Setup QuickBooks Payroll Chart of Accounts

QuickBooks software helps in business analysis through different lists such as Chart of Accounts, Items List, Class List, and Customer Type List. The configuration of the QuickBooks payroll Chart of Accounts is simple and easy. The chart of accounts indicates the list of asset, liability, equity, income, and expense accounts that are used to assign regular business transactions.

Let us discuss how to configure the Payroll Chart of Accounts for QuickBooks Online.

Types of Accounts in QuickBooks Payroll

There are six different account categories used for tracking the financial position of your business. They are assets, liabilities, equity, income, cost of goods sold, and expenses.

• Assets: Anything purchased that can be used for economic benefit is termed an asset. Assets that can be quickly liquified are a bank, Accounts Receivable, gold, etc. Current Assets comprise the QuickBooks Inventory Asset and the Undeposited Funds account. The Fixed Asset is used to track purchases of tangible property.
• Liabilities: Liabilities refer to the company debts that are yet to be paid. It comprises subsections: Accounts Payable, Long-Term Liability, Credit Cards, and Other Current Liability
• Equity: The Equity account category holds the leftover interest of the business after the liabilities are paid. Accounts in this category comprise common stock, owner’s investments and draws; retained earnings; and opening balance equity.
• Income: The earned money from selling the products or services is signified as income.
• Cost of Goods Sold: The Cost of Goods Sold account is for the costs directly related to giving a service or good for sale. There is a direct relationship between these costs and your revenue. In case your company offers a product, your cost of goods sold (COGS) expenses would include the material, labor, and other costs that are involved in selling the product.
• Expense: An expense indicates when an asset is used or there are some cash transactions made. The expense accounts were prepared during the Express Start or Advanced Setup and accorded you all the general divisions required for tracking your business expenses.

How to Configure Chart of Accounts for Payroll in QuickBooks Online

In the Chart of Accounts in QuickBooks, users create the company file, the accounting software automatically uses the details to create the chart of accounts according to the department. Moreover, you can add multiple accounts.

• First of all, Find the Settings section
• Now choose the Chart of Accounts
• Choose the New option to make a new account
• Now locate the drop-down button name Account Type to select the type of account
• After this discover the drop-down button named Detail Type to click on the type of suitable details regarding the transactions you need to track
• Give a new name to the account
• You can also add a description in the type description box
• If there is available a sub-account of an already present account then you have to choose the sub-account option
• After this write the parent account
• Ensure that the accounts identical to the real-time bank account
• In case you need to begin the finances tracking then choose the drop-down which says finance. It will let you select the transaction you need to monitor
• Choose Today to begin tracking transactions of the current day
• Now write the account balance for today in the field named Account Balance
• If you need to choose another date to proceed with tracking transaction then click other
• Now choose a date field to select the date you need to begin tracking transactions
• Locate the Account balance box to write the account balance for the date you select
• At last click on Save and then hit on the Close option.

How can you map the chart of the account before executing Advanced payroll?

Mapping a Chart of accounts is necessary to run payroll in QuickBooks. So make sure you have correctly organized the expenses and liabilities of the payroll.

Follow the instructions:

• Firstly sign in to the Advanced payroll to get prepared to run the Payroll
• Locate the initial setup wizard to update the mapping
• Once you have an update in mapping you can fill in the correct bank account & payroll liability accounts
• After this, you are eligible to modify the account settings to delve into in-depth reporting.

Watch the full video to set up the Chart of Accounts in QuickBooks

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