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Manual payroll setup in QuickBooks

Manual payroll processing

If you are not using the payroll module in QuickBooks, you can use the following workaround for entering payroll payments. You would need to calculate the amounts for payroll components manually and then post them as journal entry. Before you can enter a payroll payment, here is a sample list of accounts which need to be created in QuickBooks:

 Account Name


 Basic Pay Expense
 Dearness Allowance Expense
 HRA Expense
 Medical Allowance Expense
 Conveyance Expense
 Provident Fund Current Liabilities
 TDS Payable Current Liabilities
 Payroll Liabilities Current Liabilities

So, the deductions on the payroll payment would be added as Current Liabilities and payments as Expenses.

Create salary components of payroll

To book the details of the salary components in QuickBooks, follow the steps below:

  1. Select + New.
  2. Select Journal Entry.
  3. Enter the date on which you want to book the salary expense.
  4. In the Account drop down, select payment accounts (eg. Basic Pay, Dearness Allowance, HRA, etc... one by one and enter their amounts in the Debit column against them).
  5. Now, select the deductions accounts (eg. Provident Fund, TDS Payable, etc... one by one and enter their amounts in the Credit column against them).
  6. At the end select Payroll Liabilities accounts in the Account drop down and enter the difference of Payments and deductions amount in the credit column against it.
  7. Enter the memo for this journal entry (eg. "Recorded payroll liability for the month of xyz").
  8. Click Save and close.

When you actually make payments of the salary to your employees, follow the steps below:

  1. Click Transactions on the left menu and then Expenses.
  2. Click the Create New button and click Cheque.
  3. Enter the Cheque number (if applicable), select a date and then enter an amount.
  4. Select Out of Scope of tax from the Amounts are drop down.
  5. Under the Itemise by Account section, from the Account drop down, select Payroll Liability account and enter an Amount. Make sure the amount here is the same amount entered in Step 3.
  6. Click Save and close.

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