How to Do Payroll Accounting Journal Entries
                     How to Enter Payroll Prepared by an outdoor Payroll Service in 
QuickBooks 
Even though QuickBooks offers several integrated payroll services, many businesses prefer to 
continue using an outdoor payroll service like ADP or Paychex. But this often results in 
confusion about the way to enter payroll into QuickBooks. Some prefer to re-enter the whole 
payroll within the Employee Center. Others want to save lots of time by entering it as a journal 
entry, but do not know the way to enter it correctly. the matter is that the quantity deducted 
from your bank account for payroll never matches up to your total salaries paid. 
If you handle your own payroll taxes, the quantity you pay your payroll provider is less than 
your salary expense due to employee deductions. 
 
If your payroll service handles your payroll taxes, the quantity you pay is higher because 
employer-paid payroll taxes are tacked on. 
 
The key to entering your payroll correctly is to know the difference between gross and net 
payroll. Gross payroll is that the total amount you pay your employees before deductions. this 
is often your payroll expense. Net payroll is what your employees are paid after deductions. this 
is often a mix of payroll expense and payroll liabilities that require to be paid sometime within 
the future--things like state and federal payroll taxes, medical insurance, 401(k) contributions, 
etc. this stuff aren't payroll expenses because your employee is paying them instead of you. 
Journal Entry If You Handle Payroll Taxes 
 
Memorize the subsequent journal entry and enter it whenever you get a payroll report from 
your payroll service. you'll probably got to add a couple of accounts. Salaries & Wages is an 
travel and entertainment account , the accounts for the worker deductions are current 
liabilities. 
When you pay your payroll liabilities, you book the employee-paid portion to the associated 
payroll liability account and therefore the portion you pay as a payroll expense. as an example , 
once you pay your FICA taxes, you'd book half the quantity to the FICA payroll liability account 
and therefore the spouse as payroll tax expense. 
Journal Entry If Your Payroll Service Handles Payroll Taxes 
 
Memorize the subsequent journal entry and enter it whenever you get a payroll report from 
your payroll service. you'll probably got to add a couple of accounts. Salaries & Wages, FICA and 
Medicare are expense accounts, the accounts for employee deductions others are current 
liabilities. When you pay your payroll liabilities, you book the employee-paid portion to the 
associated payroll liability account and therefore the portion you pay as a payroll expense. as 
an example , once you pay your FICA taxes, you'd book half the quantity to the FICA payroll 
liability account and therefore the spouse as payroll tax expense.