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Join nowMy payroll taxes are reporting wrong in financial reports. Employee paid expenses are reported as payroll taxes instead of salaries. When I do a payroll item listing report I see that some payroll items are listed with both an expense account and a liability account. How do I add an expense account to the employee paid taxes and still have them with Liability Accounts? Or, is there a different way to set up how these payroll items are listed in financial reports?
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This is the Payroll Expense math:
Gross Wages + Employer share of Taxes
Everything else you are asking is Cash Flow, not Expense. Everything else is a diversion of the employee's pay.
When you pay the Taxes and that includes the employee share, that is not expense. It is like this:
Gross Wages minus all deductions = take home
All deductions are held as Liability, until paid out on behalf of the employee.
"Employee paid expenses are reported as payroll taxes instead of salaries."
Look at your Salary values; do the math:
Net Takehome checks + all Tax checks and garnishment payouts should = Gross Payroll Expense.
This is the Payroll Expense math:
Gross Wages + Employer share of Taxes
Everything else you are asking is Cash Flow, not Expense. Everything else is a diversion of the employee's pay.
When you pay the Taxes and that includes the employee share, that is not expense. It is like this:
Gross Wages minus all deductions = take home
All deductions are held as Liability, until paid out on behalf of the employee.
"Employee paid expenses are reported as payroll taxes instead of salaries."
Look at your Salary values; do the math:
Net Takehome checks + all Tax checks and garnishment payouts should = Gross Payroll Expense.
Employee paid taxes should not appear on your P&L as they are not expenses to you in any way. If they are, edit these taxes from the payroll items list and choose a liability account for them, usually the default "Payroll Liabilities" account. Leave the expense account for employer taxes and the employer portion of SS and Medicare and any similar state taxes you may have.