Money: How to Enter Payroll Checks

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How to Enter an Employee's Paycheck

To enter an employee's paycheck, follow these steps:

1. Make sure you have set up a liability account for each type of payroll tax you withhold.
   
   The number of liability accounts you must have depends on the tax structure of the state in which you do business and on other factors. For example you may need the following accounts:
   • Federal income tax withheld
   • Medicare tax withheld
   • Social security tax withheld
   • State income tax withheld
   The running balances of these liability accounts shows the amount of taxes you have withheld from employees, and the total you owe to the taxing authorities.
2. Enter a new transaction in your Business account.
   
   For this transaction, leave the Amount field blank. This will become the employee's net pay when you are finished.
3. Click the Split button.
   
   In the first line of the Split Transaction dialog box, type Payroll.
   
   You will be prompted with a New Category dialog box.
4. Under Category Type, click Expense.
5. Click Next, and then click Finish.
6. For the Subcategory, type Wages and Salary.
   
   Confirm that you want Wages and Salary to be a subcategory of Payroll.
7. Click Next, and then click Finish.
8. In the Amount field, type the gross pay amount.
   
   Note Type the gross pay as a positive number.
9. In the second line of the split window, type Transfer.
   
   Select the first of the liability accounts that you created in step 1 for the subcategory. Type the withheld amount as a negative number.
   
   Note Type each withheld amount as a negative number, because these amounts are deducted from gross pay. Each withholding is a negative transfer from a tax liability account, so each withholding increases the balance of the liability account.
10. Repeat step 9 for all of the remaining tax liability accounts that you have created.
    
    Note The unassigned amount should be zero when you have finished.
11. After you have completed the split transaction, click Done.
    
    Note Notice that Money has entered the net amount into the Amount field of the transaction.
12. Click Enter, to enter the transaction into the register.

How to Enter an Employee Paycheck with an Employer's Matching Contribution

These steps consist of two parts: entering an employee's paycheck, and entering the employer's matching contribution.

1. Repeat steps 1-12 of the previous section, "How to Enter an Employee's Paycheck."
2. Make sure that you have set up a Liability Account for each type of payroll tax paid only by the employer, such as Federal Unemployment Tax and State Unemployment Tax.
3. For each employee, enter a second transaction in your checking account, in addition to the employee's paycheck transaction.
   
   Enter the transaction as a deposit with an Amount of zero; a Date the same as the employee's paycheck transaction, and a From field with a slightly different name than the one used for the employee's paycheck, for example, Jennifer Ellison - Matching.
4. In the Category field, type Split.
5. In the first line of the Split Transaction dialog box, under Category, type Payroll.
   
   For the Subcategory, select the first of the payroll taxes paid, for example, Federal Unemployment Tax (FUTA), and then type the amount as a negative number.
   
   Note For the Description, you may want to type the following:

   Employer's matching contribution

6. In the second line of the Split Transaction dialog box, under Category, type Transfer.
   
   Select the corresponding tax liability account for Federal Unemployment Tax (FUTA), and then type the amount as a positive number.
   
   Note For the Description, you may want to type the following:

   Taxes Payable

7. Repeat steps 5 and 6 for all of the remaining tax contributions and tax liability accounts.
   
   Note After you finish typing all the Split Transaction information, the unassigned amount equals zero.
8. Click Done, and then click Enter.