Pay Employees Form 1520 QuickBooks Pro Plus Desktop 2022

QuickBooks Pro Plus desktop 2020 to pay employees form and get ready because we bookkeeping pros are moving up the hill top with QuickBooks Pro desktop 2022. Here we are in our free QuickBooks sample file sample Rockcastle construction going through the setup process in the view drop down selecting the open windows list open windows now open, go into the company drop down select in the home page, going to maximize that home page in the gray area, opening up our financial statements, reports drop down company and financial taking a look at that balance sheet standard. I’m going to do one more step increasing the size.


So we can kind of zoom in a little bit by going to the customized reports on the left hand side fonts and numbers. And I’m going to change the size. You may not need to do this. But I’m hoping it’ll be a little bit larger for people to see 14 on the text. I’m going to say OK, yes. And then okay. So there we have that large fonts. And then we’re going to go to the reports drop down again, we’re going to go to the company and financial take a look at that profit and loss standard. I’ll keep the dates the same here. 12, one to 1215,



I’ll try to increase the size of this one a bit customize in that report, fonts and numbers, change the font size, bring that on up to 14 too. And so we’re going to say okay, change the fonts. Okay. So there we have that toggling back on over and the homepage or to the homepage in the open windows, we’ve been focusing down here on the employee section. In other words, the payroll cycle, and we have the payroll turned on in the future presentations will talk about the setup process for it.



But now we’re just going to look at this pay employees area, you can see this as an essence similar to any of the other types of data input forms, although it’s a little bit more detailed in involved in terms of what is happening. In other words, whenever we looked at as we did in prior presentations, forms like Bill forms, Pay Bill Forms to create enforce forms. These are the forms that are set up to make the data input as easy as possible. And if we’re going to provide those forms to clients like an invoice form, then they’re going to make it populated in a nice fat format.



So that we can do that similar process down here with a payroll, except there’s kind of less data input, it should hopefully populate in essence automatically, if we have set up the payroll process properly, which we will focus on in more detail in the second half of the course. What we want to look at now is the general accounts that are going to be affected when we when we process the payroll, this will be significant, there’s a lot of accounts that are going to be affected when we process of a payroll.



And there’s a lot of different variants on how we could set up the payroll to process those accounts. But we can get a general idea of them at this point in time. Remember, your two main kind of options when you set up payroll. One, you can do the payroll within QuickBooks, at which point you’d probably want to pay for the payroll process so that accounting software could help you to figure out what the payroll should be doing things like pulling in the rates that are applicable to you both on the federal side, and possibly on your state and local side.



Or if you’re in a country outside the United States, possibly by you know, similar payroll processes. If you have payroll laws in place, the software is getting a lot better at automating a lot of that and including it, if you do it manually, it can get a little bit more difficult. Or you’re going to get an outside payroll company to help you do it. Most likely not your CPA firm these days, because it’s become a specialty due to the specialized nature of payroll, possibly something like an ADP or a paycheck.



If you do it within QuickBooks, then every payroll cycle, you’d be running this report, if you have hourly employees, you might then be tracking your time in the Time Tracker, but you may not, you might track it just like with an Excel worksheet or with some other time clock system that will track it, and then enter it into your payroll process as you do here. Or you might pay someone of course on a salary basis, in which case you’d be paying them on a periodic basis, then you’d be processing the payroll whenever you set up your payroll process to be typical payroll processes being weekly, more likely bi weekly, or semi monthly, or possibly monthly.



So now we’re going to imagine we’re going to process the payroll, we would go into the payroll processing here, or you can go into it from the payroll center. Now, it’s going to tell me it might give you like a schedule saying, Hey, you got to update your payroll, just say OK, on that. And then I’m going to process the book. Now notice where it took us. It took us into the payroll tab on the right hand side. I’m going to close this window for now. And it says this is the overdue item. So I’m going to double click on it and this example that will in essence Open up the payroll widget window, it’s going to say, hey, look, QuickBooks does not have the information required, I’m going to say that’s okay, because we’re just checking it out.



Another payroll exists. So it says there’s multiple payrolls, I’m going to say that’s okay, I’m going to continue because I just want to look at the data input window with relation to the payroll process. And it looks something like this. So we’ve got the payroll information, the payroll schedule, you can see his bi weekly here, as opposed to weekly, or semi monthly, or monthly, and you got the employees selected are going to be three of them, we’ve got the two dates that will typically be involved, we get the pay period. And so if bi weekly, so it’s ending, at the end of you know,



the week, it’ll always end at the end, at the same time period, as opposed to semi monthly, which means you’re gonna have to pay periods in essence per month, which is a little bit different, but we’ll talk about that later. And that’s going to be when the pay period ends. And then this is going to be the check date. So this is the date that the actual check will be written. They don’t necessarily they are on the same day right now.



But they don’t necessarily have to be on the same day you might process you might have the payroll period end, and give yourself a little bit of time to basically process the checks. So that you can basically double check that you’ve got everything lined up in order to do so that would be a fairly common kind of setup to have. So then you’re going to have your bank accounts, notice that it’s checking or selecting the checking account. Sometimes companies will actually set up a separate accounts for the payroll account and actually transfer money in just simply to cover the payroll, and then pay the payroll taking it back out.



The reason you might do that is because then the complexity of the payroll, or the payroll checks or some of the checks, you’re most likely to have questions about either from the government for the withholdings or from the employees or so on. So it’s nice to have them in a separate account sometimes to do that. So just keep that in mind if as an option. And then you got your check options.



When you process the paychecks, you can, you can print the checks here. Or you can basically hand write the checks. Notice that whatever method you’re using, even if it’s going to be a transfer, electronic deposit or something like that, you’re still using, in essence, a paycheck type of form QuickBooks seeing that paycheck type form, or the cheque type form, as the form that decreases the checking account. So if you’re, if you actually are writing the checks, then you would get the actual checks from the bank, because you need to have the check numbers on the checks, you would put them into the printer and print the checks. If you’re not writing the checks,



then you’re still going to be seen, in essence, a check type form, that will be indicating a decrease to the checking account, but will indicate that it is indeed a paycheck. And then you got the item, then you got the uncheck all these are for the items down below, you could check them off or uncheck them. So we’re gonna say okay, and then continue open check details. So we’ll do that by just clicking on the items down here. And then we’ve got the sorting. So you could sort by the employee ease the employee number and so on. We of course only have the three payroll items, the three employees to be writing checks for, it looks like this first employee,



Dan T. Miller is a salaried employee, because we don’t have the the information in terms of the the number of hours and gray and these two down below look like they’re going to be hourly. So let’s, let’s now select this first item to look at Dan, we’re going to say okay, and this is kind of a data input or detail with relation to this one employee, he and the pay for that one particular employee. This is where it gets a little bit complicated. Many people, most people, even the accountants don’t really often understand what the accounts are going to be affected for payroll, because it does get somewhat complex.



So if you get an understanding for the payroll, it could quite be could be very useful, even if you outsource payroll, or even if you process payroll through QuickBooks, because if something goes wrong, you would like to be able to look at this and say what you know, what is going on here with the payroll. So if we break this down, and we’ll talk more about this in the second half of the course, when we process payroll, also note that we will work this in one note. So we can concentrate just more on the accounting of it. And you can look at basically the accounts that are going to be affected when you think about this kind of withholding process.



So we got the salary, there are salaried employees. So we got the rate this is how much they’re going to, to earn in terms of the rate. And then down below, you got the breakout of the salary. this right hand side represents, in essence, the net Check bottom line that they’re actually going to get so clearly their salary is going to be higher than the net Check. Because we’re going to take a bunch of stuff out of their salary, some of it being possibly voluntary, like benefits, some of it being involuntary, such as taxes. So we got the salary, we’ve got the first item that now was removed. So you can imagine this being what in essence will be recapped on their paycheck stub.



So the $25 taken out for health insurance, that most likely is a is a benefit that they opted into to take out. So there’s the 25, that’s going to be coming out there. And then we’ve got the the federal withholdings, this is what we would get from the W four, in essence, to help us to calculate how much should be withheld for the employer or ease federal income tax, which we’re required to collect on behalf of the government. And then we’ve got the Social Security and Medicare, these two are, are things that we need to withhold. And we also have to pay on our side as well. So it’s, you could think of it kind of like a matching situation for a 401k plan.



That’s how they kind of, you know, proposed it when you know, they came up with this idea. But that’s going in there kind of like a flat tax as well. So so we we can calculate them fairly easily. The federal income tax withheld, we got to just kind of, we’ve just got to go by what they give us on the W four, and then go through the system to figure out what the withholding will be. And that if it’s wrong, will wash itself out. It’ll figure itself out when the employee does their taxes, doing their individual 1040.



We provided them the W two with which includes the withholdings for them to do that the Social Security and Medicare are things that should we should verify by doing the quarterly reports, the 940 ones, and those should be easier to calculate because it’s a flat tax, unlike the income tax. So it would, whatever the rate is, is generally what is now there’s some exceptions, sometimes there’s caps for the Social Security, and you can have an app plus payment or something.



So it’s a little bit more complicated than that. But in essence, it’s a lot less complicated in the progressive tax system for the federal income tax. So 159 6.15 times point oh, six two is going to give us that 98.96 Because 6.2% is the employee II portion of the Social Security, if I take the Medicare, we could take their gross wages of 159 6.15 times point oh 145, because 1.45% is the amount that’s going to be withheld. So we got the 2314. So those are actually fairly easy to calculate. But again, it’s they’re they’re easy to mess up when you do calculations, and then the yearly calculations.



And then if you have caps, that’s why having the software is quite nice to have, then you might have then state withholdings here we have California. So now you got California taxes, which are a little bit more confusing, because they’re not nationally, the same, they’re gonna change from place to place as well as California Disability, QuickBooks software is getting a lot better at being able to locate those more local taxes and do them properly.



So if we took that 1005 9615 That that the employee would have got take out the the withholdings, both the voluntary ones and the involuntary ones, the taxes, the net check would be the 1003 5957. And we also have to play the employer taxes, which is this side over here. So this is the employer or taxes, which includes California taxes, if there are if you know, that’s going to be dependent on the state, and then our portion of Social Security and Medicare.



So this isn’t the same, like number, this is us matching the employer matching the employee wages and then our portion of Medicare once again, we’re kind of matching. So now we have to pay tax on the employee wages, even though we’re the one paying the employees, we’ve got to pay tax, that’s the payroll tax, and then the Federal Unemployment Tax, and then the California unemployment tax.



So these are going to be on our side. So note, the confusing thing when you actually record this is that well, what do I What in the world is going to be the transactions, how many accounts are going to be affected? Well, the employee really got paid in theory 1005 96 point 15, even though they only got in cash, or in their account 1003 5957. So so you’re going to have an expense, we’re going to record the expense of that 1005 9615 For the whole amount that it was earned.



And then the withholdings that we took from the the employee a let’s focus in on the taxes are then going to be are going to be going to a liability account, which are going to be taxes, we’ll just call it payroll taxes payable, just as one lump sum, we could break them out to the different components of the payroll taxes. But in general, you’re going to you’re going to have this idea you can say Alright, well, we’re going to expense, the full amount 159 6.15 minus this amount that they actually got 135 9.57. And so this amount that they actually got is what’s going to decrease the checking account.



The difference between the two is going to be some kind of liability, payroll tax liabilities, as well as the withholding for the health insurance here that we’re gonna have to pay to the health insurance company. And on top of that, We’re going to have another calculation here for our taxes, which we’re gonna have to record. And this would be a debit or increase to the expense, which would be payroll tax expense, and a credit to the payroll taxes that we’re going to owe a liability until we pay them in the future. One of the confusing components is that these are the actual payroll taxes to us, meaning, these are taxes that we in theory are paying,



I say, in theory, because from an economic standpoint, when you add the taxes, who is actually paying it from an economic standpoint is up for debate. But in theory, we’re the ones that are paying these taxes and the employee, he is the ones that are paying these taxes, we just withheld these taxes from the employees. So we’re just acting as the collection agency of the government, because they’re forcing us to do so taking the money from the employee, that is their money, in theory, given that to the government, and then we’re paying taxes over and above over here.



And therefore, when we record this in the books, we’re not going to record these taxes as payroll taxes expense, but rather, that’s going to be included in the wages, we just happen to pay the employees wages for them, because the government forced us to do so we do have payroll taxes that we pay over and above the salary pay, and those are going to be these taxes. So if you’re going to break out the expenses on the income statement, in other words, between wages, the wages are going to be these wages and payroll taxes, these are going to be the payroll taxes, these taxes that we are withholding are not payroll taxes to us.



Those are taxes that are owed by the employee, he, which we’re just helping them pay by being the intermediary in a similar way as we’re basically helping them pay like their their health insurance, although it’s not voluntary, in this case. Okay. So now let’s close let’s close this out. And if I look at the other one, like Elizabeth here, then a little bit different in that they have the regular pay being calculated with the hourly rate to calculate the amount and then the rest of it’s going to be much the same. Let’s take a quick look at the financials.



Now closing this out closing this out, opening this up. And, and will, like I say, we’ll do this in one note. So you can take a look at what’s the impact on the financial statements more clearly, then, but obviously, if I were going to have a checking account is going to go down from the payment. And that’s going to be for the net Check. If you go into the checking account, you’ll find the payroll check, it’s still a check form. So note, a check form means that it’s going to be a decrease to the checking account. But it indicates that it’s a payroll check, which is nice, because that’ll tell you what kind of check you’re looking at.



If  you double click on it, you’ll see it looks like a check form. But instead of at the bottom of it having expense and items, it has the payroll information, which you can further go into the payroll detail and see that information related to it. So there’s the there’s the actual check the other side closing this out, you would naturally think of being on the income statement. So let’s go to the profit and loss down here. And you would think of it down here on payroll expenses. So here we have the whole line added for payroll expenses. Now, this example problems set it up pretty nicely in that they didn’t just just group it into Payroll Expense, which is kind of the default, they broke out the wages versus the payroll tax versus the Federal Unemployment Tax, and the SUTA state unemployment tax.



So if I went into the gross wages, then we’re going to see the gross wages here. Notice that’s not what they actually got paid. That’s higher than the gross wages because that includes what they earned. So if I go into that, and I go into the paid amount, that’s what they earned, even though they only received meaning the checking account went down by that 1003 2515 closing this out, closing this out, then the difference closing this out between what they earned and what we actually recorded, we recorded the gross amount, and then on on the on the cash, we only decrease what they actually got paid is going to go to a liability account.



So if we go back to the balance sheet, and scroll down to the liabilities, we’re gonna have payroll liabilities, which once again, they broke out kind of nicely between the category, the payroll, so they give us a lot more detail, instead of just saying these are just payroll taxes in general what you could do, or you could basically break it out into the types of payroll taxes. So they got the federal withholding, that’s not our federal taxes as the company or the business but the employees federal income tax that we took from them. So that will it will be on their W two, so that they can then use that to do their their 1040 form at the end of the year.



And then the FICA taxes, which is Social Security. Well, they’re calling that one social security and then an end Medicare, so social security and medicare here and then the Federal Unemployment Tax. So that’s going to be the employer tax and then state withholdings, if there’s any state withholdings, and then the suita, the state disability. And then here’s the health insurance. So what came out of the out of a check of the employee, he was the federal federal withholdings, all of that’s coming out of the employer each check, and then we got half of or there’s going to be two amounts that are coming out for the Social Security and Medicare, there’s going to be an employee portion and employee or portion.



So this, this liability represents both the employee and employer or portion. And then the federal and the Federal Unemployment Tax is going to represent the employer or only type of tax, the state taxes are going to represent what was taken out for the state generally, for the employee, he, so it’s an employee item. And then the other big one down here that was pulled out of the cheque was the health insurance, which was like a benefit that was taken out of their paycheck. So that’s going to be these liabilities, makeup, kind of like the difference between the paychecks.



So if I go, for example, into the federal and the Federal withholdings, these items then represent amounts that were taken out if I just double click on one of their paycheck. So this amount was taken out, there’s the 130, that was taken out the difference closing that back out, closing this back out. And then if I close this back out the federal the federal, or the FICA taxes, which is Social Security,



and Medicare, double clicking on that note, you’ve got these pairs that are happening here, because there’s an employee or a portion and the employee II portion, both the include being included, and the FICA tax, so only half of that only one of those represent the employee, or the difference between what they received in terms of cash, and what we’ve recorded in terms of what they earned for payroll expenses. So then you got the you got the second half, then about our taxes that we have to pay for Social Security. So the employee earns and pays on top of or over and above what we pay the employees Social Security and Medicare where we match, then the federal unemployment tax that we would have to pay over and above that’s an employee or tax, that’s, that’s not taken out of the paycheck of the employee,



possibly having state responsibilities here, I won’t get into that now, because that’s going to be independent per the state. And so those are also increasing as we saw in the FICA, the employer or portion, and in the Federal Unemployment Tax. So if we go to the profit and loss, then we also have then our portion. So these are the wages that were earned by the employee, which includes their everything that we withheld from them in the gross wages. And then and then we’ve got the payroll taxes, the payroll taxes represent, then our taxes our half. So if I if I go into the payroll taxes, then we’re going to see this is the Social Security and Medicare but there’s only one instead of two of them.



Because this represents if I go into this, but hold on a second, if I go into this paycheck,  this represents only the employee earn a portion here, not the employee, he portion so it’s not doubled up here. And that’s where people get mostly confused. We’ll see this in the accounting items in one note. But notice that’s that’s the key between these two being broken out. This just want to point out that’s often confused, that this this item up here includes the gross wages for the employees, not the net Check.



And that means that the payroll taxes that we withheld from them are kind of included in that number. So they’re not being broken out in a separate account being called payroll taxes, the payroll taxes are going to be the taxes that we the employer had to pay over and above the payroll that we’re going to pay to the employee either in the form of actually paying it to them or taking the money from them, either voluntarily for healthcare or non voluntarily for taxes and paying it to somebody else theoretically on their behalf.

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