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Need more control over payroll liability accounting
pivy
Member Posts: 8
I'd like to add subaccounts under payroll liabilities and the ability to map things to them. Right now, "Payroll Liabilities" is collecting a lot of stuff, and so it isn't always clear which government entity I've forgotten to send money to. I'd like something like "FICA taxes payable" and " wages payable" and "unemployment insurance premium payable" etc.
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Hey there @pivy
Payroll Bookkeeping
Essentially the initial journaled transaction is categorized under a liability account. So, when a payroll is approved, the liability account is credited (increased) by, the amount that you owe the employees. This is the accounting equivalent of saying “I approved payroll, so now I owe my employees the wages from that payroll”.
Wave will also create a withdrawal transaction in the Transactions page whose account is set to the funding account from Account Mapping, and whose category is set to Payroll Liabilities. The date of this transaction will match the withdrawal date for the Direct Deposit. Where the journal transaction credited Payroll Liabilities, this transaction debits it by the amount of the withdrawal. This is the accounting equivalent of saying “Ok, now I’ve actually paid my employees.”
The triplicate transaction is if you have a bank account connected, it will pull in the same withdrawal transaction, so you would have to either merge the two transactions, or delete the bank-imported transaction, as Wave will have already accounted for it. People recommend merging by selecting the check boxes beside the two withdrawal transactions and selecting merge at the top instead of deleting, but it doesn't exactly matter to be honest. Some people don't like the idea of deleting a transaction.
I'd highly recommend reading about how our payroll services work with this handy article.
https://support.waveapps.com/hc/en-us/articles/360046489492-Wave-Payroll-all-about-the-bookkeeping
Adding Sub-accounts
At this point Wave Wave does not have the ability to add more sub accounts which you can add to your journal transactions created by Wave's Payroll system. What I'm thinking is if you were to manually move these funds using another journal transaction. So if you create a new JT and debit the payroll liabilities account and credit the FICA account for example? Hope this suggestion works
Lemme make a better pitch here.
I am a solo lawyer. That's a professional services small business, which I read somewhere is Wave's target demographic. I keep my own books. I don't need a lot of reports, but I need to be able to pull up a balance sheet and immediately know what's going on. It is really unhelpful to see a single line item for "payroll liabilities" in Wave. Now I have to spend (quite a bit) of time figuring out where that number came from.
To do that, I have to look at all the account transactions in that account, and because of the way Wave does payroll, EVERYTHING goes in there: federal taxes and state taxes, unemployment insurance, benefits payable, employer shares of things and employee shares of things. And then there's the grouping: state and federal taxes are combined in "employer taxes payable", but payments are always made to only the feds OR the state. Worse, payments to the feds include employer AND employee taxes. That means no single debt will match any single credit. So I can't even look through the debits and credits to find matching numbers to rule things out. So now I have to start a long, time-consuming process of going payroll by payroll, adding things up on a calculator until I figure out what happened.
This could all be solved if I just had more control over the account mapping. If I could divide payroll taxes into employee state, employee federal, employer state, employer state, then I could split the payments when they hit my bank account and zero out the liabilities as I pay them. If there's still a balance somewhere, it will be obvious what I didn't pay, and I can go fix it quickly and get back to work.
Ideally, I would like to see this implemented in the payroll system itself, because I just want to click the "pay yourself" button and get back to work. But if you guys can't do that for whatever reason and I still need to do journal entries, please at least give me subaccounts because the total amount I need to pay the feds is the sum of employer FICA taxes, employee FICA taxes, FUTA taxes, and employee FIT withholding. If I could at least group those things together when the EFTPS payment hits my account I'll be able to match it up.
Hello @pivy ! If you view your pay period journal transactions on the Accounting > Transactions page, you can view how all of your debits and credits are allocated. This will display what is being allocated to your payroll liabilities account as well. Also if you can filter your Transactions page to only display your payroll liabilities transactions for more insight. To do this, press "Filter" on the Transactions page and select "Payroll Liabilities" in the Category drop down menu. Also, if you head over the the Payroll > Taxes page, you can view your due taxes. They will be broken up into the categories you mentioned such as Federal Tax, Employment Insurance, etc.