Question

3rd Party Payroll

Forum|Forum|5 years ago
July 28, 2020
1 reply
23 views

I am using ADP for our payroll. We have one pay cycle during the month. My question is Adp is creating three separate transactions per each pay cycle, We have direct deposit to the employee and ADP does a debit for the net wage, a debit for EE and ER taxes, and a debit for professional fees. The transaction would look like

payroll exp gross wages 520.00

Payroll FICA -ER Only 32.24

Payroll FUTA Er only 3.12

Payroll Medicare 7.54

State UI AZ 10.40

Payroll clearing net wages 466.18

Checking all taxes ee and er 107.12

I don't understand how to book the 107.12 as a separate check. the professional fee is would just be booked as an expense and not a part of the check, 87.91?

If ADP debits the checking account directly for tax EE and ER) who assumes the liabilities. I have seen on accounting sites that because we have ADP pay the taxes we would not use liabilities accounts.

MarsStephanieL

Level 6

I appreciate the detailed information you've shared, @drod1.

If there's an export tool, you can transfer the payroll details directly to QuickBooks. If there's none, you manually enter these payroll payments to a journal entry.

I’d recommend consulting an accountant to make sure its accuracy about the three transactions from ADP. You can also ask advise to them regarding the categorization of the accounts.

Here's how to enter the payroll payments in QuickBooks:

First, you'll have to create these accounts for tracking:

Payroll Expenses: Wages ADP
Payroll Expenses: Taxes ADP
Payroll Liabilities: Federal Taxes (941/944) ADP
Payroll Liabilities: Federal Unemployment (940) ADP
Payroll Liabilities: [State] SUI/ETT ADP
Payroll Liabilities: [State] PIT/SDI ADP

If you're using QuickBooks Online, here's how:

Go to the Accounting menu, select Chart of Accounts.
Click the New button.
In the Account Type section, select Expenses.
Choose Payroll Expenses in the Detail Type section.
In the Name box, you can enter Payroll Expenses: Wages ADP.
Select Save and close.

There are some states or locality that has a specific tax. For that, you'll just need to create an additional account for it. Once you're done with the accounts, you can proceed to create a journal entry to QuickBooks.

Get your employees' payroll pay stubs or a payroll report from ADP.
Click the + New button.
Select Journal Entry.
Enter the paycheck date, under the Journal date.
Enter it in the Journal no. field to easily track the paycheck number.

Here are the accounts you need to enter as Debits in the journal entry:

Payroll Expenses: Wages
Payroll Expenses: Taxes

Here are the accounts you need to enter as Credits in the journal entry:

Payroll Liabilities: Federal Taxes (941/944) ADP
Payroll Liabilities: Federal Unemployment (940) ADP
Payroll Liabilities: [State] SUI/ETT ADP
Payroll Liabilities: [State] PIT/SDI ADP
*Net Wages = Enter the checking account you're paying your employees from.

I'd also added a sample screenshot for your reference below.

For more information on how to manually track the payroll payments, please check out this article: Manually enter payroll paychecks in QuickBooks Online.

If you're using QuickBooks Desktop, you can use the accounts I've mentioned above. Then, you can refer the steps in this article to create a journal entry: Create a journal entry in QuickBooks Desktop.

Furthermore, you can pull up a payroll report and customize it to check the details entered expenses. I'd like to share these articles to help you more with the reports:

For QuickBooks Desktop (QBDT): Customize payroll and employee reports
For QuickBooks Online (QBO): Run payroll reports

These articles contains sub-topic such as how QuickBooks generates reports and additional features in QBO.

Please don't hesitate to tag my name in the comment section below if you need anything else. I'd be happy to answer them for you. Take care.

D

drod1Author

Thanks for the information. I understand that is how one would enter a payroll if I was responsible for the taxes. ADP pays the taxes directly as an agent for us. My question how do I make the payroll entry if ADP does three separate transactions on different days and since they pay the taxes we do not use liabilities accounts only expense accounts

Payroll gross wages

FICA

Futa

Medicare

AZ SUI

professional fees

net wage (Would this be the clearing account)

Checking

Can I combine the tax check and professional fee into one amount from the checking account and note in the description the date and then credit the checking account? The actual wage check will be a separate line from the checking account

Please provide an example.

Thanks.

Tori B

QuickBooks Team

Thanks for following up with us, @drod1.

You can combine the tax check and professional fee into one amount from the checking account and take note of the date in the description, then credit the checking account. However, it's always best to consult with your accountant before making any changes to the data. An accountant will know what's best for you and your business and could sort out what accounts need to be used, and what you can do with your amounts.

If you don't have an accountant, don't sweat it! You can find one here in our Resource Center.

You can always reach out to the Community any time. We've got your back. Take care!

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