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h_warren
Level 1

Third party payroll entries and reconcile

Hello. 

I run payroll through a 3rd party and I am attempting to reconcile our account. I am running into a couple problems as I reconcile. 

1. Our payroll service takes 4 separate payments from our bank account: Child Support, Payroll Billing, Direct Deposits, and Tax Liabilities (including MO Withholding, Federal, FUTA, and SUI all in one chunk)

 

As well as doing payroll through our third party, I use quick books to run payroll like normal, except I print stubs for the employees instead of checks. This is how I write live checks as well for newer employees and it works well. I have found that some tax numbers dont match up 100% so I do make those adjustments, making sure they match our payroll service company. 

 

I have found a way to work around everything for the reconcile EXCEPT for FUTA and SUI. Since this is quarterly and not weekly/monthly I have not found a solution to "pay the liability". Its easy to do for child support and Withholding. 

 

2. Should I just stop quickbooks from calculating liabilities and just create journal entries for them? 

*While still making sure I do the pay employee part (incase of live checks) and entering correct tax info. 

 

I have looked everywhere and cannot seem to figure out what is best to balance these months. 

 

10 Comments 10
Rose-A
Moderator

Third party payroll entries and reconcile

Good day, h_warren.

 

I'm here to share some information regarding handling payroll entries from a third-party payroll service provider and reconciling them in QuickBooks Desktop.

 

You can set up QuickBooks to stop calculating the FUTA and SUI and do journal entries instead. This way you can get real-time reporting and match the actual transactions from your third-party payroll service provider.

 

However, using this method (journal entry) needs the assistance of an accounting professional for the accounts you need to use. Also, your accountant can help and guide on which account to debit and credit.

 

To set up manual payroll, here's how:

 

  1. Click Edit at the top, and then select Preferences.
  2. On the left panel, select Payroll & Employees then go to the Company Preferences tab.
  3. In the QuickBooks Desktop Payroll Features section, select the Full Payroll radio button.
  4. Select OK

Once done, you can now create the manual payroll. Let me walk you through the steps:

 

  1. Click Help at the top, and then select QuickBooks Help (or press F1 on your keyboard).
  2. In the Search field, type manual payroll and press Enter on your keyboard.
  3. Select the topic Calculate payroll manually (without a subscription to QuickBooks Payroll).
  4. Under Set your company files to use the manual payroll calculations setting, click the manual payroll calculations link.
  5. 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.
  6. Close and reopen QuickBooks Desktop.

Since we can't change the filing and payment frequency for FUTA and SUI and you continue to use payroll, you can have a temporary account that will allocate all your weekly payments for the taxes.

 

When the due date appears on your Pay Liabilities page, you can record an adjustment and allocate it to the accumulated payments. 

 

The resources below are good references. You can get the detailed steps in adjusting your payroll liabilities in QuickBooks Desktop as well as things you need to check to make sure your liabilities are updated. Also, it provides you links on how to correct your year-to-date additions and deductions in QuickBooks:

 

Adjust payroll liabilities in QuickBooks Desktop

How to use QuickBooks to pay payroll taxes and other liabilities

 

You can always get back to me if you have any other payroll concerns. I'll be right here to keep helping. Have a good one.

h_warren
Level 1

Third party payroll entries and reconcile

When going into preferences to click "manual payroll" the box will not let me press it. Is there a step to open this up?

AnneB
Level 3

Third party payroll entries and reconcile

I have the same question for QB online. 


MaryLurleenM
Moderator

Third party payroll entries and reconcile

Hello there, AnneB,

 

Adding manual payroll in QuickBooks Online is through creating a journal entry.

  1. Get your employees' payroll pay stubs or a payroll report from your payroll service.
  2. Select + New.
  3. Select 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.

Use the info from your payroll report to create the journal entry. If you paid multiple employees for the pay period, 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.

 

You can learn more from this article: Manually enter payroll paychecks in QuickBooks Online.

 

Let me know if you have other questions.

AnneB
Level 3

Third party payroll entries and reconcile

I am already doing that.

My question was: how to reconcile the JEs to the Employer Tax Returns? My thought was if I entered all payments as history in the payroll tax center, it might give me an option to reconcile. 

katherinejoyceO
QuickBooks Team

Third party payroll entries and reconcile

Thanks for clarifying your concern, @AnneB. I'm here to help ensure you're able to reconcile the journal entry to the employer tax return. 

 

Since you're using QuickBooks Online for accounting and use a third-party payroll, you still need to keep track of those paychecks in QuickBooks. 

 

First off, you'll need to create an expense account from your chart of accounts. Ensure to select these type of Expense account: 

 

  • Payroll Expenses: Wages
  • Payroll Expenses: Taxes

 

Then, create these liability accounts. These are the Liabilities account type you'll need to choose: 

 

  • Payroll Liabilities: Federal Taxes (941/944)
  • Payroll Liabilities: Federal Unemployment (940)
  • Payroll Liabilities: [State] SUI/ETT
  • Payroll Liabilities: [State] PIT/SDI

 

Once done, follow Step 2: Enter the payroll paychecks into QuickBooks Online outlined in this help article: Manually enter payroll paychecks in QuickBooks Online.

 

Then, you'll have the option to reconcile them. 

 

For future reference, visit our QBO Help Articles page for more insights about managing your business in your account. 

 

Let me know if you need help about anything else. I'll be here to lend a hand.

Davis_S
Level 1

Third party payroll entries and reconcile

I use Quickbook Desktop and have been searching fruitlessly to find out how to enter my payroll correctly.  I am entering my payroll from ADP and although I've found out how to enter the ADP Wage for direct deposit, all the taxes and such also include those from employees who get live checks.  Then, my gross minus my taxes does not balance to the direct deposit amount coming out because of the live checks and the pre-tax deductions etc.  I am totally lost and don't know where to turn for help.  I hope I explained my problem well enough to get some direction.   = {

Archie_B
QuickBooks Team

Third party payroll entries and reconcile

Hi there, Davis_S.

 

I'd like to share and help you enter your payroll transactions in QuickBooks.

 

There are ways you can manually track your payroll transactions in QuickBooks Desktop.

 

If you have an active payroll subscription, you can follow the steps below on how to enter historical payroll data into QuickBooks Desktop. 

 

Like this:

 

  1. Go to the Help menu.
  2. Choose About QuickBooks.
  3. Press Ctrl + Alt + Y, or Ctrl + Shift + Y to open the Setup YTD Amount Window.
  4. Click on Next. You'll be prompted to enter the date you want your YTD entries to affect accounts, enter your estimated first payroll date in both boxes, and select Next.
  5. Enter your estimated first payroll date, and select Next.
  6. Enter your YTD summaries per employee.
  7. Once your done with all YTD entries, select Next to close the Employee Summary Information window.

You can check this article if you need to enter payments that you've already made for taxes and other payroll liabilities from the beginning of the calendar year: Enter historical tax payments in Desktop payroll

 

On the other hand, if you don't have an active payroll subscription inside QuickBooks, you can follow these steps to manually calculate payroll.

 

Here's how:

 

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

 

You can use this link as reference for more information: Get started with Payroll

 

Let me know if you still have questions or clarifications about payroll. I'll be here to help. Keep safe!

 

Davis_S
Level 1

Third party payroll entries and reconcile

Thank you for your reply.  Thought I'd explain better what I'm trying to do.  I am using QuickBooks mainly for the checkbook and need the GL to balance by what I enter into the checkbook.

 

I am entering everything from the beginning of the year including each payroll and I need to enter those by how ADP pulls the money from the bank and trying to figure out how to do it correctly.  Everything I have found shows how to enter the Direct Deposits however it only shows entering wages and taxes then using journal entries to move into the correct accounts.  There is a lot more I need to add than taxes. 401k, medical deduction, Paid Family Leave etc. 

 

The taxes from each payroll are all in one lump sum that includes employees who do not have direct deposits and still have to enter their check information separately to match the bank as well.  

 

I'm lost and don't know how to get live help in getting the answers.  = { 

Archie_B
QuickBooks Team

Third party payroll entries and reconcile

Thank you for following-up, Davis_S.

 

I understand how convenient it is for you to use ADP for your employees payroll. But since third party application doesn't support QuickBooks your only option is to enter those payroll entries manually inside QuickBooks Desktop.

 

I suggest contacting the third party application support to help you generate a report showing the taxes, wages, earnings, and other payroll information.

 

You can also consult an accountant to help you check and make sure each posting account for your journal entries are correct.

 

I've also included these articles that you can use as future reference: Create a journal entry in QuickBooks Desktop for Windows or Mac
 

The Community is always here to help. Don't hesitate to post or click the reply button for any follow-up questions or clarification about payroll. Keep safe.

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