We run cash basis accounting and have 3rd party payroll service. Can I enter Net Wages (not gross) and other payroll expenses as they appear on our payroll reports.
We run cash basis accounting and have 3rd party payroll
service. When I enter payroll, I enter the transactions similar to how they
appear on our payroll reports: Net Wages (not gross), Employee tax liability, Employer
tax liability, & 401k. I don’t do a JE for payroll tax liability. And the Employee
tax liability is still part of gross wages b/c I’m entering Net Wages
(basically I’m entering them after broken down, not Gross/before broken down). To get gross wages for the owner’s Sch. C and when
I reconcile with Form 941s, I add Net Wages, Employee Tax Liability and 401k to get
Gross Wages paid. Is this ok to do for cash basis bookkeeping?
Yes it is OK to make your payroll entries on a cash disbu...
Yes it is OK to make your payroll entries on a cash disbursement basis from the payroll summary report, but the entry itself is NOT as you you outlined.
Somewhere in that payroll report you will find the gross wages (not net), plus deductions, benefits and employer expenses. Your cash entry should include all of those items - the sum of which is the net payroll checks.