Setup Chart of Accounts and journal entries to handle 3rd-party payroll (cash method)

Smuthe · ‎September 03, 2020

Hi. I'm trying to setup my Chart of Accounts to handle 3rd-party (not Quickbooks) payroll under the Cash method of accounting. Based on another thread (referenced below), it seems creating a Payroll Expense account would be sufficient...? In which case, the resulting journal entry when payroll is run would look like this:

Debit 'Payroll Expense' account for takehome pay.

Debit 'Payroll Expense' account for all tax payments (both employee + employer).

Credit 'Cash/Checking Account'.

Can anyone confirm?

[Reference thread: https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/you-can-only-list-all-payout... ]

Anthony Accounting Center · ‎September 13, 2020

If you choose to debit every thing of Payroll Expense, why not just do one, instead of two debit? However, if you put everything into Payroll Expense account, it will be more complicated when you have to reconcile or you want to run report each types of payroll expenses. it is clearer to create different payroll expenses like wages, fringes, federal taxes, state taxes, worker's compensation...

Hope it helps

All the best

Anthony Accounting Support Center

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Setup Chart of Accounts and journal entries to handle 3rd-party payroll (cash method)

Setup Chart of Accounts and journal entries to handle 3rd-party payroll (cash method)

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