Journal Entry and Payroll Clearing.

In this episode of the Budget Ease Broadcast, we walk you through how to properly post and report payroll using journal entries and a payroll clearing account. Whether you're a small business or a large enterprise, following these best practices will streamline your payroll process, improve bank reconciliations, and help you avoid errors. Stay tuned for step-by-step guidance on setting up journal entries in QuickBooks and keeping your payroll on track.
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TRANSCRIPT:
Welcome to the Budget Ease broadcast.
Today we're going to talk about how to properly post and report your payroll using journal entries and a payroll clearing account.
Whether you operate a small business or a large enterprise, you will have to account for payroll.
Properly posting and reporting payroll is a recurring track task is a recurring task.
If you follow best practices, you will journalize your payroll and use a payroll clearing account.
A payroll clearing account is a temporary 0 balance liability account.
Deductions from your bank accounts for payroll are offset by the payroll clearing account.
The advantages are easier bank reconciliations because everything matches, they'll identify your errors easily, and you'll have better financial information.
Here's the step by step how to do it.
First, transactions in your bank account or your bank feed in QuickBooks are moved to the payroll clearing account.
You would credit the bank account debit payroll clearing.
Next, a journal entry to a payroll clearing account summarizes the total expenses that are incurred in all the net payroll checks.
So in other words, this is an entry that helps you determine exactly how much you're paying out in payroll in each.
The clearing in the payroll clearing account means that you are using this accounting method to clear revenues and and any expenses and reconcile any potential errors you may have you may have in determining your payroll.
Here's what your journal entry will look like.
Using a journal entry like this one is simple and easy to follow, memorizing it in QuickBooks.
Or you can just go to the most recent entry and copy it.
Then you you have a journal entry that's all set up and you're able to reconcile your payroll clearing account.
It's a great way to stay on top of what may be your largest expense and make paying payroll taxes seamless.
If you need help setting up a easy procedure to enter your payroll in a way that provides you with optimal financial information, give us a call.
We're here to help.
I hope this Budget Ease broadcast was helpful to you.
See you at our next episode.