Entering Payroll Deductions - USA

Last Updated: Jan 18, 2016 02:38AM PST

Kashoo has partnered with one of the leading payroll providers for small businesses in the United States, Paychex. Please find out more about Paychex here, and for details on how to set up an integration between Paychex and Kashoo, go here.

If you want to manually enter your US payroll deductions into Kashoo, please follow the instructions below. Once you know what you need to pay your employees and the government, here’s what to do in Kashoo.

Note: If you operate a business in Canada, please see our article Entering Payroll Deductions - Canada.

Create Payroll Liability Accounts

Kashoo by default already has a “Payroll Expense” account, so you will only need to add some payroll liability accounts.

Note: If you imported your own chart of accounts, then be sure that you do have an equivalent Payroll Expense account as these instructions assume you do.

Liability accounts are the accounts you use for money that your company owes. When you pay an employee, you deduct payroll taxes that you’ll then remit to the government.

You will need to create the following Taxes and Remittances liability accounts:

  • Federal Withholding
  • Social Security
  • Medicare
  • State
  • Worker’s Compensation (Industrial tax or SDI)
  • State Unemployment Insurance

To create those accounts go to Accounts under the SETUP section in the left hand navigation menu.

In the Add New Account section, add the following accounts:

  1. Federal Withholding
    • Name: Federal Withholding
    • Type: Taxes and Remittances
  2. Social Security
    • Name: Social Security
    • Type: Taxes and Remittances
  3. Medicare
    • Name: Medicare
    • Type: Taxes and Remittances
  4. State
    • Name: State
    • Type: Taxes and Remittances
  5. Worker’s Compensation
    • Name: Worker’s Compensation
    • Type: Taxes and Remittances
  6. State Unemployment Insurance
    • Name: State Unemployment Insurance
    • Type: Taxes and Remittances

If you look at the Liabilities / Credit Cards section, you will see the new accounts you created.

Entering Payroll Example

You can enter your employee payroll by going to the Expenses page.

For this example, we are going to have Employee A (great name, huh), make $1,000 (gross pay) in the pay period.

Here is her pay stub:

Expense Account Price
Payroll Expense $1,000.00
Federal Withholding -$120.14
Social Security -$62.00
Medicare -$14.50
State $0.00
Worker’s Compensation -$28.16
State Unemployment Insurance -$20.00
Total $755.20

So after taxes, the Gross Pay of $1,000.00 becomes Net Pay of $755.20. Notice that all the taxes are negative amounts while the Gross pay is positive.

If you look at the screenshot below, you will see what the payroll expense looks like in Kashoo.

Note: There is no State payroll tax in Washington State, so that’s why for this example the amount is $0. Payrolll liabilities will vary from State to State, business to business, and employee to employee, so please make sure you know what taxes you need to remit

Note 2: To get the Tax and Remittances accounts to show up in the Expense Account field, you will have to scroll down to the bottom and click Show All Accounts. Alternatively, you can simply start typing in the account name into the text box and it will display accounts that match the name.

After you click Add to add the payroll deduction expenses, you can click on Edit to view the summary of this transaction or click Duplicate to duplicate this transaction. The Duplicate function is great because you can enter multiple payroll entries in a row by simply changing the employee’s name (the Vendor field) and the deductions amounts.

You will be able to view deductions and pay history of your employees by going to the Vendors page which is found in the Setup section of the left hand navigation menu.

The transaction history is found in the lower portion of the Vendors Page.

You can also view total payroll deductions in the Balance Sheet report in the REPORTS section of the left hand navigation menu.

You’ll find your payroll accounts in the Liability part of the report.

Entering Payroll Tax Remittance Example

When you remit payroll taxes to the government, you can do so from the Expenses page.

For this example, this is what would be entered:

  • Date: Choose the date you are paying, in this example it’s August 14, 2013.
  • Vendor: IRS
  • Terms or Payment Account: Choose how you paid, in this example, it’s Bank Account.
    • 1st line:
      • Expense Account: Federal Withholding
      • Price: 120.14
    • 2nd line:
      • Expense Account: Social Security
      • Price: 62.00
    • 3rd line:
      • Expense Account: Medicare
      • Price: 14.50
    • 4th line:
      • Expense Account: State
      • Price: 0.00
    • 5th line:
      • Expense Account: Worker’s Compensation
      • Price: 28.16
    • 6th line:
      • Expense Account: State Unemployment Insurance
      • Price: 20.00

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