Hi, I use ADP as the payroll provider for a client of mine and this is an example of how I record payroll for them in quickbooks. I use expense accounts because technically ADP holds all the liabilities. We are simply just trying to record proof of the money being paid in ADP. I detailed each line so it hopefully makes sense as to where everything goes. I grouped all the taxes together because I didnt find it necessary to separate them however you can if you want more details. For example the account that says payroll taxes for employee would be broken out into fed tax, social security, medicare, etc to show better detail.

I hope this helps someone! 

P.S You cannot run reports by name when using journal entries (it sucks I know). Simply go back to your payroll provider for any detailed reporting that you need!

Hi, I think I found your solution the best out of everything being said here. 

However, I tried something similar to this and it wasn't matching what was showing in our bank account when doing a reconciliation. We have benefits that shows as deductions but we pay for them ourselves, and vacation accrual which ADP keeps track of, but isn't deducted from our account until someone accesses their vacation pay. I think both of those items are throwing everything off, because what shows as the total balance is not what is being deducted from our account. I also work for a non-profit, so all of our deductions have to be detailed. For example, we have to show how much vacation we have accrued in our books as well as how much was paid out on each quarterly report.

Would you happen to know how to record all of this so that it matches what is being taken out of our accounts?

Hi sharieb,

I can see that you're dealing with some complex accounting challenges related to benefits, vacation accrual, and deductions in your non-profit organization.

To ensure that your records match what is being deducted from your accounts, you may need to create detailed accounting entries for each type of deduction, including benefits and vacation accrual. This could involve tracking accrued vacation in your books and recording when it's paid out on quarterly reports. It would be helpful to work closely with your accounting team or a professional accountant to ensure that your records accurately reflect the deductions from your accounts.

I'm sharing this article for your additional reference: Set up manual payroll without a subscription in QuickBooks Desktop.

If you have other questions in mind, feel free to go back to this thread. Take care and have a good one!

Thank you for the reply to my very specific question, but it is extremely generic and not at all helpful. I have already set up detailed liability and expense accounts and was simply asking someone in this thread if they knew how to record something within these accounts so that our records DO match.

@sharieb 

Make sure you have separate liability accounts for each payment that will come out of your bank account - FUTA, SUI, Fed Withholding, 401(k), health ins., etc.  Then, make sure to assign the proper liability account to the payments made: health ins. liability to your health ins. provider payment, SUI to your state unemployment agency payment, etc.

As far as accruing vacation compensation, that is an in-depth discussion and is probably best handled by the NFP's CPA.  IMO, if your NFP needs to accrue vacation expenses, then you need a good accountant.  Accruing vacation is a GAAP requirement but the tax treatment is different.  

Hello everyone,

I actually worked with a Quickbooks job costing coach in order to figure this out. She was great. Her name is PennyLane. You can enter employees as customers to acheive the same reporting level. You can split line items by customer on the checks. It's the only way I know to achieve the level of detail needed for tax return information at the end of the year.

I saw everyone had this question and I felt the need to share. Hope this helps.

@Miguel78 @Rainflurry @macbuilthomes @MikeTLive @deannaldh 

I always do a journal entry, remembering that the employee paid portion of the taxes only needs to be recorded as a credit to the bank account for the amount being withdrawn by the payroll company. For instance:

1. Debit Salaries for the gross salary amount - you can do separate lines for each employee if you want that detail and if you need to assign to customer/class.

2. Debit the expense account(s) used for employer paid taxes - you can bulk Social Security and Medicare together or do them on separate lines. You can also break out if you need to assign customer/class.

3. Credit the bank account for the amount of the employee net pay - I usually do this as a lump of all the employees because that's how it shows up on the bank statement, which makes reconciliation easier.

4. Credit the bank account for the amount of employee withholdings the payroll company will pay on behalf of the employee.

5. Credit the bank account for the amount or employer tax liabilities - I like to keep this separate from #4.

6. If the payroll company is paying into a 401K plan on your behalf - credit the bank account for the amount. You can do separate lines for employer and employee contributions or bulk them together to equal the amount taken from the bank account.

7. Debit the Employer 401k expense account for ONLY the employer contribution to the 401k.

8. Create payroll liabilities for any withholding that YOUR COMPANY will be responsible to pay. Examples are usually disability insurance, health insurance withholding, Federal and State unemployment.

The thing to remember is that you don't want to overcomplicate all of this by creating liabilities for the employee withholding that the payroll company is paying on behalf of the employee. The employee liability portion of the external payroll has nothing to do with your books unless you are holding that money and will pay on behalf of the employee. The only thing you want on your books are the gross salaries, the payroll taxes that are the employer portion (expenses), 401k employer contribution (expense), and any liabilities that your company will be paying on behalf of the employee (usually health insurance premiums, disability, and unemployment).