What do I do after running my payroll?
One of the most important things you need to do after running your payroll is ensure that your payroll is posted in your general ledger system (like Quickbooks) properly.
Paper Trails will always debit the entirety of your payroll, including wages, taxes and our invoice, from your checking account in one lump sum. It’s critical that you split this withdrawal up and post it to the correct accounts in Quickbooks or whatever general ledger system you use.
What makes up my payroll withdrawal?
While every client is different, there are always three items that are part of your payroll withdrawal:
- Employee Wages – these are gross wages paid to each employee. These are a direct expense to the company and should be posted separately so that at year end these wages match the company W3 that Paper Trails issues.
- Employer Taxes – these are social security, medicare and unemployment taxes that the company pays on each employee. These employer taxes are a direct expense to the company and should be posted to your general ledger in a separate expense category.
- Payroll Invoice – the fees that you pay for service are fully deductible, but should be broken out in a separate category.
What if my transaction is not balanced?
There are other items that you may need to post to get your transaction to balance:
- Insurance & Retirement credits – Employees often contribute to their insurance premiums or retirement contributions. These may need to be posted as credits in your general ledger as they are “liabilities” that you will pay on the employees’ behalf.
Where can I find the information I need and what should my entry in Quickbooks look like?
All the items noted here can be found on your Payroll Summary report that is provided with payroll each cycle. If you want, wages, taxes and adjustments can be split as part of a labor allocation report so that your general ledger can detail the expenses to your company based on whatever labor allocation you prefer (think departments, locations, jobs, etc).
Once you know what you need to post, a general ledger entry in Quickbooks will look something like this:
| Account | Debits | Credits | Description |
| Checking Account | $14,100.72 | Payroll withdrawal on pay day | |
| Wages | $12,010.01 | All Employee Gross Wages | |
| Payroll Taxes | $2,834.96 | All Employer Payroll Taxes | |
| Health Insurance Payable | $644.25 | Employee Deductions for Health Insurance | |
| Retirement Payable | $150.00 | Employee Retirement Contributions | |
| Payroll Invoice | $50.00 | Paper Trails Invoice |