3rd Party Payroll

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:

1. Go to the Accounting menu, select Chart of Accounts.
2. Click the New button.
3. In the Account Type section, select Expenses.
4. Choose Payroll Expenses in the Detail Type section.
5. In the Name box, you can enter Payroll Expenses: Wages ADP.
6. 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.

1. Get your employees' payroll pay stubs or a payroll report from ADP.
2. Click the + New button.
3. Select Journal Entry.
4. Enter the paycheck date, under the Journal date.
5. 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.

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.

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!

@MarsStephanieL 

Hey there!  I was wondering if you would be able to direct me as to how to record some of my Payroll Expense: Wages ADP as Direct Labor (Cost of Goods Sold) instead of being categorized as just the payroll expense?  

Is this even possible?  I'm using the Quickbooks Online Version and I use ADP for my third party payroll company? 

Let me chime in and help record some of your payroll expenses on QuickBooks Online, @ AshleighL01.

If you use QuickBooks for accounting and another service to run payroll, you still need to keep track of those paychecks in QuickBooks. We can manually track these payments as journal entries. This keeps your payroll and account data all in one place.

To begin, create an account to track your payroll liabilities and expenses. For the detailed steps, you may follow the steps given by MarsStephaniel. 

After you pay your employees outside of QuickBooks, create a journal entry.

1. Prepare your employees' payroll pay stubs or a payroll report from your payroll service.
2. Click the + New button.
3. Choose Journal Entry.
4. Under the Journal date, enter the paycheck date.
5. If you want to track the paycheck number, enter it in the Journal no. field.

Utilize the data from your payroll report to create the journal entry. If you paid multiple employees, you can combine all of their paycheck totals into one journal entry. You can also create separate journal entries for each employee if you need to break out the details.

For more additional info about the process, feel free to read this article: Manually enter payroll paychecks in QuickBooks Online.

I also suggest consulting an accountant to make sure the recording is accurate. You can as well ask for further guidance regarding the categorization of the accounts.

Additionally, here's an article you can read to learn how to print paychecks in QuickBooks Online.

Keep in touch if you have other payroll concerns. I'll be around to help you more. Have a great day ahead.

I only work with clients bank statements. My question is how do categorize the ADP Wage, ADP Tax, and ADP fees? Those are the only items I see on the clients bank statements. I don't have access to the client's raw adp payroll summary. Any help will be appreciated.

I appreciate your time getting back in here, @Megcrutcher.

As I've mentioned previously, you can enter the payroll date data as a Journal entry. This keeps your payroll and account data all in one place. For the detailed steps, please refer to the steps above.

Regarding ADP fees, you can enter or categorize them as Expense or Check. Also, it would be best to consult an accountant to make sure the recording is accurate. You can as well ask for further guidance regarding the categorization of the accounts.

In case you need to modify an employee paycheck, feel free to open this article for further details: Change an employee paycheck.

Keep me posted if you have other payroll concerns with QuickBooks. I'll be around to help you. Stay safe and take care.

Thank you for replying back. I'm still curious. The example you provide above has the gross pay and data for liabilities. What I get are lumpsum numbers. ADP wage (lumpsum) is the direct deposit paid out to employees. ADP tax (lumpsum) I belief that is the EE and ER portion of the taxes. I don't have access to the gross wages to do the journal. Advice

Hello there, Megcrutcher. Thanks for getting back to us.

I can see how important to get all the data you need and enter them using the Journal Entry feature in QuickBooks. 

Since you don't have access to the gross wages, it would be best to consult the person who can help you access the payroll information in ADP. This way, you'll be able to use that as a reference when recording them in QuickBooks.

Once you get all the details, you can follow the steps shared by my colleagues above. Still, I'd recommend consulting your accountant for further guidance in determining the correct posting accounts.

The Community team is always here to help as soon as you post your concerns. Take care and stay safe always.