Set Up Payroll Accounts

You can select the accounts for your payroll expenses and liabilities on the Payroll Accounts tab of the Payroll screen. These accounts are used when you create Payroll Register entries for your company's payroll activity.

The Payroll Accounts tab lets you set up accounts for salaries and officer compensation, state and federal withholding, disability, unemployment, and tips. You can also identify up to six deductions with their associated accounts, and set up a net payroll account for the employer.

When you set up expense accounts and the employer taxes payable on the Payroll Accounts tab, the system will automatically calculate the employer portion of FICA (Social Security and Medicare taxes) and Other Employer Taxes (FUTA, SUTA, disability, etc.) when you create Payroll Register entries, and generate the appropriate journal entries.

In addition, from the Payroll Accounts tab, you can select the Print Payroll Checks option to enable you to print paychecks from the Check Printing screen.

To set up payroll accounts:

1.  Select Payroll from the Company menu to open the Payroll  screen, and select the Payroll Accounts tab.

2.  Use the drop-down list in the Select Journal field to select the journal (Cash Disbursements or Payroll) to be used when you make entries in the Payroll Register.

3.  If you have multiple cash accounts, select the cash account you use for writing payroll from the Cash Account drop-down list.

4.  Click the Print Payroll Checks option to enable printing of payroll checks from the Payroll Register or Check Entry screen.

5.  Use the drop-down lists in the Payroll Expense Accounts section to specify the accounts to use for Officers' Compensation and for Salaries and Wages.

6.  Select the federal and FICA withholding accounts to use from the drop-down lists in the Federal WH Payable and FICA Withholding fields in the Withholdings section.

7.  Use the fields in the State and Local Accounts section to identify up to two states and two localities, and select a withholding account for each.

8.  Select a state and an expense account for disability and SUI, where appropriate, from the drop-down lists in the Disability and SUI fields.

9.  Click Add Deduction to open a row in the Deductions panel in which you can define a deduction, then use the drop-down lists in each column to select the specific type of deduction and the appropriate account.

You can identify up to six deductions and associated accounts. Pre-tax status for these deductions is automatically computed when you enter amounts in the Payroll Register.

10. Select the appropriate accounts from the drop-down lists in the Reimbursement and Tips fields, and click the Cash Tips checkbox, if applicable.

11. Select the checkbox to use a non-cash account as your net payroll account if payroll checks have already been written, and select the account to use from the drop-down list in the Net Payroll field.

You must select the checkbox to activate the Net Payroll field.

If you are using the Payroll function to print paychecks, the account you select should be a payroll cash account. If you are not using the Payroll function to print paychecks, the account you select should be a separate payroll clearing account.

For example, if paychecks are written using the Payroll function, journal entries appear as follows:

If paychecks are not written from the Payroll function, when the checks are written, the journal entries appear as follows:

When the payroll is entered, the journal entries appear as follows:

To facilitate Bank Reconciliation, cash is credited separately for each paycheck.

12. Click Save to save your entries.

You must save your entries on this tab before moving to another tab of the Payroll screen.