I need help entering Payroll taxes?

Question

I started a new job a few weeks ago and I do most of the accounting. I am new to payroll and I need some help. Payroll is done through an outside service but I need to make a journal entry for the full amount of employee and employer taxes. How do I enter the employee and employer's share of payroll taxes?

When I say full amount, I mean for each payroll period- not for the year. I have the amounts for each payroll period from the service. I just need to know how to make the journal entry to record it in my accounting software.

Thanks, ADP does break it down but I need the journal entry info to enter it into QuickBooks. The previous employee had a memorized trx and it was incorrect, posting twice to Payroll Expenses and once to Payroll Liabilities. That's where I am confused.

Answer 1

First you must consider what is a debit and what is a credit.

The debits will be expenses to the company. That is usually any wages and employer expenses. Employer expenses are anything that does not come out of the paycheck that the company has to pay. examples are ER FICA and 401k match if you have it.

The liabilities are the deductions and net pay. When I say deductions, I mean withheld taxes as well.

The two columns should equal and that is your entry.

Another way to check is to map all the pay codes to the appropriate accounts. Most GL systems will let you know somewhere whether the account is a debit balance or credit balance account. If you follow the balance of the account you will know what side to book each entry on.

I hope that helps some.

Answer 2

The payroll service will provide you the summary of everything. So, you can see it and make your journal entry. Since if there is no changes in employment then the taxes deducted should be same for each pay period.

Answer 3

I'd have separate accounts for each type, such as social security, ss employer match, medicare, medicare employer match, federal income tax withheld. Doesn't your payroll service break that down? The business I work with uses Paychex as a payroll service, and they send a notice of the total amount to be deposited, and break it out by tax type.

Answer 4

No, the payroll taxes are not owed twice. If he was a "responsible party" then he is individually liable for the taxes. While the company has an agreement in place and are making payments, the IRS put him on notice as a backup plan. They probably acted so that the statute of limitations didn't expire. If the company fails to honor their agreement the IRS is now in a position to go after him for the taxes.

Answer 5

payroll tax expense debit
fica payable employee - credit
fica payable employer - credit
medicare payable employee - credit
medicare payable employer - credit
fit payable - credit
sit payable - credi

debits equals credits

when you pay the taxes, debit all the credit accounts above and credit cash