would you like to know the proper way to record everything listed on your paycheck
well this video will show the real way
to deal with salary and wages when you're doing quickbooks for home finance
if you have any questions about this topic you can leave them in the comments section below and i'll
do my best to help you and of course if you feel the video helped you i hope you will click like
and don't forget to subscribe to get updates on new videos that come out all the time salary
or wages is money you earn from a job where you qualify as an employee not an independent
contractor the paying company must withhold several taxes and possibly other withholdings
from your gross pay what you physically receive in your jobs paycheck that amount is called net pay
your monthly financial statements are not showing the whole picture if you only record
the net pay and do not put into quickbooks the gross pay amount that you actually earned and each
withholding that you pay as an expense the proper way to do that is to read from the pay stub of the
paycheck so everything you need is in a typical pay stub the salary will be part of your gross pay
and these are the expenses that you should have listed one by one
on your income statement profit and loss and the net pay is the physical amount of money that you
deposit to the bank and you have to record the net pay being deposited in order to match your bank
records and be able to do bank reconciliation you have to add all the income and expense accounts
listed here so that you can record from your pay stub each time you get a check from your job
so in our example we will have five accounts that we have to add to the chart of accounts
federal income tax as an expense state income tax as an expense social security medicare and even
health insurance will all be listed as expenses and they'll all be deducted from salary income
and salary income will be the income account so we go to the chart of accounts list
chart of accounts account new and the first one will be an income account and we will put it as
salary wages as the income save and new the other five items will be expenses federal
income tax
save and new state income tax
save and new social security
saving new medicare save and new and the last one will be health insurance
the last one you can save and close now we have the accounts that we need that will give
us the ability to record from our paycheck example one let's imagine on october 15th of
2016 which is the example year we're using joe got his monthly paycheck the numbers were as follows
here's the gross pay that he earned here's the federal tax withheld state tax withheld
social security withheld medicare withheld and healthcare insurance deduction withheld
we are going to read these numbers and record them in the deposit window so we get the accurate net
pay recorded into the bank account so from the main menu we click banking make deposit and this
is what we do on the day that we're depositing the money which we will assume in this example
is the same day that the paycheck was issued october 15th of 2016. by the way
this has to be the date that you physically make the deposit so that it matches your bank's records
so even if your job gave you the check earlier you can only record it at the moment you deposit
now the account that's two thousand dollars is the income account salary wages
income and that's the gross amount 2 000 and that goes in as a positive number
however the federal tax was deducted so that will go in as a negative number
i believe that was 300 and the state income tax was 100 so the state income tax expense
down here goes in as a negative 100. notice when i push tab the net amount deposited decreases
so what are the other expenses um social security 124 social security
minus 124 taken from your check what about medicare you could type in the first two letters
to filter the account that goes in as negative and we have that in the amount of twenty nine dollars
and of course they take out money for your health insurance h e and it will
filter and how much did they take out 67
when you push tab the bottom number on the deposit subtotal should equal the amount of the check that
you're physically depositing into the bank that's your net pay and if we click save and
close and then we open the profit and loss and we change it to make it from october 1 of 2016
to october 31 remember of the year we're working on 2016 you can see the income is the gross pay
and all the deductions are expenses and your income would only be the net pay if
during this time period you did not include any other income or have any other expense
it would help you learn better if you practiced another couple of examples and you would see
how the numbers accumulate from month to month let's imagine on november 15th we got the same
paycheck for the same amounts but will record it on november fifteenth you would do the same thing
banking make deposit just make sure that the date you put is the date that the check was deposited
to the bank not the date of the paycheck because it has to match your bank's records when you do
bank reconciliation so you have the income account for salary and wages and that's a positive number
excuse me let's fix that
you have the federal income taxes that was withheld
so that's a negative number excuse me you have state income tax also withheld
so that's a negative number you have social security i keep putting it in the wrong column
social security withheld and we know that's a negative number and we have medicare withheld
so let's take a peek to remind me of the medicare amount
uh 29 and i think health deduction is the same okay twenty nine dollars
and the health care deduction
minus sixty seven dollars so if they are the same money amounts each paycheck you just have to put
the date that it was deposited to your bank account save and close now what you could do
is keep open the overall profit and loss so that you see the salary and wages our income the same
as the others are and you can see the withholding taxes are the same like the other expenses that
you have to pay so here's what i suggest you do for practice see if you can enter example three
for december 15th for the exact same money amounts do it without the teacher and i'll
pause the video and do it myself and see if we get the same final profit and loss
so these are the total accumulated numbers and the profit and loss
if you show the results of all dates assuming you properly recorded the december 15th
paycheck notice if you double click salary and wage all three paychecks show the gross amount
however if you close this and go back to the profit and loss
you can see the federal income taxes up to 900 double click and it shows each paycheck
where you contributed to your federal taxes and so on congratulations this is the proper way to
record each paycheck if you're an employee and you are using quickbooks for your home finances