No More Headaches: Mastering Payroll Accounting in the Modern World

Payroll accounting is an important aspect of finance that involves tracking five essential payroll-related costs and obligations. Not doing payroll accounting correctly can result in several problems, including:

• Inaccurate processing of information, leading to incorrect payment to employees [4].

• Delays in General Ledger (GL) posting, which can result from using disconnected systems.

Correcting payroll errors can be time-consuming and requires cancelling the payroll, amending the error, and reprocessing it for the affected employee or employees. In order to avoid these problems, it is important to have a correct and efficient payroll accounting system in place.

Five Essential Payroll-related Costs and Obligations:

1. Employee compensation: This includes salaries, wages, paid time off (PTO), and other taxable income that is reported on a Form W-2 at the end of the year.

2. Taxes withheld from employee paychecks: This includes federal income taxes, Social Security, Medicare, and applicable state or local income taxes

3. Payroll service provider fees: Employers need to consider the fees charged by their payroll service provider.

4. Employer payroll taxes: Employers need to pay payroll taxes, such as unemployment insurance and workers' compensation insurance.

5. Paycheck printing and delivery: This includes the cost of printing checks or the cost of direct deposit.

It's important to note that not all these costs may apply, depending on how payroll is processed.

Avoiding the Five

Take the following steps:

1. Reduce Employee Turnover: Reducing employee turnover can help you avoid the costs of interviewing, hiring, and training new employees. Encouraging your staff to take time off, such as vacations and long weekends, can help with this goal [1].

2. Federal and State Unemployment Taxes: Employers are required to pay the Federal Unemployment Tax Act (FUTA), which requires a 6% tax on the first $7,000 an employee earns. The state unemployment tax rates vary, and some states don't require them [2].

3. Workers' Compensation: Most states require employers to offer workers' compensation [2].

4. Stay up-to-date on Wage Deductions and Payroll Requirements: It is important to stay up-to-date on national and state-related requirements around wage deductions and payroll [3].

5. On-time Reporting of Compensation and Taxes: Employers can avoid employment tax penalties by improving their payroll processes so that all compensation paid to employees and all taxes withheld from wages are remitted and reported to government agencies on time [4].

Or Automate

Follow the recipe:

1. Sign into QuickBooks Online as the Primary Admin.

2. Select Settings ⚙, then Payroll Settings.

3. In the Auto Payroll box, select the Edit icon.

4. Select Manage Auto Payroll.

5. Select the employees you wish to pay on Auto Payroll. You'll only be able to select eligible employees.

6. Select Save Changes.

Automated payroll can simplify the process of paying employees by performing tasks such as filing taxes, processing direct deposits, generating payroll reports, and calculating tax withholdings. To edit payment due date and methods, follow these steps:

1. Go to the Related Payment Activities tab in the QuickBooks Payroll Center

2. Choose the Edit Payment Dues Date | Methods option.

Additionally, if you need to set up payroll, sign into QuickBooks online, navigate to the employees or payroll menu, select a suitable plan, choose the Standard Payroll option, click on Get Started, and then go to the Payroll menu to set up and run payroll.

Reference:

https://quickbooks.intuit.com/r/payroll