To create payroll in Design Manager, you will need to use Journal Entries to record the necessary fiscal transactions.
Prior to recording your payroll entries, you will also need to have pre-configured accounts for which you will be recording this activity. You can learn how to add your bank or checking account information here.
The first account that you will need is the account from which the payroll provider is going to remove the necessary funds. This could be a cash/checking account, an operating account, a savings account, or any other type of asset bank checking account.
You will also need to add any liability accounts. These are any legally binding debts that your company will eventually owe. For example, this could include a health insurance withholding account if your Employees contribute to their health insurance directly from their paychecks. You’ll want to record that amount into a liability account as your company will ultimately use the funds along with any amount that you provide for insurance as an expense when you go and pay your health insurance premiums. Another example could be a 401k withholding liability account or any other version of a retirement plan your company might offer that allows your Employees to contribute directly from their payroll.
You will also need to consider any expense accounts. This could include a salaries expense account, which holds the total amount earned by your employees. It is not necessary to have an account for each Employee, but it’s important to check with your accounting professional to see if they would prefer you to break out the salaries into subgroups. Payroll taxes also count as an expense account; this can be one or many accounts used to hold business-related payroll expenses. A payroll service fee expense account may also be necessary for the charges related to your payroll company handling everything. Some companies will take this fee outright during the transaction process, while others will invoice or automatically withdraw later in the month. Either way, an expense account is needed to record these expenditures.
You can add these liability and expense accounts, if they are not already listed in your General Ledger, by going to the left side menu under General Ledger and clicking on Accounts. If you are unsure of which accounts to add, check in with your Accountant, CPA or bookkeeper to be sure you are adding and selecting the right accounts.
To create a journal entry for payroll, follow these steps:
1. On the left side menu under General Ledger, click on Journal Entries.
2. Click on the + Add button in the top right.
3. Add in the Journal Entry information.
Under Entry No., you can choose to keep the pre-made Entry No. created by Design Manager, or change it if you or your accountant have an internal Journal Entry number scheme you’d prefer to use
Add the date on which the funds were withdrawn
Under Description, you can add in the pay period covered
4. Click on the + Add button in the bottom right to add your accounts.
Under Account, select your asset account name from which the funds are withdrawn. Since this is a checking account, select Credit, as you are crediting/reducing the account by the total amount withdrawn from your payroll company, which number you then type into the Amount box below. Click the + Save button and then the + Add button again to add another account, or just click the + Save & New button to save the account and automatically open another account addition tab
Repeat this process to individually add in each withholding account. These accounts should also be classified as Credit, as they are liabilities and liabilities go up when you credit them, conversely to the assets
Repeat this process to add your salary account. This account will be classified as Debit because expense accounts go up when you debit them
Repeat this process to add your payroll tax expenses account. This includes total Employee liabilities and is also classified as Debit, as it is an expense account
Repeat this process to add your payroll service fee (if applicable)
5. Make sure your debits and credits match by ensuring that the Net Debit and Credits total at the bottom is $0.00.
6. Click the Save button to save the Journal Entry.
7. Click on the box to the left of the Journal Entry to select it.
8. Click on the Actions drop-down and select Post. Edit the Fiscal Month if needed and then click OK to post the Journal Entry. It will now be in the Existing tab under Journal Entries.
You can now see the effect of your Journal Entry in your Checkbook, which can be accessed under Accounts Payable on the left side menu.
To pay a health insurance provider, follow these steps:
1. On the left side menu under Accounts Payable, click on Vendor Deposits & Invoices.
