so there's kind of a widget to do that if you're processing in QuickBooks they hopefully have everything set up in QuickBooks will make that an easy thing to do once we pay the the liabilities at the end of the quarter on a quarterly basis then we typically have to file 941 forms summary forms kind of like a 1040 for individual income taxes and at the end of the year we then have to do the 940 for federal unemployment tax summary report similar to a 1040 for individual income taxes and then we have to do the W2s and the W3s of course and if we deal with state taxes state tax stuff as well so we're going to imagine back on over here we turned on our payroll and prior presentations that's in the first tab we have the payroll on the left noting that you might do payroll in QuickBooks you might have a third-party process to payroll either way you're typically going to have to pay for the processing of payroll upselling in QuickBooks or possibly paying someone else to do it outside of QuickBooks that's just the way it goes you could try to do it yourself without the upsell but wouldn't really recommend it even if you only have a few employees because payroll can get complicated and you want to make sure that you're in compliance so that you don't get hit with fairly hefty penalties and interest and the pain of trying to fix a messed up payroll process so we turned on the payroll we added our employees and then we processed the payroll for two months of payroll as of this point in time and so now we have the the point where we need to be paying the payroll the payroll taxes that is so we can go over here then we have the employees and then we have the payroll taxes if I go into the payroll taxes tab I'm going to close up the hamburger it says here we need more information to pay and file your taxes so you'll have to manually file and pay your taxes until you provide all the necessary information so obviously if you're going to be paying electronically on the payroll taxes you have to have the system set up to be properly paying those institutions and oftentimes the government might want their money in some kind of electronic type of transfer system and then down below you have the the time frame of the items in a nice handy little widget that basically is all set up for us so we have the california PIT the income tax and the and the sdi that is currently owed and it's going to be due on 215 according to what we have in the system for our practice problem the federal taxes on the 941 which includes the social security medicare and federal income tax for both the well those are the federal taxes and then we also have the federal taxes here which is going to be this is the following month I believe so that's due on 315 so these are the two that we're basically looking at at this point let's show all and this gives us the rest so this one is due on 315 and then 430 and then and then 131 25 okay so if we look at our liabilities over here our liabilities have been broken out in the liability section by who we need to basically pay california taxes and then the sui for california a different type of california tax and then the federal taxes for this whole this whole group would be the social security medicare and federal income tax and then this is the federal tax for unemployment or futa now I and then we have our adjustment that we made now if you're running real time then you can basically if everything's running smoothly then we can process the pay with our pay liabilities section and that would process another check which would be similar to just an expense form or check right expense or check form but it would be a pay a pay uh payroll liabilities check similar to what we saw when we have like a pay bill type of check right it's still a check but it has its own kind of designation when we look at it in the transaction detail however because this is a practice problem and we once again want to tie into what we see on the bank reconciliations we're just going to do manual entries here so you wouldn't really want to do manual entries entering a manual check you would want to use the widget so that everything is done within quickbooks because that makes it so your reports will will run smoothly and just note the payroll the whole widget system within quickbooks works pretty well everything everything gets set up and works well but if you mess something up and you have to do something outside of the payroll system you can throw things off right and then and then it becomes kind of a problem to get back in line with everything running through the widget that's one of the not so great things about everything being completely automated because it's difficult to make an adjustment that's not part of the automated system right so i just want to point that out but for our practice problem purposes we're just going to write a check and basically the idea is going to be that we're writing checks to pay off the payroll liability in january and then the the february payroll liability that has accrued will remain on the books and we will pay that off in the following month uh which would be march which is outside the scope of our practice problem so the january payroll left us with 2028 48 we're just going to think of it in total of a liability and so that's the amount that we're basically going to pay off leaving us with the difference between these two left which would be the payroll that was accrued in february that's the idea now we're going to do this with three separate paychecks that are not going to tie out exactly to these totals because we're trying to use something that's going to tie out to our practice problem for the bank reconciliation so we're going to do a little bit of a deviation let's go to the first tab instead of doing this we're just going to hit the drop down and just do a normal check which you wouldn't normally do for payroll and we're going to say this is going to be i'm going to say the the first one i'm just going to call it irs and i'm going to say fit this is a generic vendor that we're going to be setting up to pay the payroll taxes to the government federal income tax i'm going to save it and it's going to be the checking account okay and we're going to pay it on o 229 let's say 24 and then the other category i'm going to put it into the adjustment account if i go back on over here you can see we have the payroll liability adjustment i'm going to put it in there as kind of our summary account instead of decreasing each one of these as would be the case if we use the widget so we can kind of see what's happening broken out in different accounts so i'm going to call it payroll liability adjustment so we'll just call it payroll liability adjustment and so that'll be the first payment that we make i'm going to make that one for 1080 and so this is just going to decrease the checking account and the other side's going to pay down the liability and that liability adjustment and then i'm going to make another one hitting the drop down i want to save and new and so this one i'm just going to make another vendor for i'm going to call it irs medicare which is one that you would probably pay at the same time social security and medicare both part of the the fika taxes but i'm going to break it out for here and then tab because it'll match what's in our bank reconciliation and so we're going to say this is going to be once again the payroll liability payroll liability adjustment account payroll liability payroll liability adjustment account and that one i'm going to say is for 82.52 82 dollars and 52 cents and i'm going to do one more save and new and so we'll do one more i'm going to call it irs social security and tab and i'll just add that one same date and we're going to say this is going to go into payroll tax liability uh payroll tax liability where did it go there it is and then we'll make that one for once again uh this time 865.94 okay so let's go ahead and say save and close this time and then if i go back to my balance sheet and run it run this report then in the liability accounts we have kind of a mess but we basically stuffed everything into this account here so this is the taxes that accumulated in january adding up to 2028.48 and then we paid those off in february and this adjustment account in practice if we used the widget all of these would be of course credited individually in the following month right we would we would decrease each individual account if we broke it out into its own category and the widget would help us to apply that check out but in our problem we just used a normal check and so we can see it a little bit more transparently we put it into this account so this account we've got the three checks that we wrote so we've got the three checks are uh this one the 82.52 plus the 108.0 okay one is missing i think i put it to the wrong account so i'm going to go i think it went into the tax account so if i go into the tax account i put it into the payroll tax adjustment and if i go into this one it was this 865.94 which was that check so i should have put that into the liability so i'm going to drill down on it and fix it so i'm going to say this one needs to go to payroll liability adjustment account not the payroll expense and then i'll save and close that and then back and then go back to the balance sheet run it again and then scroll down and we should see then in the payroll adjustment going into the payroll adjustment account we then have our three checks which are the 108.0 plus the uh 82.52 plus the 865.94 and that's the 202.846 if i go back here we could see that we have the the the january liability 202.848 so it's a couple pennies off that's going to so that's the general idea so we have the payroll go up in january we're paying it off in february what is left in february then as a liability are the accrued of the liability for the february paychecks which was just one because we're paying monthly in our case so if we ran the payroll reports then we could we should be able to tie in basically the liability as of the end of the period now there's something i just want to note here that if you had like a third party process the payroll you'll note that the this liability this payroll liability is just a timing difference so in other words if i if i go to my payroll taxes over here we we can see that you know everything's going to run through the income statement at some point there's only a difference on on the timing difference meaning when we process the payroll we we recorded an expense of this amount but then we withheld uh the taxes now if you were on a cashed based system and and you worked with a cpa firm to do an adjustment at the end of the period you could simply wait until it clears the bank use the bank feeds to record the net check instead of the full check here and then when you paid off the payroll as we saw here that will also clear the bank and when it clears the bank you could have you could just simply record it as again payroll expense using the bank feeds because you have someone else a third party an adp or a paycheck for example processing the payroll and and so then you would see it's just a timing difference so and then at the end of the year possibly you can get the the payroll reports from the payroll provider and possibly have your cpa firm or tax preparer do the adjustment at the end of the year and if they do the adjustment at the end of the year they can then break out the wages versus the taxes the payroll taxes versus the wages as well as any accrual that needs to be in place meaning withholdings and your portion of the payroll taxes for the last pay period which has not yet been paid so that you can create the financial statements as of the cutoff date the end of the year for taxes or possibly for external reporting as well so in other words if i went to the tab to the right right click on this and duplicate this tab and we go into let's say our payroll reports let's go into our reports down below close this out and we're going to go down all the way down to the bottom we've got our payroll reports now we saw that that you have those the the the reports that you can export to excel that we saw before that's a nice tool let's just take a look at the payroll summary report here and i'm going to make this go from 010124 to 022924 and then apply and so now basically we have our summary so we've got the checks that went out each of the checks that went out for the two pay periods that have happened we have the employee taxes that were withheld the net pay the employee ur taxes so that's a pretty summarized report let's go back on over and open up another one i'm going to go back down and say payroll item list no what did i want what was the one i like here i think it's the payroll summary by employee i'm going to right click it on this time open in a new tab and so this one gives you yeah i think this is the one i was looking for so this one gives you i'm going to close the hamburger each individual for what they've earned up until this point in time i believe and let's actually run it for the whole period 010124 to 022924 and then run it so now we've got the pay for the two periods now note at the end of the year if someone else was doing your payroll then they might provide you with a report such as this that you can then use to kind of summary summarize and make sure that your financial statements tie out to this report which should also match the the year in financial reports or tax return reports that you're going to get to the government the quarterly 941s the 940 the w2 and the w3 so you can think of this as the the the two individuals having their gross pay totaling up to 13 966 66 right if i go to my profit and loss and was to look on my wages 13 966 66 that should tie out to what you give the government in terms of the 941s and the 940 and so on and then you've got your employee taxes and deductions so this is the employee taxes that were taken out each individual and in total note that that number is not on your balance sheet on your income statement over here because this tax number is just the employer portion those were the employee taxes that we had to take from the employees and pay on their behalf but it's really part of their pay there's the net paycheck then this is our taxes that we had to pay over and above per each employee for a total of the employer taxes 1540 45 so if i go to my profit and loss we can see 1540 45 then we made this adjustment to it but that that's the problem with adjusting things outside of the system right because this is the number that's going to be tying out to to the reporting forms that we're going to be creating so that's going to be our our taxes and then you could do a similar report for basically your liability reports so that's the general idea so let's see where we stand right now here's our balance sheet we're balancing it balancing the sheet like a basketball on one finger and then we've got the profit and loss spinning it round spinning it round like crazy i could balance it and spin it and then we're going to go to the trial bounce so if your numbers tell to these numbers great if not try changing the date see if it's a date range issue remembering this is just simply the balance sheet on top of the income statement starting with the assets going from the checking account down to the machinery and equipment basically debits that's what the company has measured in dollars not in uh not in units and then who has claimed to those assets the flip side of the coin liabilities and equity starting with liabilities which start at accounts payable credit balances going down all the way to the unearned revenue and then we have a claim to those assets as the owner as we can see if we were to transfer the accounting equation to assets minus liabilities equals equity the book value of the company we have got the owner investment kind of like the common stock if it was a corporation us putting money into the business and the owner's equity similar to retained earnings if it was a corporation and then the income statement which is part of owner's equity or retained earnings but broken out for one year's activities where we have income credits minus the expenses debits giving us a net credit on the income statement which will roll into the owner's equity equivalent to the retained earnings if a corporation quick books doing that on a yearly basis so if we change the date 010125 to 010125 we see that quick books will close out those temporary accounts into the permanent account of owner's equity