If you plan to use an outsourced payroll service, we
recommend that you DO NOT set up payroll in QuickBooks. Instead,
we recommend setting up your company file in the following ways:
Add your employees to
the Employee list. Go to the Employees menu and click Employee Center, then click the Employees tab.
Decide how much payroll detail you want to track in QuickBooks so that your
profit & loss statement and
balance sheet have the
information you need.
Set up an expense
account for payroll expenses and
sub accounts for each type of
For example, suppose you need to track expenses for gross wages,
company-paid taxes, and company-paid benefits. You would set up a sub account
for each of these expenses.
Set up an Other Current
Liability account for all employee-paid deductions that are paid later, whether they are taxes
When you receive information from the payroll service, enter employee
paychecks in the Write
On the Expenses tab, enter the gross wages on the first line and the
deductions (with a minus sign) on the next line. Assign your Payroll
Liabilities account as the account for the deductions.
When you enter a payment of taxes or benefits, use the Write Checks
Assign an expense account for the portion of the payment that is a company
expense. Enter a separate line for the portion that the employees paid for as
deductions. Use your Payroll Liabilities account for the deductions.