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

Payroll

My QuickBooks Trial Balance is showing Payroll Accounts adding up to $169,400, but per my 941 reports the payroll should be totaling $189,740, so there is a 20,340 difference. I found out it was Cash tips declared but not recorded in QuickBooks, so what would be the adjusting journal entry that I make to balance out the payroll account??

1 Comment 1
BigRedConsulting
Community Champion

Payroll

There is very little to no connection between payroll expenses on the P&L and numbers on tax forms like the 941, which in turn isn't in any way designed to show you your payroll expenses.

 

I'm not sure what box on the 941 you're referring to. 

Box 2, Wages, tips, and other compensation, will display the sum of various compensation items, including hourly and salary items, bonuses, and so on.

 

Payroll Expenses, however, include wages, other company paid benefits, and company paid taxes like social security and medicare. Usually your expenses will be more than your wages.

 

RE: "I found out it was Cash tips declared but not recorded in QuickBooks". 

 

If you didn't add cash tips to the employee paychecks, then your payroll is incomplete because you have under-reported taxable income. If you somehow added that to your 941 manually, then naturally QuickBooks and the form won't be the same, even when comparing what should be the same data (compensation, not expenses).

Tips must be added to paychecks as tips wages so that the employee and employer taxes and tax wage-base are calculated correctly and also reported correctly. The wages from tips will appear on the 941 and W-2 explicitly, and are included on may other tax forms as part of taxable wages (and the resulting wage base most forms use as "wages") such as the 940, state unemployment reports, and so on.

 

Because tips are taxable both for the company and each employee, there isn't any way to journal the tips into QuickBooks. They must be included on paychecks in order for the system to work properly.

Need to get in touch?

Contact us