- When you create a company file, QuickBooks may create a couple of Payroll Accounts for you. But if you want to track Payroll Liabilities and Expenses in more detail you simply set up additional Payroll Accounts. Here's a company file for Two Trees Olive Oil. Let's take a look at the accounts that QuickBooks sets up. On the home page, head over to the Company Panel and click Chart of Accounts. And that opens up the Chart of Accounts window. Now you can see that there is a Payroll Liabilities account that's an Other Current Liability type.
This account represents payroll taxes and withholdings that you're going to send in to tax agencies or vendors. So it's kind of a holding bucket until you send that money in. On the other hand, if I scroll down further into the expense accounts, you can see that there's a Payroll Expenses account. This represents your company's payroll expenses. Things like employer payroll taxes. Now I've opened the Quickbooks sample file.
This sample file already has more payroll accounts set up. So let's take a look at what happens. On the home page, click Chart of Accounts. I'm going to drag the bottom right corner of this window, make it a little bit bigger. And when I scroll down to Other Current Liability accounts, you can see that there's a top level Payroll Liabilities account, just like in the other Company file. But it has several sub accounts underneath it. For things like Federal Withholding, FICA, which is Social Security, Federal Unemployment, State Withholding, and so on.
And if I scroll down further, to the expense accounts, there's a top level Payroll Expenses expense account. And it has four sub accounts underneath it, for Gross Wages, Payroll Taxes and Federal and State Unemployment. Well let's say we want to create a couple new payroll accounts. The first one is going to be a liability account for Company 401K Match. To create a new account, at the bottom left corner of the Chart of Accounts window, click Account and then choose New.
We're going to create an Other Current Liability account, and that doesn't show up with an option here. So select Other Account Types, and then choose Other Current Liability, then click continue. While we've got the Account Type set up, we're going to fill in the number, let's say it's 24120. And the Account Name is 401K Match Payable. So this account is going to be a bucket that holds the company matching until you send it in to the company's 401K vendor.
Turn on the Subaccount of checkbox, and we're going to make it a Subaccount of Payroll Liabilities. Click the down arrow and choose Payroll Liabilities. We will want to create a second account, an expense account. Down at the bottom right, click Save & New. Now the first thing we have to do is choose the Account Type. Click the down arrow, and choose Expense. Then in the Number box, we're gonna type the number 62750.
And the Account Name is going to be 401K Match. Now we want this to be a subaccount, so turn on the Subaccount of checkbox. Then click the down arrow, and choose Payroll Expenses. One last thing, we're going to do a tax line mapping for this account. Click the down arrow, it's going to be a deduction. Scroll down until you see Pension/Profit Sharing and choose that. Well that's all we need to do for that account, click Save & Close.
And now you can see that the 401K Match expense account is sitting underneath Payroll Expenses. And when I scroll back up to the Other Current Liability accounts, 401K Match Payable is a subaccount to Payroll Liabilities. That's how you create additional accounts to track your payroll. Keep your payroll account organized by making them subaccounts to the top level Payroll Liability and Expense accounts.
- Signing up for Intuit Payroll
- Working with the Setup Wizard
- Entering compensation and benefits items
- Setting up employees
- Defining payroll taxes
- Recording historical payroll data
- Running payroll
- Managing payroll liabilities
Skill Level Intermediate
Q: This course was updated on 12/08/2017. What changed?
A: The following topic was updated: signing up for QuickBooks Payroll.