Sharon Fourakre, CPA

[Sfourakre]

I have a client that has been using a professional employment organization, ADP, to prepare their payroll. How are others recording the costs on the financial statements and then on the tax return?

[kathyc2]

Debit gross pay to appropriate account(s)- i.e. direct, admin, officer
Debit employer paid tax to appropriate expense account
Debit w/c insurance (if applicable) to expense account
Debit ADP fees to professional fees (or similar) account
Credit net of these to cash - if this doesn't equal amount ADP deducted from account, something was missed.

Since ADP takes all tax directly from client bank account there is no reason to mess w/ payroll tax liability accounts.

If you are recording frequently in QB, I find it easiest to have a memorized entry w/ accounts but no amounts to speed entry.

[TAXNJ]

Did you

Did you contact their IT Technical Dept.?

It has been a few years since using that payroll service, but they have a "download" payroll file into QB for your client that does the bookkeeping entries thus eliminating the manual work by you. It reduced our manual work by 98% (other 2% proofing) back then. Hopefully they have improved their system even more since then.

When you say "tax returns" are you asking about the "employment" returns? If so, it should be part of the service if clients signed up for it. Sounds like you need to talk to your client and the payroll service for the specifics your clients is paying for.

Key is for your client to get you "permission" to talk to them to see how to set it up. Give it a try and update us.