Skip to main content
J
JoeOps
January 10, 2022
Question

Best practices for payroll integration (double-entry accounting conundrum)

  • January 10, 2022
  • 1 reply
  • 0 views

Hi - I'm setting up a new QBO file and integrating Gusto payroll. Based on my previous experience, I would typically set up the journal entries to debit expense accounts and credit liability (clearing) accounts. Once the direct deposit transactions come in via the bank feed, I would debit them against the liability account. 

 

Gusto clearly recommends crediting the checking account in the payroll journal entry, and I presume QBO could match the bank feed transactions to the payroll journal entry during reconciliation. 

 

Crediting the liability account "feels" like the "right way," but maybe I'm just being old-fashioned? Or is it better in case there is a discrepancy between the payroll journal entries and the bank transaction?

 

Still, it "feels" more modern to match all the transactions coming through the bank feed rather than categorizing them directly. Thoughts?

 

Thanks in advance!

1 reply

R
RCV
January 11, 2022

Let me provide some information about categorizing and matching the bank transactions in QuickBooks Online (QBO), JoeOps. 

 

When downloading the bank transactions, we can either categorize them first so they go into the right accounts in the Banking page and match the data in QBO. QuickBooks matched the entries with the one you already entered and links them together to avoid duplicates. We can also match them first and categorize the transactions in the Chart of Accounts page once you add them to the register. Here's an article you can refer to for more details about categorizing and matching online bank transactions in your account.

 

If you need to automatically categorize transactions from your bank, we can set up bank rules. QuickBooks automatically applies your rules to transactions in the For Review tab. These are the bank data you need to review every day. 

 

On the other hand, we can follow Gusto's recommendation by crediting the checking account in the payroll journal entry. If there's any discrepancy, we can reconcile them to keep your records accurate. You can also consult your accountant for the best way on how to handle the transactions from Gusto payroll into QBO.

 

Feel free to browse this link here if you need help with managing your bank feeds and reconciling accounts. It'll route you to our general bank topics with articles.

 

The Community always has your back, and I'm just a post away should you ever need anything. Just leave a comment below and I'll get back to you. Have a great day ahead.

Terms & ConditionsAccessibility statement