Time for action – making payroll entries in GnuCash
We are going to enter the payroll accounting entries for one employee with appropriate deductions for federal and state income tax and FICA tax:
We have created a spreadsheet of the calculations that we are going to use in making the payroll entries. Take a moment to study the following screenshot:
Create the expense accounts: You need two expense accounts – one Payroll Expenses for gross pay and another Employer FICA Tax for the company contribution to FICA tax.
Create the liability accounts: The tax amounts deducted from the employee's gross pay are owed to the appropriate government agencies. We need to create liability accounts to hold these amounts until they are due. Go ahead and create three accounts, Federal Income Tax, VA Income Tax, and FICA Tax of Account Type Liability with Liabilities as the Parent Account as shown in the following screenshot:
What just happened?
Monthly salaried employees are typically hired with a gross pay...
