Gross Payroll Expense?

peng_o

Hi all,

I'm looking at my Profit & Loss statement and I'm seeing that Wave is recording:

Payroll Gross Pay + Payroll Employer Taxes + Payroll Salary & Wages

as operating expenses. This means it shows the payroll amounts twice as an expense and this expense is duplicate.

When I look at Payroll Gross Pay, it shows in the books as Journal Transaction.

New to bookkeeping, is this a bookkeeping error or I am misunderstanding?

Mikeg

I have a client that uses Wave payroll. The journal entry that Wave makes is to book gross wages. The following is how it's done. Debit gross wages (expense) Debit Employer Taxes (Expense) Credit Payroll liabilities (for net pay) Credit Payroll Liabilities (employer and employee taxes). The next entry it makes is a debit to payroll liabilities (for net pay) and a credit to cash on hand (for net pay). I personally don't like the second entry they make and I delete it. That's because net pay comes through the bank imports. I usually code the net coming from the checking account against payroll liabilities. Any payments to the IRS etc should also be coded to payroll liabilities.
Mike G, CPA
www.mgfinancial.net
Better Service - Better Pricing

enlightened_FL1

Great answer - I have coded all my transactions to payroll liabilities. Adding to this question, when would one utilize an Expense category Employee Salary and Wages? I'm wondering how would you figure out salary/wages minus taxes (not gross pay)?

Mikeg

@enlightened_FL1 ,
If you are using Wave payroll it should post to salary expense, the gross pay, which is what a business deducts. Are you asking how do you compute payroll and record on your own?

enlightened_FL1

I’m using Wave Payroll and have different 2 expense accounts set up on default - Payroll Gross Pay and Payroll Salaries/Wages - I’m unsure why there are two. No journal transactions from Wave Payroll have been accounted to this salaries/wages account, only Gross Pay.

Mikeg

@enlightened_FL1 ,
Yes there are several payroll accounts that are duplicates. The one that it is using is fine. As long as there are no entries in the other salaries and wage account it won't show up. Might have to do with programming a default account for those using Wave payroll.