Publishers with few employees will track payroll expenses in a single department. Organizations with many employees will often allocate payroll expenses by department – Customer Service, Editorial, Marketing, Operations, Production.
We recommend that publishers use a single department as the initial destination of all their payroll expenses. This provides management a high-level view of all payroll related expenses. If needed, these expenses can be allocated out to the different departments with a general journal entry that credits a payroll allocation expense account and debits departmental payroll expense accounts.
The central payroll department expense account segments show 1) salaries & wages, 2) government mandated benefits and 3) employer provided benefits. Payroll expenses can be reported at a summary (collapsed) or expanded level of detail.
Salaries and Wages
Salaries and wages shows the total earnings for officers, salaried employees and hourly employees.
Payroll benefits includes all government mandated expenses. This includes employer payroll taxes, disability insurance and workers compensation insurance.
Employee benefits is for optional employer provided benefits such as 401K matching and health insurance. If local laws requires the employer to provide health insurance this would be listed as a payroll benefits account.
Vacation pay accrual tracks the companies liability for vacation pay if an employee leaves the company. Most state employment laws specify that employees are entitled to be paid for unused vacation time when they leave the company.
To record this liability, each month a general journal entry is entered to record the unused vacation pay earned that month. This is a debit to vacation pay accrual (expense account) and a credit to vacation pay liability (current liability account).
When vacation pay is paid, the employer debits the vacation pay liability account and credit the vacation pay accrual account for the amount of vacation pay paid that period. This reduces the vacation pay liability balance.
The payroll processing account shows the fees associated with processing payroll for your organization. QuickBooks Payroll Service fees can be automatically charged to this account.
Payroll Allocations (optional expense account)
A payroll allocations account expense account (66500 – Payroll Allocations, a subaccount of Payroll Expenses) is used to assign a share of the payroll expenses to departmental payroll expense accounts. A department’s monthly expense allocation is based on its share of the total salaries and wages for that month. A department that accounts for 25% of total salaries & wages will be allocated; 25% of the total salaries & wages, payroll benefits, employee benefits and payroll processing fees.
|Account||Before Allocation||After Allocation|
QuickBooks Payroll Service Options
QuickBooks offers three payroll service options; Basic, Enhanced and Full Service. All services include direct deposit.
- Basic: Calculates payroll. Does not include tax forms. Create reports for your accountant. The monthly cost is $25 plus $2 per employee.
- Enhanced payroll: Includes tax forms. You are responsible for filing the payroll tax filing. The monthly cost is $39 plus $2 per employee.
- QuickBooks Full Service payroll: They setup, run payroll and file payroll taxes for you – No tax penalties guaranteed. The monthly cost is $99 plus $2 per employee.