Entering Payroll in Quickbooks the Right Way

Quickbooks has a built in payroll but unfortunately you cannot use it in the Philippines. To record payroll in Quickbooks, you would need to do it manually.
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This is the first part of a series of Quickbooks tutorials. The series of articles assume that you have a background in using Quickbooks. Also, the steps below apply to Quickbooks desktop. We use Quickbooks UK Enterprise 13 but menus are the same across most Quickbooks desktop versions.

Quickbooks has a built in payroll but unfortunately you cannot use it in the Philippines. To record payroll in Quickbooks, you would need to do it manually.

The simple but wrong way

Our bookkeeper initially recorded our employees’s net pay and all government deductions as Expenses. This got me thinking – what about the employer share for government contributions and the taxes withheld? Where do we put that in our Chart of Accounts? I searched online and found this very helpful video from Nerd Enterprises on how to properly record payroll in Quickbooks.

Essentially, what we did was enter the net pay, tax payments and government contributions in our payroll bank account on payday and post them as Expenses. This is a simple process but not the correct way as the video will show. Government deductions have an employee share and employer share component. The employer share should be part of Liabilities.

Entering payroll in Quickbooks the right way

This is a very informative video if you are entering payroll in Quickbooks. You need to set up a Payroll Clearing Account and your liability account for employer share for government deductions. After setting up those accounts, it’s a matter of writing the check and posting the correct amounts to their correct Chart of Accounts. The 13 minute video will guide you through in entering payroll in Quickbooks the correct way.

After watching the video, we had to re-do all our payroll entries from the beginning. This was a hassle but it was the right thing to do. What made our job easier was that we use Salarium as our payroll system and we just downloaded our CSV payroll register and enter them in Quickbooks.

Special thank you to Nerd Enterprises for guiding us on how to enter payroll in Quickbooks. He has loads of videos about Quickbooks and Excel. You can check out their YouTube channel here.