Payroll for Small Business
it's been asked several times. What about payroll? In this simple version of QuickBooks, there is not payroll. But if I can find it, I can get to that page. Here we go. Yeah, here we go. This is what I hit was I went to the circle and I said, I want to do recurring transactions. See, the sea, the arrow and I got this layout that shows you all three different kinds of the online system on a monthly. And I'm just gonna tell you this is my bias. Paying $40 a month for this software. That's that's a bargain for what it does. I mean, I don't work for QuickBooks, but boy, that's pretty cheap. So you run down the list of things here on the support that each of the three types of software do. You can see that the far one does inventory tracking that the far one on the right does budget and planning. OK, but what you're not seeing on here is the online version that does payroll. Let's look through it one more time if you guys see it holler, but I don't think it's on here. But there's a way arou...
nd it. So I want to use I isn't it? I want to use the online version of QuickBooks. I don't think I'm sophisticated enough where I have to use one of the, you know, versions that you download. I've only got one employee. I'm gonna hire a payroll company to do this. You can do this on a small scale manually without having to have without having to have the payroll portion of QuickBooks. Here's what I mean again, I'm gonna go to Plus, I'm gonna go to journal entry, which I know. And based on the comment that was online, not everybody is fund of using the screen, but for the payroll, you do, because if I go to transactions over here, there is not. There is not a segment here to do payroll. See what I mean? You could do invoices. I'll get to that just like that's the one I'm gonna use. So sales expenses registers. This section does not do peril. And that's the next thing was going to say. So what about employees? Okay, so going back to the home page since I there were a couple of inches here, I'm gonna go to home. I'm gonna go to employees now. Need to pay employees. It says turn on payroll, which is which is the on extra fee. So I'm not gonna click that button. Okay, you could, and it's going to go out and you can buy more. QuickBooks. Let's just see what happens if I do it. It may be an ad on your people. Oh, try free. I'm not. I'm not sure if I want to go this deep into this. So let me go back and tell you what I did. So we went to home page employees, and I said, What about turning on payroll? And I got tried online for free. Now there's a cost. Obviously, if you go into this and decide to go past the 30 day program and you can turn this stuff on, so let's click on see your So look at your preferences of the bottom. I want to pay payroll taxes myself, using payroll, their tax forms. I want payroll experts to handle my taxes for me. Let's just click on it. They recommend the full service payroll. Okay, it's this much a month, so that's that's getting Intuit QuickBooks payroll system in there. If you though, just have one employee. And just to illustrate what goes on with your payroll, even if you're having them do it, let me illustrate. Okay, so I've decided I've gone to employees. I've looked a turn on payroll. I look at my plan, and I say to myself, You know, I'm not gonna start the on QuickBooks online payroll because all I'm going to do right now with one employee, it's just take the report that has this information from the payroll company and interrupt myself. I'm also doing this selfishly because it shows you what's going on the debits and credits in QuickBooks, which you need to see rather than just relying on the payroll and having it posted to your account. All right, let me go home, get us back to where we need to be. So I'm gonna go to reports and I'm gonna go to the balance sheet, and I'm going to see how much cash I have today, and I'm gonna put it through the end of February because I did attract transaction for the end of February, and I'm going to run report and I've got $4800 so I can pay this $1000 payroll and posted with these numbers. That's why. Looked so again, I'm not using the employees system. I'm just keeping it really generic. And I'm gonna post this in QuickBooks, using a journal entry journal entry just again to educate folks on Deb the debit and credit part of this. The first thing I'm gonna have a salary expense. So I'm gonna scroll down to expenses. I wonder if I have a salary expense category. I've got legal and professional fees, and this brings up a good point. Um, if somebody is not an employee, if they are an independent contractor, you could post it under legal or professional fees. You're hiring a professional. You're paying attendant. You're giving him a 10 99. If it's payroll, it should be salary expense. So if it's independent contractor, you're paying your lawyer or you're paying your accountant. You're paying your whomever. That's a that's not an employee. You can use legal and professional fees. Okay, I keep scrolling. There's a subcontractor account again, not an employee in the independent contractor, not employees. So if you're Levi's and you're making blue jeans and you subcontract out to accompany Teoh to cut the denim and send it to you. So the subcontract out cutting the denim, and then you get the denim, and so it make the blue jeans. That's a subcontractor. That's not an employee. Okay, subcontractor for Christine. If you're paying somebody to do editing work cause you don't have time or whatever to do it yourself, that's a subcontract. It's not an employee. Okay, All that being said, I'm gonna create an expense account. This is kind of the most exciting part of today. Am I wrong? This is This is big. I'm gonna create a new thank you. I'm gonna create a new account. It's gonna be on expense expenses. I click on it now. QuickBooks is good because it gives you these subtitles underneath the category. Detailed type Now, got to be careful. Is there a salary category? There's not. But there's some confusion because look, there's a cost of labor. I'm gonna use that again. This type that you see in blue in the blue box that does not affect your accounting directly. It's just categorizing expenses. It does not get to your financial statements. So if you're like me in this instance, and you've got a type that doesn't exactly fit what you want to use. Go ahead and use it because it's not going to affect the reports that gets sent out. So I'm gonna create salary expense. And again, I would avoid. If I click on this, I would avoid sub accounts unless you really have to. Here's why when you have sub accounts and you see activity. So if I had salary expense and then I had five sub accounts that's going to show up as one long description on every transaction, and it gets a little unwieldy. So I would wherever possible just have individual accounts and not have a lot of sub accounts now under capital. If you want have a sub account for Bob's Capital on Jill's Capital, that's fine, but I would avoid using a lot of stuff. Accounts. Yes, man, I like how much a particular employees cost me because it's a salary and the cost of that Employees healthcare and charge, which like their salary, maybe that $ their health care for the family for maybe another $1200 there may be other cops, so stay with that employee. How am I tracking that Within QuickBooks. So what I could do is rather than just having one withholding, I would have a withholding for federal tax state tax insurance premiums that they pay. Now, let me make a distinction. Let me. Can you hold that? Just a minute, cause I want to talk about that. Let me. And if you could add to that for one case as well. Okay. My expense was a dab it. I debit to increase expenses. $1000. Federal tax, withholding its liability. Why? Because I'm obligated to send that tax deposited. Okay, Do I have a liability account? I have sales tax is payable. If I was collecting sales taxes, I have customer deposits, but I don't have any other liability accounts, so I'm gonna create new liability current liability. Now, you'll notice here that there's current and long term. And just while we're here needed to find that it comes up later in an exciting segment down the road. But anyway, for this class, current means less than or equal to 12 months. Current means less than or equal to 12 months. So that means that that liability is going to be paid in 12 months or less. That's a current liability. Now, if you had a bank loan that had payments three or four years out, those are long term liabilities which were here. You see the difference. Current pay in less than a year, long term, more than a year. It's a current liability, you'll see. And this relates to Jackie's question. Here's a whole bunch of payable accounts that relate to payroll federal income tax payable, payroll tax payable, which is a generic category. And this answers partly her question. Sales tax payable state local income tax, whole bunch of categories. I'm gonna say it's federal income tax. I'm not gonna create a sub account. I'm not gonna put in a balance, and I'm gonna have to save now. You'll notice something on QuickBooks to do you notice how I posted $1000 debit and when I put in this account it automatically posted $1000 credit, which I can change. That's to make debit sequel credits. Now watch what happens. I'm gonna put in $100. Okay? When I click on this line, $900 is gonna automatically feel here when I pick an account? We paid him cash. Checking the 900 automatically filled. Is everybody with me on this salary? Payable 1000 right there. Celery. Expensive tax withholding. 100 credit. Second line paid out. Cash. 903rd line is already with me. Does do debits equal credit to the bottom? Yes, they do. The most exciting thing for accountant. Ever post the entry. Let me show you where this appears on the reports and then go back to Jack. Eos question. OK, home report. I'd like to know where it appears on the reports. If you look at the board, I know salary expenses in the income statement where revenue and expenses are. This is a liability that's in the balance sheet. Cash is in the balance sheet. You'll notice as we keep going, cash gets a whole bunch of activity, doesn't grows and grows and grows and grows. Go to the balance sheet. What I should find is cash reduction. I should find a federal withholding. There's my cash balance. It did go down. If I click on it, I get all the detail. And if I scroll to the bottom? Sorry. I know It's in there. Where's that $9 check. There it is Right there. Journal entry number 10. I haven't highlighted in blue. $900 negative. Reduced cash. Okay, transaction detail for checking. There's checking. I go back liabilities. You'll notice that it's divided the liability section into current liabilities. There's a sub total and total liabilities. If I put in a long term liability here, it'll fill in. Right now, we only have current income tax payable $100. I click on it. I go to a summary report. But again, it doesn't show me both sides of the transaction. Click on Journal entry. Now, I'm gonna make a change to this journal entry cause I broke my own rule, which is I didn't put in a description. I'm going to say it's a $ salary payment and federal tax withholding on abbreviate withholding. And then I'm gonna copy that same description down so that regardless of which of these numbers I look at, I'm going to see the same description and then I'm gonna hit save again. So I'm updating an existing journal injury. Okay, let's go back. Report profit and loss, which is what they call an income statement. There's my salary expense under expenses. $1000. Click on it. I see the journal entry, and now I see the memo description, which is so important to put on every transaction journal entry. There it is. Okay, so what we just did was we took this transaction. We recorded salary expense, some withholding and paid cash like we did here. We found it on QuickBooks in the reports. Jackie, can you ask your question again? I want you to track how much an individual employee is costing with the total of all of their cots. Salary insurance premiums. Except how do I do that on QuickBooks? So for a one K constitute crimes that I'm matching, I'll do it on the board. Then I'll show you where it will be. QuickBooks, um, there's a couple ways to do, and that's why I'm thinking. But let's just say an employee has, um, accumulated over a year 2013 benefits, cause this is worth talking about because this is another area of misconception insurance. I'm gonna use E for employees, and I'm gonna use you for the owner. Okay. The portion that I'm going to do it in QuickBooks effect. The portion that of the insurance costs that the employee pays is simply withheld and set in. Right? Let's say they pay 100 and you, as the employer, pay 100. This is the employer's expense. What you pay this is not a new expense to the employer. That's just money or withholding and sending inform, right? Okay, I want to make that distinction. And so let's assume that there's a laundry list of other benefits. There's 401 k The employee put in $500 you matched $500 again, This is an expense for you. This is not an expense for you. The employee portion. Okay, so the answer is how do I see the total? The problem is in QuickBooks. In most cases, the best way to look forward is not QuickBooks, because QuickBooks is gonna put in lump sum numbers for all the 401 Cape expense and all the insurance expense. The best way to look at it is to look at the statements you get from the vendor to break out that employees. Now you could make some accounts where you have an insurance expense account for every employee. Some account. You could have a 401 K expense For every employee sub account that gets a little, it gets tedious to posts in that amount of detail. I think it's better to look at your vendor statements, so whoever manage your 401 k breaks it out by employees for you for the year insurance company breaks it out by employees for the year. I think that's better to try to create a whole bunch of stuff. Accounts for everything fender have on your payroll with. Which is another reason to payroll. Um, it's easier, though. Let's say that Jackie specifically wants to know how much did I pay in for a one K expense for this employee? The problem with 80 p on those paychecks, they're employed there. If you look, there were reports they're so complex, it's sometimes tough to pick out this number, so it's easier to go to the individual money manager or go to the insurance. Look at their statement because the eight that payroll is just it. It just goes on forever. It's hard to locate. It's in there, but it's hard if I Okay, let's do these because this is this is valuable. Let's do these. This is valuable. I'm gonna do one of them just to make my point. Okay. Again, employees, we've chosen not to turn on payroll, so I go to the Magic Plus button. I would assume that this is closed. I hit show Mawr. I go to journal entry. There were $200. There was $200 sent in for the insurance. 100 of them was withheld for the employees and of it was my expense. Okay, let's think about that. Shouldn't put these work. So let's set aside the 401 k for a minute. And let's just think about the insurance. I've got insurance expense for $100. It's this number. Okay, so one way to do it, and again, I kind of like separating them is to do insurance expense cash to handle that portion. That is my expense. In other words, I could do this in one big, huge journal entry. But as I said in the course earlier, it's better to do with a piece of the time piece of the time. So this is one piece. Okay. The other piece is I'm writing a check for 100 for this cash and cash goes out the door. I'm gonna need some sort of it. Oh, I'm sorry. This is gonna be a payable for my 401 k I owe the money for a one k payable for that. Employees, employees. Would you just do it? Based on the invoice I took out from your insurance company or all your employees, I would do it. I would do invasion the insurance for all your employees. And then if I wanted to see the detail, I would look at the detail. So let me do this. Let me do that. Just this transaction first. Okay. Uh, so I've got a payable for this employee. So insurance expenses. Look at that one. I'm going to do this one. Good. Go to journal entry. I need an expense account for insurance. Now, I've already set up some expense accounts. There's insurance expense. Now you'll note that they feel for you insurance expense. It could be disability insurance. It could be liability insurance, which we talked about before having a liability policy to protect yourself. I'm gonna say It's just insurance expense. I debited $400. I go down to this line, I go to my checking and again the autumn. The number automatically fills to be 100. So that debits equal credits I'm gonna fill in company portion insurance expense. Okay, So, Renee, you said I could right click. Ah, awesome. I hear there's this new thing called the Internet to become pop. I sometimes like to do that. I said you could go out on the World Wide Web and found me. Find me on the inner tubes. People go. What? I'm just kidding. Okay. Insurance expense checking goes down to recognize the company portion of insurance expense, which is the expense. The employee withholdings, not an expense save quickly go to reports, profit and loss insurance. There is the insurance expense, $ and finally balance sheet. Go to checking and you can see that we've got lots and lots of detail now in this checking, and we're going to see a decline in cash for the insurance. And here's the way. And this is why the memo is so important. It's much harder to scan and look for a dollar amount. Why not scan and look for the explanation. Okay, so if we look on there that it added at a payment for cash salad, here it is right here. Company pores, insurance expense. It's easier, I think, and this is why I want you to use memo and I suggest it. It's easier to scan for something here that look at the numbers, particularly with this law. So look for the date and look for the explanation. Look for the Dayton explanation. Okay, Any other questions? I had one that came up earlier when you were talking about closing out in keeping track of everything. I know this is obviously a QuickBooks cores, but we had a question from nickel asking about what kind of actual physical paperwork you would keep in regards to the month and building. Do you also keep invoices in a folder by customer, or do you have folders for each month? That's a good point. I would, um, do both. I would keep a folder for each client, and I would keep a folder, a separate folder with all the months activity. So you've got it. You got a folder by customer because then it's easy to go through a flip through and see what the customers done if they paid late, how much business where they do in hard copy.