How to Allocate Payroll Taxes in QuickBooks

Allocating taxes in Quickbooks is easy with a few quick selections.
Allocating taxes in Quickbooks is easy with a few quick selections. (Image: Comstock/Comstock/Getty Images)

Quickbooks makes it very simple to allocate revenues and expenses to various sub-categories. With just a few clicks, you can easily set up recurring features and automatic allocations to configure payroll tax retention and payment.

Allocating Payroll Taxes in QuickBooks

Create a new expense account in Quickbooks. Under "Lists" select "Chart of Accounts" and choose "New." Name the account "Wages Plus Payroll Taxes" and save it.

Click the "Vendor" option and select "Add New." For the expense account created in Step 1, create two vendor names, "Net Pay" and "Payroll Tax Payments," and save the new names.

Create a journal entry for the taxes to be withheld. Click on the "Banking" menu and select "Create Journal Entry." Debit the "Wages Plus Payroll Taxes" account and credit the "Payroll Tax Payments" account for the amount of the taxes to be withheld.

Tips & Warnings

  • If you need to separate federal, state, and local tax payments, you can choose to create a vendor entry for each municipality. Repeat Step 2, but add in the notation for federal witholding, state withholding or local/city withholding.
  • If the transaction will be the same every pay period, you can choose to save the entries as automatic entries so that you do not have to repeat the steps every pay period.

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