I have a client that pays their employees with cash. The payroll service runs the payroll every week and gives my client “slips” that are given with the cash to the employees every week. The cash comes from sales. How do I record the “debit to net payroll payable” and “credit to sales?”
You shouldn’t credit sales. Instead, you should deposit the sales into a petty cash bank account and write a check from petty cash. If you deposit any of the sales into the checking account, you should make that deposit too. You need to find out where sales are deposited now. Are they all sitting in undeposited funds? Are they all being deposited individually into the checking account? You need to make sure they’re deposited into the correct bank account.The tricky part is that your payroll expense is more than the net payroll. You’ll need to enter gross payroll to the payroll expense line and then negative lines for all the payroll deductions mapped to payroll liability accounts, leaving the net payroll as the check amount. It’s complicated which is why I recommend using QuickBooks for payroll instead of an outsourced payroll service. You can still use the petty cash account to pay cash paychecks.
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This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.
Written by +Ruth Perryman, CMA, CFE, CFM, MBA
Ruth is the president of The QB Specialists, an Intuit Premier Reseller that offers huge savings and expert advice on QuickBooks POS and QuickBooks Enterprise. She is an Advanced Certified QuickBooks ProAdvisor and a member of Intuit’s Trainer/Writer Network. She is also certified in QuickBooks POS and QuickBooks Enterprise and has provided expert QuickBooks help to thousands of businesses all over the world since 1996.
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