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Quickbooks payroll service cost6/13/2023 Typically all direct deposits are deducted from your checking account as one transaction. This check will consist of gross wages (expense), employee payroll taxes (payroll liabilities) and any other deductions (payroll liabilities).ĭirect deposits - any employee that is set up on direct deposit will fall into this category. If these checks will clear your bank account you need to enter the actual check with the correct check number. It is important to find out from your payroll company if these will hit your bank account as a separate check or be grouped into the deduction the outsourced payroll company takes from your bank account. I like to break up outsourced payroll into 5 groups:Īctual paper payroll checks - these transactions would be for any employee that actually receives a paper check and is not set up on direct deposit. Use vendors or memorized transactions to record outsourced payroll It is important to figure out what each transaction consists of by looking at the payroll reports provided to you from your outsourced payroll company. However, as you can see in the illustration above the transactions are actually made up of payroll liabilities and payroll expenses. One common mistake we often see is that when an outsourced payroll company makes a deduction from a business banking account the bookkeeper automatically hits payroll expenses. Gross wages, employer payroll taxes and payroll service fees are all examples of payroll expenses. Payroll expenses are costs to the employer related to payroll. The reason being you will withhold them from your employee's checks (setting up the liability) and later distribute them to some other entity (which zero's out the liability). should all be considered payroll liabilities if they are deducted out of your employee's checks. Things such as employee payroll taxes, 401k, medical etc. In short payroll liabilities are anything deducted from your employees check that will later be distributed. Understanding the difference between payroll liabilities and expenses
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