Showing results for 
Search instead for 
Did you mean: 
Level 1

Entering Employee contributions to 401k / deductions

Hey folks! this year our company has offered 401k to its employees, I'm looking to correctly record employee contributions in the QuickBooks desktop program.

side note: we are using adp for payroll services.


previously I would enter in the payroll info as checks taken out of our bank accounts into the following accounts.

payroll expenses 401k

payroll expenses adp fee

payroll expenses deductions

payroll expenses gross pay

payroll expenses payroll taxes.


deductions I would enter in as a negative number, because charges they had accumulated would be removed from their paychecks, then later I would make a journal entry to cancel out the AR Employee account with the deductions account.  now that we have the new deductions of the employee contribution I'm not sure how to go about recording this. 


4 Comments 4
Community Champion

Entering Employee contributions to 401k / deductions

Any employee deduction from gross wage will be handled by ADP and would never be something you would need to record separate in QB since you do not produce and file any of your own payroll forms, including W2. Your expense for labor is gross wage + employer taxes + employee benefits (401k), etc. 


One place i se a huge error is your recording of payroll taxes as an expense since it is possible you are expensing both the employer and employee share. Employee deductions are a payroll liability not an expense. The liability is removed when the deductions are paid to whichever authority. Same with your company employment taxes, they are an expense but sit as a liability like unpaid vendor bills untilmdeducted from your bank account. You might be double dipping payroll tax expense

Level 1

Entering Employee contributions to 401k / deductions

thanks for the help!

sadly our previous bookkeeper passed away and we are still trying to get a solid hold on doing our own books. so if we are not using the payroll function on qb what would be the proper way to enter in the payroll info?

QuickBooks Team

Entering Employee contributions to 401k / deductions

Hi there, @Roki.


You can set up manual payroll in QuickBooks Desktop so you can create a payroll check. It contains the gross pay, complete list of your deductions, and you can record each payroll item to the proper account.


There isn't a need to pay for your subscription with a manual payroll. You'll just have to calculate, enter payroll taxes, and file your tax forms yourself if necessary.


To start, please ensure your computer is offline or not connected to the internet. Then, follow these steps to set up your company preferences for payroll:

  1. Go to the Edit menu.
  2. Select Preferences.
  3. Choose Payroll & Employees, then go to the Company Preferences tab.
  4. In the QuickBooks Desktop Payroll Features section, select the Full Payroll radio button.
  5. Select OK.


Once done, you can now create the manual payroll. Here's how:

  1. Go to the Help menu.
  2. Select QuickBooks Help (or press F1 on your keyboard).
  3. In the Search field, type manual payroll, then press the Enter key.
  4. Select the topic Calculate payroll manually (without a subscription to QuickBooks Payroll).
  5. Under Set your company files to use the manual payroll calculations setting, click the manual payroll calculations link.
  6. Select Set my company file to use manual calculations link. When your company file is set up for manual payroll computation, QuickBooks inserts a zero amount for each payroll item associated with a tax.
  7. Close and reopen QuickBooks Desktop.


Also, there are other ways on how you can record these payroll expenses in QuickBooks Desktop (QBDT). Here are those:



Furthermore, in case you want to reinstate payroll tax calculations, you'll have to sign up for QuickBooks Desktop Payroll.


Please let me know if you have other concerns. I'm just around to help.

Level 1

Entering Employee contributions to 401k / deductions

Hello, maybe you can help me, I wasn't clear with the response you have last for the other lady.


ADP handles my payroll but money gets taking from my account separately as 401k and payroll

for example; total payroll 1,000 but 1 employee puts 100 for his 401K,  so it shows on my account as:

900 payroll

100 401K

How do I set up a 401K account for this transaction?

Need to get in touch?

Contact us