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Chapter 17. Recording Liabilities > Recording Payroll Tax Accruals

Recording Payroll Tax Accruals

The taxes you withhold from your employees must be turned over to the government, and, as an employer, you have a responsibility to pay additional payroll taxes such as the employer's share of Social Security, Medicare, and unemployment taxes. Although these amounts are owed to the government when you issue paychecks, the amounts might not be due immediately. When your company owes payroll taxes, you have to create payroll tax liability accounts to record the taxes that are due. If you use QuickBooks to calculate your payroll, the liabilities are recorded automatically. If you use an outside payroll service, you need to record your payroll and payroll tax accruals yourself, as shown in this example.

Record Payroll Tax Accruals

Select Make General Journal Entries from the Company menu. Note that you might see an information window telling you about the QuickBooks automatic journal entry numbering feature. Click OK to close this window.

Enter the date of the payroll, which might be different from the date that automatically appears.

Enter the payroll expense account.

Enter the gross payroll expense (total salaries and wages before withholdings) as a debit.

Enter an optional memo.

Enter the first tax liability account—for example, enter Federal withholding.

Enter the amount of tax liability as a credit.

Repeat steps 5 and 6 until all your tax liabilities have been entered.

Enter the cash account from which the payroll is paid.

Enter the net payroll expense (the amount of payroll actually paid out to employees after withholdings) as a credit.

Save the journal entry.



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