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Join nowHello -
I have a client who uses a 3rd party payroll company. The 3rd party payroll company pays the garnishment directly (not my client) - I am having an issue reporting this garnishment.
For example. I create a JE -
Gross goes to labor COGS
EE taxes get credited to a liability account
Any other deductions (health etc) get credited as well
After each employee is entered - there is one debit from the payroll company who issues checks to the employee and then are cashed from the payroll companies checking account.
The problem I am having is that the garnishment gets posted to a liability account (the JE equals) but I can not zero the liability account out because the lump sum that the payroll company takes includes the garnishment. There is no separate payment to pay the garnishment. Please help!
Your journal entry is incorrect. You are making it too hard. Employee withholdings and deductions do not need to be recorded unless they affect an expense account such as an EE contribution to health insurance or a liability account that you pay and your payroll processor does not.
DR - Labor COGS
DR - ER taxes
CR - Cash account (or multiple cash entries if the garnishment, net paychecks and taxes show as multiple entries on your bank statement).
It's as simple as that. I process payroll for 500+ employees weekly using a third-party payroll service.
If the payroll company pays the garnishment to the employee then the garnishment is taken out of our checking account, how do I record this in QB? There is no line item to offet it.
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