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Detail of payroll expense and liability accounts

I'm setting up an accounting system as part of a ERP implementation, and I'm at a point where I am loading my expense and liability accounts related to payroll. We run our payroll in the ERP system (NetSuite), but our only G/L accounts for payroll are Gross Payroll, Payroll Expenses (i.e. any benefits or taxes), and Payroll Liability (for what we owe to other agencies like the IRS). We use a NetSuite payroll partner and transmit our withholding and tax amounts directly to the partner for them to pay the relevant agencies. What suggestions do you have as to the level of detail I should implement for the various payroll accounts? We have many remote employees, so we have a variety of state taxing agencies for income tax withholding and unemployment. We also have a variety of different states' expense categories for unemployment-type expenses. Would you have one category for "unemployment taxes", or would you split this by state? What about for the liabilities related to withholdings? How detailed would you get? The NetSuite integration is great for allowing us to link to any liability and expense account we so choose, so this is really about a level of comfort with the amount of detail vs. the additional administration we would need with more accounts.

Answers

Kirstin Smith
Title: Accounting Manager
Company: NextSpace
LinkedIn Profile
(Accounting Manager, NextSpace) |

All of the needed state detail is managed by NetSuite and always accessible through NetSuite reports. However, from a company overview of financials I split out Employer Paid Benefits and Employer Paid Taxes. The tax rate is fixed and the benefits is not as it is up for review each year.

Rich Robins
Title: Accountant
Company: Tec
(Accountant, Tec) |

One account for all payroll tax liabilities. What's the advantage of having one for each state? And more than one GL account for each type of liability? Unless a state has several highly unique payroll taxes, then don't segregate. But also to be consider how many locations your org does business out of 4 or 20? If it is many, than yes, capture each state as you would with sales tax.

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