For those that use the P&L and run a small business: how do you reconcile payroll line items if the transaction doesn't match the actual biz expense?

I would like advice on how you guys use your business profit and loss statement because I’m finding this difficult to reconcile. In the past i hand entered things and thought tiller imports from my bank would help but the amounts from my payroll do not match my actual business expenses.

Let’s say my employee (me) is paid 60,000 a year. Therefore the gross wage and total expense to my company would be 5,000 per month.

However, my payroll company simply deducts the net employee 'take home" after taxes. This is significantly less. (SO rather than hitting my bank as $5K, it hits as $2K.).

The payroll company also does a second deduction for taxes, but it is combining both the employer taxes as well as employee taxes into 1 line (Around 400 for the employee and $400 for the employer but it reflects in my bank/tiller import as $800)

So what ends up happening is when I try to categorize the transactions in my spreadsheet, and run profit and loss nothing matches up to how it’s supposed to be and expenses looks much less in some areas (wages) and much more in others - (taxes)

So am I supposed to add a line item at the end of the year (or monthly) to reflect the actual payroll costs?
So $5000 (supposed to be the expense - $2000 actually paid expense) = $3000 (have to add this in every month?

And on the taxes, only the employer taxes are my expense, so I have to split those as well and subtract out the employee taxes?

This seems incredibly manual anyway, so but thought I would ask in here first how you do this.

I’m trying to avoid formalized accounting software as its just me. I already pay the payroll company to do the taxes for me. So how do you deal with the mismatch between what is being deducted from your business account and what should actually be considered a business expense?

I thought I would add a screenshot to explain my inquiry: In the below example I added 2 “adjustments” to reflect the actual cost to my business. This is what I mean as seeming very manual and easy to make mistakes.

And the red arrow is where i have the opposite issue: This would need to be split, as the company only paid a portion of these taxes. Yet another adjustment - even the need to add 2 lines if i want to not overwrite the original amount from the bank.

image

@Blake i saw you seem to have a lot of accounting skill and since i am trying to use Tiller to generate my P&L hoping you could offer insight here.

Basically I am looking to sigh up on Tiller to assist me in LESS manual work for my 1 person business, but it seems my Payroll transactions are giving me MORE!

Hey @Rocketghost! I see the issue and get the frustration. These are good questions…

Let me start by saying that I’m not an accounting expert. It sounds like you are hoping for more of a double-entry accounting workflow… which our base templates are not designed around… though this is a rich opportunity for builders. :wink:

In the short term, I’d consider building one (or more) manual transaction entries that pair with each feeds payroll record to true-up and better capture the total business expense. For these kinds of workflows, some users mirror the structure of their Transactions sheet (to match the column order) into a new helper sheet with static transactions so they can copy and paste clusters of dummy/pre-fab rows into their Transactions sheet.

Again, this is outside my domain knowledge but hopefully this helps or gets the conversation started.