posting payroll tax checks

[gbs30115]

I have been working to put our current budget in to Power church 9, before now we have had it on Excel and I am somewhat confused on how to post the tax liability check to the budget. I am using Peachtree to do payroll until 2008 so I have to post everything by hand (so to speak)to Powerchurch.
I have my payroll set up right but when I post the check that I paid the taxes, I am not sure how to show in on the budget. The taxes are in the salary and I have the employer SS tax "budgeted on Payroll tax (liability).
Please let me know if I have this set up right and how to show the tax check.

Thanks

[CLCRenee]

Do you have a budget amount for the Payroll Tax Liability account (which is basically a pass-through account) or for the Payroll Tax Expense account where you actually post the expense for the employer's SS?

[Jeff]

Typically you are going to have a salary expense account and a employer taxes expense account. In addition to these expense accounts, you will also have a liability account for payroll taxes. The two expense accounts will be budgeted. When you write the payroll check to the employee you are going to debit the expense accounts and credit the liability account. A typical payroll transaction would look like the following.

Bank Acount (credit for amount of paycheck)
Salary expense (debit for gross salary)
Employer Taxes expense (debit for employer portion of SS and medicare)
Taxes Payable Liability (credit for amount of taxes withheld)

When you write the check for the taxes you would just credit the bank and debit the Taxes Payable Liability. The employer taxes expense was recorded when you wrote the payroll check.

If the Employer Taxes Expense was not debited at the time the payroll check was written, you can also record the employer portion when you write the check for the taxes. The transaction would look something like:
Bank Account (credit for amount of taxes)
Taxes Payable Liability (debit for amount of taxes withheld from employee)
Employer Taxes Expense (debit for employer portion of taxes)

[jgillett]

The one thing that i don't understand is how it is going to work for bank rec.

We are doing the first method,

Bank Acount (credit for amount of paycheck)
Salary expense (debit for gross salary)
Employer Taxes expense (debit for employer portion of SS and medicare)
Taxes Payable Liability (credit for amount of taxes withheld)

When you write the check for the taxes you would just credit the bank and debit the Taxes Payable Liability. The employer taxes expense was recorded when you wrote the payroll check.

So for example say you check to the IRS was 1,000

400 in WH
200 In Employee SS
100 in Employee Med

200 in Employer SS
100 in Employer Med

The Employer portion is already showing up debited to your expense account so we can't include that in the Check to the IRS, so we end up putting the check in for 700

Credit your bank account $700
Debit the Employee SS and Med for 300
Debit the WH 400.

So the check in bank rec is only going to show 700 but the actual check that wrote and is coming out of the account is $1,000.

I am prob missing something stupid here but....

Any help would be great.
Thanks

[tborgal]

The employer portion should be credited to the liability account when the payroll check is written so you do not debit the expense account again when you pay the IRS. The payment to the IRS is a credit to the bank account and a debit to the liability account in the full amount due the IRS.

[jgillett]

Got it!!

Thank you so much Tom. I now see what it is doing.