My son just started his own business in the construction industry and has asked me to do his books. I agreed :(
He has a Quickbooks accounting software package without the payroll option. I guess I'll be doing P/R manually then and am struggling with how to set the accounts up properly.
Is there anyway you could give me some direction? I use the Government of Canada Payroll Deductions calculator currently but need to know how to enter the gross salary, EI, CPP, tax deductions, etc. in the COA.
Thanks so much, Siobhaun in Ontario
You can upgrade to QuickBooks Payroll for a fee ... but the journal entries you need for basic payroll are:
DEBIT Wages (expense account on the income statement for the office staff or part of COGS for the construction crew) - this is where you book the gross wages.
DEBIT Employer Payroll Taxes (expense account on the income statement) - book the employer portions of CPP and EI here ... you can make two subaccounts under this account if you want.
CREDIT Payroll Taxes Payable (current liability on the balance sheet) - for the employee and employer portions of CPP and EI as well as the income tax deducted from each employee ... you can make three subaccounts under this account if you want. This account represents the amounts you have to remit to CRA on form PD7A.
CREDIT Wages Payable (current liabiability on balance sheet) - equals the net payroll paid to employees.
To issue pay cheques, your bookkeeping entry would be:
DEBIT Wages Payable
CREDIT Bank (current asset on the balance sheet)
When you remit the source deductions reported on Form PD7A to CRA, your payroll bookkeeping entry would be:
DEBIT Payroll Taxes Payable
You will also need to account for vacation pay and union dues.P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.