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Tracking payroll expenses for income tax reporting

To report payroll expenses accurately on your income tax forms, you need to set up a separate payroll subaccount for each type of expense that you report. Example

  1. Go to the Lists menu and click Chart of Accounts.

  2. Click Account at the bottom of the list and click New.

  3. Click the Type drop-down list and choose Expense.

  4. Enter a name for the subaccount that will help you recognize its purpose.

    For example, if it is for tracking commission expenses, name it "Commissions."

  5. Select the Subaccount of checkbox, then select Payroll Expenses.

  6. Click the Tax Line drop-down list and choose the tax line. Example

    What if the list of tax lines is missing?

    What if the list of tax lines is missing?
  7. Record the new subaccount:

    • Click OK.


    • Click Next to set up the next subaccount.

  8. Repeat Steps 3 through 7 to set up any other payroll expense subaccounts that you need.

  9. Assign the new payroll subaccounts to the appropriate payroll items:

    • In the Payroll Item list, select the item. Click Payroll Item at the bottom of the list and click Edit Payroll Item.

    • Click Next. Click the Expense account drop-down list and choose the payroll expense subaccount you set up.

    • Click Next until you can click Finish.

See also

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