Before handling payroll records, let's first understand what payroll is? You can make a call at Quickbooks enterprise support to understand it. According to Investopedia, payroll is the sum of all compensation that a business must pay its employees for a set period or on a certain date.

Larger firms have their accounts department that monitors payroll for small businesses. Therefore, owners or associates handle payroll on their own.

If payrolls are outsourced, recording accounting information for these transactions is a good way. However, this can confuse when entering QuickBooks.

Some consider re-entering payroll, while others are meant to save time as a journal entry but they often don't know how to do it.

• Gross payroll v / s Net payroll: To clear up confusion, it is necessary to understand the significant differences between gross payroll and net payroll. The amount you give to your employees before the deduction is called gross salary.


Net payroll is what your employees get after deductions. It is a mixture of payroll expenses and payroll liabilities, such as medical insurance, contributions, etc.

Following the tips for outsourced payroll recording:

• Actual Payroll Checks: If the outsourcing company does not remove payroll checks, their payroll fees, etc. from your account, you will have to do this manually for each record. Enter wages as a positive number.

All employee payroll taxes and any deductions should be recorded as negative numbers and hit the liability account. The result of this payroll check should be equal to the amount that the check was written for.

• Direct Deposit: This is similar to real payroll, the only difference being that you have two options - if you want to check each employee's deposits in QuickBooks individually or if you want to enter them as a journal. Entering details are the same - pay wages as positive and taxes and deductions as negative numbers.

• Payroll service charges: The amount to be paid to the outsourcing company is also to be added to it. Enter a check in the name of the service provider of the total amount of the payroll fee and enter it as an expense.

• Recheck: This is an important tip after all. Rechecking helps you detect your flaw if there is any. There are two ways to accomplish this - look at your accounts chart and make sure all payroll liability accounts have a balance of zero as they need, or also check the service fees of the outsourcing company.

This direct deposit should equal the sum of payroll taxes and payroll fees for both the employee and the employer. It also includes liability for the actual payroll check if the service provider considers this.

You can save some time from this marathon job by asking the outsourcing company to create a file that can import all transactions directly into QuickBooks.

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