How to Classify Payroll with Gusto

Overview

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With this procedure you can correctly account for the different payroll categories in Xero once payroll is processed.

Who can do this

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Anyone who is approved to run payroll and has access to the accounting system Xero.

What you need

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Access to Xero, Access to Gusto as an admin.

Steps

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What discrete actions constitute the procedure? Make sure to nest them as appropriate.

Run Payroll.

This first thing you need to do is to run payroll. This will cause a bill to be created in Xero noting the different categories (taxes, Payroll, Reimbursements).

Delete the line in the Gusto bill that was created for reimbursements.

This only applies if there are reimbursements that were paid in the payroll. This allows you to match the reimbursement that processes in the bank account to match the employee submitted expense claims which are already in Xero.

Match the Employee pay Bill in Xero to the Bank transaction (this will need to be split between the Employee pay and the taxes bill that was created in Xero by Gusto).

Match the Taxes bank feed line item to the taxes bill that was created by Gusto when you processed payroll.
Re-classify Taxes once reconciled.

Once the taxes are reconciled to the Gusto bill, you'll need to re-classify this total and separate it out into its specific amounts according to the below guide. You can find totals in Gusto under (Reports>Employee Payroll).

This requires matching the amounts shown in Gusto to the correct Payroll tax account and Wages and Salaries Accounts. You can see what goes with what below:

CA ETT>

CA State Income Tax> Wages and Salaries- CA Income Tax

CA SUI> Payroll Tax Expense- CA Unemployment

NJ WF/SWF> Payroll Tax Expense- NJ Unemploy

NJ Employer SUI> Payroll Tax Expense- NJ Unemploy

Additional Medicare>

NJ Employee SDI> Wages and Salaries-NJ Disability

Medicare> BOTH Wages and Salaries and Payroll Tax Expense Categories (if both listed)

Social Security> BOTH Wages and Salaries and Payroll Tax Expense Categories

CA SDI> Wages and Salaries- CA Disability

NJ Employer SDI> Payroll Tax Expense- NJ Disability

Federal Income Tax> Wages and Salaries- Federal Income Tax

TN Unemployment Insurance> Payroll Tax Expense- TN Unemployment

NJ State Tax> Wages and Salaries- NJ Income tax??

NJ Employee SUI> Wages and Salaries- NJ Unemploy

NJ Family Leave Insurance> Wages and Salaries- NJ Employee FLI

FUTA> Payroll Tax Expense- CA FUTA Credit