 QuickBooks Online 2022 Interpayroll for second month. Get ready because it's go time with QuickBooks Online 2022. Here we are in our Get Great Guitars practice file that we set up with a 30-day free trial. Holding down control, scrolling up just a bit to get to that 1-2-5% we're currently in the home page, otherwise known as the Get Things Done page. If you wanted to change to the accounting view, it's something you can do by going to the cog up top. It's going down to the switch to the accounting view down below. We will be toggling back and forth between the two views, either here or by jumping to the sample company file, which is currently in the accounting view. Let's open a few tabs that we can put some reports in. Right-click it on the tab up top to do so, duplicating it. Back to the tab to the left, right-clicking on it again, duplicating it again. Back to the tab to the left one more time, right-clicking on it, duplicating again. As that is thinking, let's see where the reports are located in the accounting view by going to the sample company, which is in the accounting view. They're located down here under reports. If we go to the business view, they're a bit deeper down of a dive, but not too deep. It's in the business overview left-hand side. We're currently in the second tab. We're going to go to the reports, and let's open up the good old balance sheet report. The balance sheet report, yes. I know that was unexpected, but that's the one this time we're going to look at. 0101222123122. We're going to run it, running it. We're going to go to the tab to the right tab, right? And then business overview again. This time we're going to open up. It's no shock whatsoever to profit and loss income statement, pay L, do the range change from 010122 to 022822. Let's do the month-by-month report, and so we can see the side-by-side as they say. We got Jan. We got Fed. We got the total. We're in the month of February, running the payroll. Let's go to the tab to the right and then go into the reports again. Business overview. We're looking at those reports. We're looking at you reports. That's right. We're looking at you. Let's type in trial balance so we can find the trial balance and open it up. Trustee TB, trial balance, doing the range change from 010122 to 012122, run it. Let's go on back to the first tab. We're now going to be processing the payroll, looking at the running of the payroll for the second month. So we ran payroll for the first month. Now we're processing it for the second. Remember, payroll is going to be an add-on type of feature. We were able to add it on, tack it on with our 30-day free trials. We're testing it out. If you have access to it in that way, that is great. Before you set up payroll in practice, however, I would talk to a CPA, someone who you're not planning on actually processing your payroll with, so that they can give you an independent decision as to whether you should process it through QuickBooks or possibly have a third party like an ADP or a Paychex. Then go in and set up your payroll, remembering payroll being one of those things, which I would say you want to measure twice, cut once. Not one of those things you want to tinker with until you get it right, because that'll cost you more that way. It's one of those types of things. It's better to get it right the first time, most of the time. So we've got our payroll set up down here, and we went through the setup process. Notice that we don't have everything completely set up to pay the taxes. We still have our open items like the 401k, the workers comp policy. We need some of our business data information to complete this, and normally they would want to connect to the bank account and so on for the direct deposit and the liabilities, which we'll talk about next time. We set up enough here so that we can basically process the payroll, get a taste for it, get a feel for it. If you want more detail on the payroll, we have a course on payroll, but we want to get a general sense for the withholdings, how the withholdings work, and a better understanding of payroll is really helpful because whether you do payroll internally, you work in the payroll department or not, have the payroll done externally, it's good to know what's going to be the impact on the financial statements. Also, obviously human resources and payroll in general are often areas where you can have most liability problems and so on. So you want to have a good idea of it. So we're going to go into it here. We're going to then run the payroll. Imagine we're running the payroll. We can do that here. We can go into the run payroll. We're going to run it. The payroll needs to be ran. It's got too much energy. Let's take it out for a run. And then we're going to say this is going to be payroll period for February. Let's say it's going to be for February. So we'll pick up 2-1 to 2-28. Remember, the payroll periods will change depending on what type of company you have. You could have most likely weekly, bi-weekly, semi-monthly, or monthly payroll pay periods. We're setting up a monthly pay period here. So we've processed the payroll for the month of January, now processing for the month of February. Now, if you have everything set up properly, then it should be pretty automated after you have everything set up. It's usually the setup process that's going to be the most difficult part. And we should be able to, in essence, process the payroll by just basically running it at this point in time and either having the check coming out of the direct deposit or have the manual check be processed. But I'm going to go into it and look at this and we might change a few things to make it a generic problem because I already have my stuff set up for the bank reconciliation and stuff. So we've got the information up top, the payroll time period, and then the pay date. These two don't necessarily have to be the same, but they are in our practice problem. And then we've got the check pay by check 3,352. That's the net check we're looking at here. The gross pay is at the 4,580,333, the year to date because there's been two checks thus far, 9,166.66. And then we've got the employee taxes. This is what's being taken out of the employee's checks. The federal income tax being a complicated tax that we're dependent upon tables to calculate because it's way too complicated to get right because it's a progressive tax, and that means it has progressive tax rates and all the other deductions and whatnot. So we're going to make it generic here though. And I already have this calculated in our book problem. That's why I'm changing it. Usually you would be dependent on the software to change it. This is one of the places where QuickBooks makes its money by being able to populate that complex sale as opposed to the other two taxes, which are more of a flat tax, therefore easier to calculate. So on these other two taxes, we could say, for example, the 4583.33 times .062 is going to be that 284.16 and the 4583.33 times .0145 is that 66.47. So those are pretty straightforward taxes. And then we have the California tax, which I'm going to remove because I want to make this as generic a problem as possible and the California taxes are going to be subject to California. So that means that if we pull out the trustee calculator here once again that we've got the gross pay of the 4583.33, that pay is gross. It's sticky, stinky gross pay. Minus the 105.62 is going to be the 3532.71. That's where we stand at this point in time. That's actually going to be coming out of the checking account and be handed over to the employee in some way, some shape or some form. And then we've got the employer taxes down below, which we are matching the Social Security and Medicare. These are of course the taxes that are over and above what we owe to the employee and will be broken out into their own expense account payroll taxes. These ones up top will not be in the expense account of payroll taxes but will be in the expense account of payroll expense wages because they're not really our taxes. We're just the tool of the government that are collecting or withholding the taxes from the employee, which are their taxes to pay them on their behalf. And these taxes for some reason are charged to us not on our income but on an expense. Actually the expense of us paying our employees were taxed over and above that for the Social Security and Medicare. Okay, so those are the changes I want to make. Let's go ahead and save that. And then we're going to do a similar kind of adjustment for Erika. Let's take a look at Erika over here and see what she's got. So we're going to say that she worked. How many hours is she going to work? I'm going to say 100, 160 hours she worked. Update the timesheet for accurate project. Keep these hours. Okay, 160 hours at 15. And then we're at the 2,400. So the year to date is 4,800 now because there's been two months. I'm going to look at her withholdings. So then once again we've got the federal withholdings that are calculated using the table. Usually we would let QuickBooks do that but I'm going to change it for the generic book problem to 360 that may be wildly off compared to the W-4 but I'm doing that to reconcile to my bank reconciliation that I had put together prior to this. So this is a generic problem, calculating that. Remember that's really where QuickBooks often makes their money because that's a complicated tax to calculate. Whereas the Social Security and Medicare once again are typically more straightforward to calculate although there are still problems, you still want software to help you because there's going to be caps on it and plus up payments and other kind of weirdness. So there's the 14880 that's easy to calculate. We've got the 2,400 times the .0145, the 1.45%. There's the, hold on a second, 2,400 times the .0145, the 34. For some reason they're getting, oh there it is, 3480. And then the California tax, I'm going to remove because I'm making it generic. We don't have any other withholdings like 401Ks in the practice problem and so on. They would act in a similar fashion as with the taxes except that they are typically voluntary instead of mandatory as taxes typically are. If it goes to the employer taxes we're matching these items down below. These are going to be what's going to go into the payroll tax expense which we are paying over and above. These are our taxes that we have to pay as the employer. These taxes up top are not in theory our taxes but rather the employee taxes which were required to take from the employee before they get their little fingers on it because that's what the government makes us do and then we pay it on their behalf as if the employees were children. So now we're going to go ahead and say okay and there's going to be our two checks. So let's go ahead and run this thing. If I hit the drop down here let's go ahead and save it. I'll say preview the payroll. Let's go through the preview process and so this is what we've got on the preview. Review the submission total for the payroll. Looks good. It's going to come out of our standard checking account pay periods for February date 228. I think everything is the way things should be. If I select this let's go ahead and submit it. Let's do it. I'm going to do it here. Here we go. And so I'm going to go ahead and auto fill the check numbers auto fill the check numbers and the auto fill auto fill. Okay. And then if I look at these stubs the print stuff remember we have to provide these to the employee in some way. So this is kind of a human resources requirement so that they know what they earned and what we were required to take from them. So we have this is a year to date so we got the salary current and then the salary or wages or whatever year to date and then we've got the taxes here on the current and the year to date numbers so you're probably familiar with this kind of pay stub. You need to provide this either electronically or with the paper stub in some way. Okay. So let's close this back out and go back to the first tab and finish it. Take payroll off your to-do list. Auto payroll is included at no extra cost so you can set up the auto payroll and whatnot but no I'm not going to do it. That probably costs more and I'm on the free 30 day. Remind me later. You can remind me later if you want. And then I'm going to go back to the let's see what the checks are. I'm going to hit the Hamburg hamburger and then take a look down here at the let's I like to go in the check register which is in the bookkeeping area. If you were in the accounting view it would be in the accounting area and then going into the trustee chart of the accounts and then I'm going to go into the register here. Hold on a second. Am I in the chart of accounts? This is the transactions. I want to go into the chart of accounts and then close up the Hamburg and then we can go into the checking account to check it out. I like checking out the checking so let's do it. So there we've got our two checks. It didn't add the check numbers so I'm going to add the check numbers here and I'm going to say that Erika's is so this one's going to be 10-2-2 I'm going to see if they let me add it says you can't edit this field from here well I'll edit it from here then that's what I'll do if you're going to be stubborn like that this is going to be 10-2-2 and then I'm going to say okay and I want to put that in place because it's going to tie out to my bank rec that we'll see later on in the problem it kicked me out of the register so I'm going to go back into it bookkeeping down below go back into my register into the chart of the accounts and then go into the register again and I'm going to change the the number for Erika which is going to be 10-2-3 so we're going to have to edit it so edit it 10-2-3 so we're going to say 10-2-3 alright and so I'm going to say okay so that's good and then I'm going to go to the next tab let's take a look at what happened on the balance sheet I'm going to freshen this one up run it run nine and then I'm going to say that we can go into the checking account the cash of course is going to go down by the net check by the net check now I'm not going to drill down all the way on to that check because if I do it keeps kicking me out of where I'm in so I can see it but I know that those are the net checks after we had the withholdings and so that's good then I'm going to go back up top the other side if I go back to my reports scroll up just a bit it's going to be on the income statement go into the income statement and say it should be in the wages area under payroll they give us a nice little sub total I kind of like it wages we've got the two the two months and then the total on the right hand side let's take a look at the month of Feb the Feb activity and there we have it so now we've got the wages for Feb so then if I go back if I go back then I'm going to say that we have the taxes are going to be in here so this is where the wages are going to be located which is the gross pay and then we have the taxes which is what we paid over and above that what we had to pay so if we go into here we've got the taxes that would be in place and then the difference between the two if I go back on over is going to be on the liability side so if I go back to the balance sheet and then we go into the liabilities down below and say we're going to go down so that we can go in to the liabilities so we're looking here the federal tax liabilities are going to include an increase for both the employee withholdings the amounts that we took from the employee as well as for the employer portion that we had to pay on our behalf as well as the employee okay so let's go back on up let's go back to our report holding control scrolling up a bit now we can also open up the payroll liability or the payroll reports I won't go into them in detail but I'm going to right click on the tab to the right duplicate the tab and then we'll go in to check out some payroll reports the payroll summary report for example and to do that let's go into the reports on the left hand side and then we're going to say this is going to be payroll so we'll type in payroll and we'll look at the payroll summary by employee E let's take that one up now I'm going to look at it just for February because you'll recall that we made a little bit of an adjustment for January due to trying to tie it into our practice problem so it's not going to be perfectly tying into the January because we kind of tweaked it away so that it would match with our practice problem so I'm going to run this for February and say 02 I got to do it with a dropdown this is a picky report with a dropdown thing okay I'll use your dropdown if you want if that's the way you want to do it so remember you can think of these reports as basically the payroll in total and this is something that would be useful whether you run payroll in the system or outside the system if you run it outside the system meaning you run it in ADP or paychecks they might provide you with a report like this and you need to basically make your financial statements proper in other words you often might want to think about payroll in terms of what's the reporting like in terms of the financial statements and is that correct in that case you often want to think about all of your employees as if they're kind of like one lump sum and then the other way you want to look at it is to get down to the nitty and gritty when you have to fulfill those requirements basically for the reporting requirements year to date reporting by employee, by payroll period and so on and so forth so here we can take a look at this for example for the second payroll period and we can say for the two employees Adam and Erika we have the adjusted gross wages which we would expect to find in February on the income statement 69833 if I go into the income statement for February and scroll down we're going to say we've got then 69833 so that's what we would expect on the financials and then we can say okay the employee taxes we can think about them in terms of the total here now these are taxes that are going to increase the liability but they're not going to have an impact that will be broken out separately on the income statement because they're included and that's 69833 because they're not our taxes they're the employee tax is therefore for us on the expense side they're just recorded as expenses for the wages and then these taxes down below the 534322 our our taxes we pay over and above you would expect to find that on the income statement you could break it out employee by employee tax by tax but the total is the impact on the financial statement 53422 so we would expect then the payroll tax 53422 here we would expect on the balance sheet to tie in if we were to pull out the trustee calculator and do some trustee calculations with the trustee calculator we can then say that the amount of withholdings that we took from the employee E was 1594.22 and our taxes employee were 534.22 so we would expect then the change or the February taxes on the balance sheet to be that so if I went then in to the balance sheet account the payroll liability account where is that it's right here federal taxes if I go into that and I'm going to try to change the date range just for the February to see the activity for February 020122 to 123122 run it scroll down and we get that we get that's the activity that's the increase that happened in February so that would make sense there that's the activity to kind of your report if you can tie out to the reports like that you're probably doing more than most people can with the payroll people get confused with the payroll taxes and and so on and so forth so if you could do that that's quite useful especially even if you're working with someone outside like an outside payroll company like an ADP or paychecks you still want to know what the impact is going to be on the financial statements okay so next time we're going to we might have to make a little bit of an adjustment to tie into our practice problem again but we'll talk about that next time and then we're going to go into our trial balance for now and let's run this thing again and this is where we stand as of this point in time so if your numbers tie out to these numbers then we're on the pay we're on there's like one page and we're both on that same page which is good if they don't then try changing the date range it's often a date range issue if you're following along and we'll be taking a look at the transaction detail list which is a good thing to detect and diagnose and something else with any kind of changes so we can check out the changes and dive a little bit deeper at that point