 QuickBooks Desktop 2023 Interpayroll for Second Month 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 Get Great Guitars practice file we started up in a prior presentation going through the setup process we do every time maximize the home page view drop down height icon bar open windows list checked off open windows open reports drop down company and financial P and L change the range 0101232 123123 customize fonts and the numbers changing them to 14 okay yes okay one more time with the reports drop down company and financial balance sheet standard let's customize it with the changing ranging 010123 to 123123 fonts and the numbers to bring it on up to 14 okay yes okay so there it is there's the setup process we do every time now we're going to be running payroll for the second time for the second month so we're going to go back to the home page and recall that the payroll items are down below the last kind of cycle down below you need to have payroll turned on in order to process payroll so just a quick recap because we did run the payroll in the prior month the quick recap being you want to make sure when you're processing payroll set the process up right the first time when you look at the adage of should I make or with something or should I measure twice and cut once with payroll you're typically better off measuring twice cutting once because if there's a problem it often is found at the end of the year when you're doing W2 W3 and you got a whole lot of other stuff going on you don't want to go back and fix any problems also changing payroll in the middle of the year is kind of an issue it's not something you typically want to be doing with payroll do you want to set up the payroll within quickbooks or do you want to have a third party provider help you out with payroll if you're a bookkeeper for example you want to be thinking do I want to be doing the payroll in-house or do I want to be setting up clients where I'm working with a group of people which may include payroll providers that can that I can have a system with the put to help with my bookkeeping process generally and possibly like a CPA firm and tax preparer of course as well we are running the manual payroll in the system which can be found by going to the edit drop down the preferences and then down below in the payroll items and company preferences we turned on the manual payroll which is great for a practice problem but not something you typically want to do in practice running live because you typically want the double checks that are going to be you know or helpful to negate any kind of math errors when you're doing the payroll calculations they also could help you filling out the payroll forms to quarterly 941 to 940 the W2s and the W3s more easily as well but the manual payroll great tool for practice it's on we can tell because we have the little arrow down here below showing the process of the payroll note the arrow thing starts at the enter time entering time may not be required to process the payroll if we have hourly employees we might we're going to need the time in some way shape or form which might be done with the enter time but we might also just have them do it with a with some other check in or check out system or with just like a like an Excel worksheet just telling me well how much time you have worked for the week we have seen the enter time be useful not simply to process the payroll but to create invoices if you're in a job cost system common in professions like a law firm CPA firm where people are billing out their time and then we're going to be invoicing the partners for example invoicing to to the clients at the end of the month or something like that we also saw that when you set up the payroll we have to set up the items if I go to the lists drop down we have the item list or the payroll item list these items are typically going to be set up as we create the payroll you can see that they are driving the calculation of payroll in a similar fashion as like inventory items and so on and service items drive the sales process when using the form of invoices and sales receipts these are going to be driving the process when entering the forms of the pay employees pay employees will in essence generate checks for each employee similar to a normal check form decrease in the checking account but also account for all the other stuff that goes on the withholdings and what not in the liabilities let's go into the pay employees item here and go through the process we're going to say the pay period is going to be at the end of of February and that would be monthly paying so you might pay people typically people pay weekly semi-weekly by monthly monthly would be the general idea we're going to say the check is on the same date 022823 that doesn't always have to be the case because you might say hey I need some time after the end of the period in order to count my hours or allow people to give me the hours so I can process payroll but in this case we're going to say they're the same day it's going to come out of the checking account remember that you could consider having a separate checking account why? because that will allow you to have all your payroll transactions in one location and because they can be complex it can be useful to have just one account with just payroll transactions in it although it takes more problem or more detail to do that because you'll have to transfer money into the payroll account simply so it can cover payroll so that you can then pay that same money out of the payroll account but it gives you that nice detail just in payroll so we're going to check print paychecks on check stock or we can say hand write and assign the check numbers if they're electronic transfers then we just wouldn't have the check number here but we're still going to use a check type form because that's the form that decreases the checking account so then I'm going to check these two off down below and then I'm going to go into their detail because we don't have the pay payroll within the system now notice I turned on for Adam I turned on the tracking of the time which is pulling in here now so I kind of messed things up when I turned on the time so let me fix this so we basically paid we paid Adam a salary so we said the salary I think it was 65,000 is that what we paid divided by 12 no we paid him 55,000 divided by 12 so we're paying him 4583 so there it is 4583 that we're going to be paying out so that looks good actually even though they put it in the two line items because it pulled over some stuff from the time entry I believe so now we're going to go down here and say okay let's calculate the federal withholdings this would be coming from the W-2 information this is his withholdings for their federal income tax this is the most confusing one to calculate almost impossible to do so without just tables because it's not a flat tax so I'm just going to put a random 720 here for our example problem purposes the social security is more of a flat tax so usually it would be 4583.34 times 0.062 so something like that typically so that looks about right so we're going to say this is going to be 248.17 and then Medicare is usually going to be the 4583.34 that's the total earnings times the 0.0145 so 6646 looks like we got it right this time 6646 so those are just the federal taxes might have other things that we're taking out that are voluntary from his check which could include retirement plans 401k health insurance, vision, that kind of stuff as well our taxes that we have to pay on top matching the social security at the 248.17 matching the Medicare at the 66.46 so there are our taxes we also have federal unemployment I'm not going to get into that now because there's caps on it they kind of confuse things it's a smaller tax that's the general idea for the payroll if you can understand the payroll entry then you will have a big leg up on other people whether the payroll is processed within QuickBooks or outside of it because the payroll transaction is often you know somewhat complex of a transaction so what's this going to do we're going to say it's going to increase the expense of the 4583.34 the gross what he earned and then it's going to decrease the cash by the 3548.71 because we're taking this stuff from him in this case the required federal taxes that means the difference has to go somewhere it's going to go into a liability account which you could just call payroll liability that we're going to have to pay out in this case to the federal government for these three items and there's payroll taxes these are the payroll taxes these are kind of payroll taxes too and sometimes it depends how you use the term but these are payroll taxes paid by the employee which we as the employer are forced to take from the employee before they get it so that we can pay it to the government on their behalf these are payroll taxes that we are having to pay over and above what we agreed to pay the employee either not coming out of the employee's checks we're paying them over and above based on the earnings of the employee so that's going to increase the liability for payroll taxes and it's going to have a payroll tax expense for these two amounts save it and close it next so now we've got the earnings for Erika so Erika we're going to say worked Erika we're going to say worked I'm actually going to change your rate to 15 we're going to say 15 on the rate and then 160 I should go and change that in Erika's information but I'm going to keep it here just so we can process payroll so that gives us the 2400 we're going to say the federal withholding which we would get from the 2400 before information this is what would be great for to pay for within QuickBooks to allow QuickBooks to calculate it because it's a confusing thing you got to go to the tables and that kind of stuff Social Security is usually more straightforward so 2400 times 0.062 would be 148 so that would be 148 because it's more of a flat tax and then Medicare is usually going to be 2400 times 0.0145 at this time at least so 3480 so that makes sense and then we've got to match it down here on our side at the 3 at the not the 3 the 148.8 and the 34.8 so what's this going to do same thing we're going to say well they got gross pay increase in the expense 2400 the other side checking account going down by the check that we're going to pay Erika 1856.40 the difference of the withholdings is going to go to a liability account or multiple liability accounts depending on how we set them up using the payroll items and then we also have our taxes that we have to pay over and above the taxes that we took from the employee out of their wages in theory and that will increase the liability account and have payroll tax expense notice that we can think about that that process of which accounts will be impacted employee by employee which if we're processing the payroll internally will be necessary because we're going to have to use the paycheck stubs and give those to the employees however if for example we had a third party doing the payroll or just to think conceptually you can think about all of our employees as if one employee and think about that same kind of journal entry and see the impact on the financial statements in other words the expenses for all employees will go up by the gross earnings of all employees the net check is what's going to decrease the checking account for all employees the payroll expenses that were taken from the employees the withholdings will increase the liability for all employees and then our payroll taxes will be increasing the tax expense and the liability for our payroll taxes okay so we got the check this looks good and so employees let's go ahead and see if we can continue and say we're going to create the paychecks I think we're good to go let's do it create the paychecks you have successfully created two paychecks great so now we want to say let's take a look at the pay stubs and let's just see if we can preview them so okay and so here's the pay stubs now for that you can't just process the payroll even if it's electronic and give that to the employee because typically they're going to need the payroll stub detail which gets quite detailed so now we've got to give them how much they earned on the current basis for the current pay period how much we took from them for withholdings on behalf of the government how much we paid them and we need that information so the stuff gets kind of complex in terms of the amount of data that we have to report that's why you kind of have to pay for payroll even though any no one calculation is all that complex when you put them all together it gets complex so we're going to close this out I'm going to close this out and say okay let's close this I usually like to check my register reports drop down and go to my use I'm sorry banking use register and go to the checking account so here's the paychecks that were created you can see that they say paycheck if I double click on the paycheck it has that information down below if I want to see more detail I can go to the paycheck detail and there's the detail now if you need to fix one of these paychecks you typically don't want to go in here and try to fix the paycheck once it's been processed you would typically want to void the paycheck or possibly delete it you kind of have to process the payroll again oftentimes so that's again why you want to try to get it correct the first time whenever you're processing payroll because fixing it can be more of a problem than spending more time on the front end okay so then we're going to say what happened well if I go into the checking account double click in the checking account we see our two paychecks down below and that of course has been recorded let's just pick Adam here the net check so if I look at the detail the net check closing that out closing that out on the expense side closing this out which is on the profit and loss we have the payroll expenses and we broke out the taxes separately which is common that's driven by the payroll items if I go into Adam's check here so that is for the full amount this is the second check we want to look at the second check Adam's second check they put it in here a name of the customer because of the fact that we turned on the time so I'm going to say okay here it is if I go into the check that's for the net which is the I'm sorry this is for the full amount the 458334 closing this back out closing this back out and that should be this plus this so that's going to be the 2291.67 plus 2291.67 that should be the 458334 and then I'm going to close this back out the difference is going to the balance sheet up top in the liability account now for what we collected or took from the employees that now needs to be paid to the government so we've got these items here representing three entries and then also our employer side so we've got the federal income tax Social Security and Medicare we'll go into the federal government and then we've got our side but we'll talk about that in a second and then we've got on our side if I go back to the profit and loss we broke that out separately for the payroll taxes which should not include withholdings but just our side of the taxes let's look at Erika this time since it's less confusing because I didn't turn on the tracking thing and if we go into that then that's going to include our taxes which is this side 148.8 that's the 183.60 that we had to pay over and above what we said we were going to pay her for her payroll taxes that are our side of things and that then is also going to go into the balance sheet and increase the liability account and that's why you've got these duplicate items here and here there's the employee portion and the employee portion that are increasing the liability closing that back out and then we're going to go into the detail reports I won't go into a lot of detail here but in the employee payroll there's nice reports and this Excel report you might want to check that out I'll just take a look at the payroll summary from 0101 2 3 let's say to 022823 just for the two months so here's the detail okay okay so that's perfect okay so now we've got our data now basically it looks formatted like a paycheck stuff so you got Adam you got Erica you can also think about it in total the total is what you think the net impact should be basically on our financial statements so for here for example we've got the net pay that's what came out of the checking account for the two checks we've got then the gross adjusted gross pay let's go to the income statement let's actually adjust the income statement for the two months by going 022823 and then I'll go to the totals and make this a month by month so now if I go down to the month by month I've got the payroll expense and we're at the 1396667 payrolls summary at 1396667 that makes sense then this is the amount that was withheld and then we've got the employer payroll taxes 97246 if I go to the to the profit and loss we've got the 97246 so that makes sense right and then in terms of our liabilities at this point in time we've got the these that were withheld that we still have to pay to the government because on the employees behalf 3132.46 plus our portion that we have to pay down here which is plus the 97246 so you would think our liability at this point in time would be that so that's our liability right 410492 and then we could run this report if I ran this profit this payroll summary just for February 020123 you could start to kind of experiment with this and you could say okay here's the gross pay for the month of February that should be on the profit and loss if I go to the profit and loss because now I have two months and I look at just payroll for February I'm at 698334 so there's the 698334 and the our portion is the 49823 that of payroll taxes 49823 for the payroll taxes so ticking and tying these things out is quite useful because at the end of the month and the end of the year you'd like to be able to tie out your reports to your profit and loss and your balance sheet and tie that out to the forms that you're going to have to give to the government to verify your payroll taxes that being the quarterly 941 reports the yearly 940 reports the yearly W3 reports the yearly W2 reports as well as any other state reports that you need to be doing alright so let's go ahead and process our our trial balance and 010123 to 123123 customizing fonts and numbers changing it up to 16 and okay yes and okay so you can check your numbers if everything ties out great if there's a problem try changing the date range and see if it's a date range issue we will be taking a look at the transaction detail reports shortly at the end of entering all the data for the second month which hopefully helps hone down on any inconsistencies or problems at that time