Most transaction types allow you to enter a date, a payee, line-item descriptions, a memo line and to attach a file in the Receipts section. Like all other transaction types, a payroll transaction can be created from any view in the Ledger area of the software.
A payroll transaction includes four sections in which to select accounts:
Payment Source, where you select the Asset account the payroll funds are paid from (for example, a checking account).
Earnings, to select an Expense account to record the employee’s gross pay.
Deductions will use Liability accounts to record pre‑tax deductions, typically voluntary, chosen by the employee, such as insurance premiums and retirement plan contributions
Withholdings are used for mandatory tax deductions, also recorded using Liability accounts. This would include federal, state, and local taxes and Medicare and Social Security.
In addition, Payroll transactions will record both the Net and Gross pay.
To add a new payroll transaction
1. Transaction
- Click the Transaction button in the upper-right corner and select Payroll from the drop-down menu.
2. Asset Account
- Use the first drop-down menu to choose the Asset account that will be used to make the payment.
3. Transaction Date
- Use the date selector to choose the appropriate payroll date.
4. Description
- Type in any desired line item description for the Asset account.
5. Payee
- Choose the employee from the Payee drop-down menu.
6. Earnings
- Select the Expense account. amount, and description (as needed) for the person's Net pay.
- To split earnings across multiple expense accounts, click Add Line.
7. Deductions
- For each deduction, enter the Liability account, amount and description (as needed).
- Use Add Line and repeat until all deductions have been recorded.
8. Withholdings
- Record the Liability account, amount and description (as needed) for each tax item to be withheld.
- Use the Add Line button until all withholdings have been recorded.
9. Memo
You may also choose to add notes in the Memo section.
10. Receipts
You can also attach a file to the transaction if desired, in the "Receipts" area to the right of the Memo.