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PAYROLL LIABILITY ACCOUNTS

Liability Accounts must be used when doing payroll checks and when sending in withholding deposits.

Liability Accounts - These are technically debts the Extension district owes. In Extension the only time we use a liability account is when we withhold money from an employee's pay and when we at the same time obligate our the district to pay the employer portion of Social Security, Medicare and IPERS. You are now going to set up liability accounts that we will use for payroll. These accounts are used to set aside the money we will use to pay Federal (including Federal withholding, Social Security and Medicare), State and IPERS deposits.

Press your Accts icon to get a list of your accounts. The screen should look like this:

• Select the New button
• Select Liability and then click "NEXT"
• Select the Summary tab in this dialog box. This time you are going to name your account Payroll Fed.
• Use the Tab key to move to the next box or use your mouse to click the cursor in the Description box.
• Enter Federal Withholding.
• Tab to the Balance box. Enter the $0 in the Balance box.
• Tab to the box to the right of as of and adjust the date to July 1, 2006.
• You have no outstanding transaction on this account.

We are going to set up seven (7) more liability accounts to be used for payroll. The names and descriptions are 1) Payroll SS and Social Security Withholding: 2) Employer SS and Employer Social Security Deposit; 3) Payroll Med and Medicare Withholding 4) Employer Med and Employer Medicare Deposit; 5) Payroll IPERS and IPERS Withholding; 6) Employer IPERS and Employer IPERS Deposit, and 7) Payroll St and State Withholding.

Once you have written payroll checks and also written withholding deposit checks, then you have completed the payroll cycle and the balance in the payroll liability accounts will go back to $ 0.

UPDATES TO PAYROLL PROCEDURES
How to make Yearend Financial Reports even easier!!!!

(Be sure you are in the correct account - Operating Checking)

PAYROLL
To figure the Extension office payroll, use the Excel payroll spreadsheet available on the web. To figure the appropriate withholding amounts and the employer portion of Social Security, Medicare and IPERS, use the Excel template. First, enter the employee's name in the spreadsheet, replacing the words "Name #1". Enter the gross wages and the Federal and State withholdings for gross wage after IPERS from the Circular E and the State Withholding booklets. Remember that the amounts for Social Security and Medicare are the same for both employee and employer. The template figures the Employer's IPERS for each employee.

Now you are ready to enter the payroll checks in Quicken

• Click on the icon Checks.

  Employee's Check

• First, change the date to m/d/y
• Then enter the Employee name, followed by the net amount of the check.
• Instead of selecting a category, select the Splits button.
• On the 1st select the category for gross wages in the Category box
• [TAB] to the Memo and enter Gross wages
• [TAB] to the Amount and enter the amount of Gross wages.

• [TAB] to 2nd line and in the Category box select [Payroll Fed]; this is a transfer to a liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter Federal Withholding
• [TAB] to the Amount and enter the amount of Federal withholding as a negative number.

• [TAB] to the 3rd line and in the Category box select [Payroll IPERS]; again, this is a transfer to a liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter IPERS Withholding
• [TAB] to the Amount and enter the amount of IPERS withholding as a negative number.

• [TAB] to the 4th line and in the Category box select [Payroll SS]; again, this is a transfer to a liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter SS Withholding
• [TAB] to the Amount and enter the amount of FICA withholding as a negative number.

• [TAB] to the 5th line and in the Category box select [Payroll Med]; again, this is a transfer to a liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter Medicare Withholding
• [TAB] to the Amount and enter the amount of Medicare withholding as a negative number.

• [TAB] to the 6th line and in the Category box select [Payroll State]; again, this is a transfer to a liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter State Withholding
• [TAB] to the Amount and enter the amount of State withholding as a negative number.

The screen should look like this when you have completed this portion of the entry:

• Now go to line 16 of this Split window and in the Category box, select the expense category for the Employer portion of FICA - C Employer SS
• [TAB] to the Memo and enter Employer Social Security
• [TAB] to the Amount and enter the amount of Employer FICA obligation as a positive number.

• [TAB] to line 17 and in the Category box, select [Employer SS]; again, this is a transfer to a liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Amount and enter the amount of Employer Social Security as a negative number.

• Now go to line 18 and in the Category box, select the expense category for the Employer portion of Medicare - D Employer Med
• [TAB] to the Memo and enter Employer Medicare
• [TAB] to the Amount and enter the amount of Employer Medicare obligation as a positive number.

• [TAB] to line 19 and in the Category box, select [Employer Medicare]; again, this is a transfer to a liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Amount and enter the amount of Employer's Medicare as a negative number.

• Now go to line 20 and in the Category box, select the expense category for the Employer portion of Medicare - E Employer IPERS
• [TAB] to the Memo and enter Employer IPERS
• [TAB] to the Amount and enter the amount of Employer IPERS obligation as a positive number

• [TAB] to line 21 and in the Category box, select [Employer IPERS]; again, this is a transfer to a liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Amount and enter the amount of Employer's IPERS as a negative number.
  

Your screen should look like the screen shown below:

• Now click "OK" and "RECORD CHECK".
  
  What these entries have done is record as an expense the Employer's portion of Social Security, Medicare and IPERS and then reserved that money in a liability account. When you complete the payroll cycle and write checks to Federal bank depository and to IPERS, you will remove the money from the liability account.
  
  The next step in the payroll process is to pay out the Federal, State and IPERS deposits.

  Federal Deposit Check
  

• Enter the Bank's name, followed by the amount of the check, which can be found on the month worksheet of the Excel template
• Instead of selecting a Category, select the Splits button.
• On the first line in the Category box, select [Payroll Fed]; this is a transfer out of the liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter Federal Withholding
• [TAB] to the Amount and enter the total amount of Federal Withholding for all the employees in the office as a positive number. You can find this number on the month worksheet of the Excel template.
  
  
• [TAB] to the 2nd line and in the Category box, select [Payroll SS]; again, this is a transfer out of the liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter Social Security Withholding
• [TAB] to the Amount and enter the total amount of Social Security Withholding for all the employees in the office as a positive number. You can find this number on the month worksheet of the Excel template.

• [TAB] to the 3rd line and in the Category box, select [Employer SS]; again, this is a transfer out of the liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter Employer Social Security
• [TAB] to the Amount and enter the total amount of Employer FICA for all the employees in the office as a positive number. You can find this number on the month worksheet of the Excel template.

• [TAB] to the 4th line and in the Category box, select [Payroll Med]; again, this is a transfer out of the liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter Medicare Withholding.
• [TAB] to the Amount and enter the amount of Medicare Withholding for all the employees in the office as a positive number. You can find this number on the month worksheet of the Excel template.

• [TAB] to the 5th line and in the Category box, select [Employer Med]; again, this is a transfer out of the liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Memo and enter Employer Medicare.
• [TAB] to the Amount and enter the amount of the Employer Medicare for all the employees in the office as a positive number. You can find this number on the month worksheet of the Excel template.

When you complete the entry your screen should look like this:

• Now click "OK" and "RECORD CHECK".
  
  State of Iowa Check
  In 2003 most of our county office became quarterly depositors for Iowa withholding instead of monthly depositors. What this mean is that instead of sending a check monthly to the Treasurer - State of Iowa it will be done at the end of each payroll quarter. These payment should be made after the final payroll payments in March, in June, in September and in December.
  
  
• Enter Treasurer - State of Iowa, as the payee.
• [TAB] to the Amount and enter the total amount of State Withholding for all the employees in the office as a positive number. This amount can be calculating the sum of the state withholding on each of the month worksheets of the Excel template for a given quarter.
• [TAB] to the Memo and enter State Withholding
• [TAB] to the Category line and select [Payroll State]; this is a transfer out of the liability account found at the bottom of the Category pull-down menu.
• Now click "OK" and "RECORD CHECK".
  
  IPERS Check
  
• Enter IPERS, followed by the amount of the check, which is the employees withholding amount which can be found on the month worksheet of the Excel template.
• [TAB] to the Memo and enter IPERS Withholding.
• [TAB] to the Category line and select [Payroll IPERS]; this is a transfer out of the liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Amount and enter total amount of IPERS Withholding as a positive number. You can find this number on the month worksheet of the Excel template.

• [TAB] to the Memo and enter Employer's IPERS.
• [TAB] to the Category line and select [Employer IPERS]; this is a transfer out of the liability account found at the bottom of the Category pull-down menu.
• [TAB] to the Amount and enter total amount of Employer's IPERS as a positive number. You can find this number on the month worksheet of the Excel template.

When you complete the entry your screen should look like this:

• Now click "OK" and "RECORD CHECK".