Entering Historical Paychecks – Payroll Taxes and the Accounts They Post To

Setting up QuickBooks payroll and entering historical information can be quite confusing.  Thankfully there is a Payroll Setup wizard that will help you through most of the really rough parts.

I am entering historical payroll from 2012.  Our fiscal year began 10/1/12. It is now 4/12/13.  How is best way to enter this payroll and balance month by month until I get to the current info.  Also, I am confused on what accounts the payroll taxes post to. I’m not sure I have them set up at this point.

Especially on the exact accounts I need for payroll taxes and are they debits or credits. and how do I link them to my chart of accounts.

Any help would be appreciated.  Debbie

Hi Debbie

If you are entering historical payroll info from October 1, 2012 through now, I have to assume that you are new to QuickBooks and are either coming from another accounting system where you processed payroll – OR – that you are new to QuickBooks and have an outside payroll service which has actually cut employee paychecks during this time and either way you just want to get your “books” in order.

The process will depend on how the paychecks you want to record in QuickBooks were created (another program or via a payroll service) and how you are going to process paychecks going forward; so I’ll talk about that first.

If you have an outside payroll service and will continue to use them, then I would recommend that you turn on Manual Payroll in QuickBooks.  To turn on Manual Payroll:

• from the QuickBooks Help menu -> choose QuickBooks Help
• on the Have a Question window, type in Manual Payroll and press Enter.
• Look for the topic called “Calculate payroll taxes manually (without a subscription to QuickBooks Payroll)” and click on it.
• In the Help Topic, look for the 3rd bold heading “Set your company file to use the manual payroll calculations setting” and click the link that says “manual payroll calculations” -> this opens a new help topic and at the bottom of the window you’ll see a bold heading “If you are sure you want to manually calculate your payroll taxes in QuickBooks” and then a link to “Set my company file to use manual calculations”.

Yes, Intuit makes it very difficult to find the instructions for turning on manual payroll, after all, they do want you to subscribe to one of their payroll services.

Speaking of payroll services, if you intend to process your future payroll through QuickBooks, you will need to purchase a payroll subscription in order to have access to tax tables and tax forms.

Ok, enough of that — now to answer your question 🙂

So once you’ve decided how you are going to process your future payroll, you can then start setting up your historical payroll.

The first thing that I’d highly recommend is to go through the Payroll Setup wizard (from the QuickBooks Employees menu).  There are 7 sections in the Payroll Setup wizard and if you go through each of them, in order, you should be in pretty good shape.

• Section 4 helps you set up your payroll taxes and QuickBooks will automatically create the tax items and link them to your Chart of Accounts for you – creating an Expense Account called Payroll Expenses and a Liability Account called Payroll Liabilities.
• Section 5 let’s you enter Year-to-Date Payroll information by employee by month by quarter (so you’d have October, November and December of 2012 and then January, February and March 2013)*
• For April you’d want to enter payroll information on a paycheck by paycheck basis.*

If job-costing your historical payroll data is important to you, then section 5 of the Setup Wizard may not prove to be the right method of entry and you would probably want to enter all historical payroll data on a paycheck-by-paycheck basis.

If you’d like additional help, please contact me to schedule at least a 1 hour consulting/training session.