Reconciling payroll general ledger accounts transactions
QuickBooks is an excellent accounting software package for the small business owner today. It offers many powerful bookkeeping, accounting, and tax features at a very affordable price. Equally as important, it is perhaps the easiest to use of all of the accounting packages on the market today largely because of its emphasis on visual elements and mouse-click implementation and drill-downs. Unfortunately, many of its users, lulled by these powerful hypnotic features, think they are born again accountants or bookkeepers and jump right into setting up a company on QuickBooks and entering transactions, without having the requisite knowledge of accounting.
Disaster looms for them and the company eventually down the road. Perhaps you or your company has traveled that road already. A critical QuickBooks accounting area where clients often experience a great deal of difficulty in correctly processing involves the payroll function of a company. Amounts of monies and reports have to be distributed to employees, the internal revenue service, state revenue and labor departments, benefit providers, etc.
Significant penalties and interest charges may be imposed upon the employer who fails to comply on a multitude of legal requirements on an unforgivingly timely basis.
If you are not a trained accountant, do not attempt to set up payroll—nor, for that matter, the entire QuickBooks program—for your company by yourself.
You will not save any money; in fact, you will spend in the long run many multiples of what it would have cost you to have hired someone with a solid background in accounting and QuickBooks either to assist you or undertake the entire set up for you.
There are far too many reconciling payroll general ledger accounts transactions to process correctly, in addition to accounts and their linkage. Leave it to the pros and save money and headaches.
Besides, too much is at risk if you foul things up: If you have a solid accounting and QuickBooks background, here is some additional advice if you wish to process payroll in house. Do not only set up a separate bank account for payroll, but set up a separate company for payroll as well.
Privacy laws are a major concern to employees and governmental bodies today; penalties accompanied by lawsuits can put you out of business. Internal controls over QuickBooks functions should always prevail over other considerations. And it will not cost you one additional cent to be careful. Many QuickBooks users outsource payroll reconciling payroll general ledger accounts transactions a payroll service provider, including the printing reconciling payroll general ledger accounts transactions the payroll checks and all governmental filings.
However, these clients often experience difficulty in reconciling their bank account every month because they post a consolidated journal entry or two in QuickBooks to reflect the effect of the entire payroll transaction in the accounting records.
Not all payroll checks clear by the end of the month. Moreover, governmental agencies, not especially known for their timeliness, often require more than a few days to process checks, if not weeks or months. Consequently, posting the consolidated journal entry for the weekly payroll into QuickBooks fallaciously assumes that all payroll checks have cleared.
So how does one reconcile the payroll bank account without fudging we hope that your bookkeeper does not force the reconciliation, assuming a reconciliation is done at all? Please be advised that if you set up a separate company in QuickBooks reconciling payroll general ledger accounts transactions order to process payroll, you will also be required to post a consolidated journal entry into your original QuickBooks file to update your general ledger.
Consequently, you will also be required to reconcile your payroll bank account in a similar fashion. When outsourcing payroll or setting up a separate payroll company, the QuickBooks workaround for uncleared payroll checks at the end of the month involves a decomposition of the total net payroll for the month into amounts cleared and uncleared, with the uncleared total further decomposed by individual checks.
Your payroll bank account now balances, of course, assuming there are no other errors. Companies with experienced accountants often prefer keeping the payroll function entirely in house, since it ordinarily provides more control over its processing, greater accuracy, and cost savings. Too often a payroll after reconciling payroll general ledger accounts transactions submission to an outsider service provider has to be changed, resulting in hot payrolls and panic attacks.
However, a major limitation imposed by Intuit on in-house reconciling payroll general ledger accounts transactions processing is the absence of payroll updates on an annual basis. Apparently Intuit desires the QuickBooks user to purchase either one of its payroll plans or newer QuickBooks versions with the updated payroll tax tables. The workaround involves a cumbersome and tedious annual payroll tax inputting of withholdings and the like for those determined not to shell out one additional sheckle to Intuit.
This article attempted to provide a QuickBooks payroll tip to facilitate the bank reconciliation of the payroll bank account, as well as to alert the reader reconciling payroll general ledger accounts transactions a few precautionary measures before undertaking the processing of payroll in QuickBooks.
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