 In Excel of what you know a paycheck might look like just do it a quick register Just so you can kind of imagine the accounts that would be impacted from an accounting standpoint So I'm just gonna format this Excel worksheet. Just do this fairly quickly and I'm just gonna say this is gonna be What am I doing here numbers? currency boom boom, let's say This no decimals for now and so I'm just gonna say all right let's say we've got Employee one and employee number two and I'm gonna say the earnings earnings for so employee one generic employee one and employee two Generic employee two. Let's say that the earnings are Hold on. I put this way down here. What happened? Let's delete that. Let's make it bold So let's say employee one earns one thousand $200 for whatever pay period a week or whatever we're doing and then we're gonna say that the withholdings will at least be The withholdings for for taxes the federal taxes So that's FIT federal income tax, which is based on the tables you get from the W4 information and so on Quickbooks, hopefully will help you to deliver the W4 and the employee can kind of do that So I'm just gonna make up another a number here. Let's say it's like 180 or something and then we're gonna say that we have the social Security, which is right now. I believe it's something like this times point oh six two That's the employee portion and then we're gonna have the Medicare Which I might misspell that's gonna be something like this times the point oh 145 and then you might have state taxes you might have other withholdings that you have to put in there As well for like 401k voluntary withholdings and so on but just as a simple scenario. Let's do this and say this is the net check So the net check is going to be the sum of these So that's how much the check is going to be for let's say employee to earn 2,500 and let's say the withholdings for FIT are are 230 and then this is negative this times 0.062 this is negative this times negative times 10145 and then I'll sum this up and Then we have the total for all of our employees. I'll sum this up this way and So boom there we have our total that I can add down like this sum up like that and We can also double check it adding this way. So so there's our numbers. I'm gonna make this like centered Let's make it black and white on the headers. Let's put a bracket around this Just so we can see it a little better. Let's put an underline here so So we can kind of visualize this if I did this internally within QuickBooks Then I would have to have the detail for each individual Employee in terms of their earnings on a pay cheque check by paycheck And on a year-to-date basis so I can provide it to them But if I'm having an external payroll provider do it then I really only need the total That's gonna be going into my into my system so that I can get my financial statements correct And the payroll provider can kind of do everything else now if I was to record this into the system then in Total you would say okay the net cheque is going down by 3,007 so if I go back on over here cat cash would go down, of course by 3,007 you got to be a little bit careful of that because when it's coming through the bank feeds We can see that it's gonna actually be two checks that are gonna be for this amount in this amount But total cash is going down by 307 You've got to be careful of that so that when you do the bank Reconciliations you can reconcile them and that's where the bank feeds can come in and then we're gonna have a liability Which will be these three? Which adds up to six ninety three? So that's gonna be the six ninety three in the liabilities area of six ninety three and And then you're gonna have the difference That's gonna be the net check and then the three thousand seven hundred that's gonna be what's on the income statement as Earnings so you've got payroll or wages so wages. Let's see this way Wages will be three thousand seven hundred Expense and then the cash will be going down in total by the three oh seven and then the liabilities should go up by this six six ninety three if I did a journal entry for it for example payroll Expense if I just do debits and credits would be going up by this and then Payroll, it's not pay roll Liabilities Would be going up in the credit direction for the sum of these and then we've got Check-in account would be going down by that right and then We also have the employer portion of taxes so in employer Taxes which we have to match social security medicare and we might have futa to but just We have at the minimum social security Medicare for our two employees and You can then sum it up this way for the total and Sum it up this way and Then you can sum it up this way if you wanted and Sum it up across like this Boom and you can double-check it by adding these two. So there's our total Liabilities, so then you would also have payroll Payroll tax expense, which is our portion of The taxes debit and then once again payroll liabilities I know those misspellings and whatnot all over the place, but that's the general Payroll transaction that would happen and you can record it on an employee by Influentee basis which you would have to do if you were doing it internally or you can record it as a total Which you might do if the payroll was done by an external Payroll provider and you're just trying to enter the system into your system in such a way that your financial statements will be Correct. However, you got a note that as they clear the bank They're gonna be two checks here So when you do the bank Reconciliations possibly with the help of the bank feeds that's gonna be something that you got to kind of be aware of so that you can Properly reconcile, but that's the general idea now note that it it might be possible I it is possible if you're if you're working with a third-party provider to even say hey look I want to be on a cash-based system as much as possible So instead of me taking your reports that might look something like this and Recording the transactions looking something like this periodically I'm just gonna wait till everything clears the bank and I'm just gonna record it to one account called like payroll expense Which is misspelled up here, but like payroll expense. So that would mean When the checks clear the bank I see that check clearing the bank I'm just gonna record it to payroll expense decrease the cash the other side's payroll expense I'm just gonna record this to payroll expense and then when we pay off the liabilities I'm gonna wait and just record these to payroll expense as well so that you can automate the system on The bookkeeping side. So if you're a bookkeeper and you're saying I'm trying to automate everything I just want to record everything the payroll expense and then at the end of the year you or Your CPA or tax preparer as well as your payroll provider can then say okay I'm gonna get the payroll reports from my payroll provider Breaking out the unit date information that looks something like this And I need to get that to the CPA or tax preparer So they can make my financial statements correct at least for tax preparation and possibly for external reporting possibly just on a yearly basis and they can then make the adjustment necessary based on these reports to account for to account for the Liabilities as of the cutoff date 1231 the end of the year to account for the breakout between payroll taxes and payroll expense If necessary for tax preparation purposes, you know at the end of the year So these are just some ideas that you can you can go through if you're a bookkeeper or or you're thinking about adding the payroll