Ok, little warning, I am new to all of this and we are a new church so the learning curve is a little big
I have consulted with a bookkeeper to establish correct payroll deductions for taxes etc. I entered the tax tables and set up the priest for his salary. I processed and posted the payroll and my question is, as far as the tax deposits go, do I need to enter them in manually. I used the EFTPS to electronically transfer the payments...when I posted the payroll will that automatically show up in the checking account when it comes time to reconcile the bank account?
It sounds like you are "sending" the tax money to your bank electronically.
If you followed the "normal" setup, then you will pay the entire paycheck (net plus taxes) by crediting the checking account and debiting the payroll expense account. That is the income item in payroll.
Then, you set up a tax deduction, which "puts back" the tax into the checking accounts and creates a liability so that you remember to pay the tax at a later time to a different entity. You then create a check in Accounts Payable that pays the tax amount to the other entity.
By transferring the money directly to your bank, I assume they take care of paying the tax liability automatically and send you some notification that they have paid it. If that is the case, you will not create a check in Accounts Payable, but you will need to either enter a manual transaction or a manual check to complete the paying of taxes.
It may be easier to show an example:
Pay payroll income item ($1000 gross = $750 net plus $250 taxes)
CR 01-1110-000 checking account $1000
DB 01-5010-000 pastors salary $1000
Payroll tax deduction (sent to the bank for payment)
DB 01-1110-000 checking account $250
CR 01-2010-000 federal withholding $250
(Bank pays your tax and send you a notification)
Accounts Payable - Manual Check to tax vendor
CR 01-1110-000 checking account $250
DB 01-2010-000 liability $250
You can watch my PowerChurch tutorials now on YouTube!
EFTPS is a direct deposit with the IRS and does not go thru the bank.
To answer the original question. You will have to enter a manual check crediting the bank account and debiting the liability account were the withholding is being held. Otherwise you will not be able to reconcile with your bank.
So lets say it's gross $2,000
Federal Withholding=179.00
Medicare Employee=29
Medicare Employer=29
Social Security Employee=124
Social Security Employer=124
Net $1,668.00
I ran that through the payroll module and posted the paycheck. It correctly withheld those amounts listed and the check was correct.
I then made an EFTPS for the $485.00 in taxes.
So processing and posting the payroll is not the only step? I also need to manually go in and tell it that you need to remove $485 from checking (for EFTPS) to pay the tax and then tell it the breakdown above to each liability account...fed withholding, medicare and social security and are those broken down based on employer/employee contributions?
(sorry )
In Version 11, you can assign an Accounts Payable vendor to each of your deduction items, then when ready to make your payment, there is an option under the Payroll menu to automatically create the A/P entry from the Payroll deduction amounts. This will be created in Accounts Payable as an open Invoice or Manual Check, depending on which you choose to create.
So I need to go to MAintain List of Vendors and create a vendor for:
Federal Withholding
Employer Medicare
Employee Medicare
Empolyer Social Security
Empoyee Social Security
and after processing and posting payroll I click on Create Accounts Payable Entry for Deductions? and it posts everything correctly?
(Remind me not to volunteer to run the books again haha )
You will only need to create one vendor for the EFTPS payment. We do not separate the withholding for taxes, FICA and medicare, we put them into one liability account and pay the taxes from that. However you will need to separate each liability in the lines of the payment entry.
Example:
Vendor - IRS
Amount - $485.00
Credit Bank Account - $485.00
Debit each of the liability accounts for the amount held in it for the month or quarter, whichever you are required to pay.
Zorak,
I tried to set up the automatic payment but could not get it to work. Keep getting "No items were found to process" window. Will this only work if a payroll is in process and not yet posted? Thought I did what the instruction said to do, but maybe I missed something.
It actually does some additional things in the data when you have vendors assigned to the items. It will not go backward and process things prior to you setting up and assigning the vendor to the items.
)