Payroll

What Payroll does#

Payroll, under People in the sidebar, keeps one record for each payroll: what it paid in gross, what was withheld, and what the business paid on top. It's booked on the pay date (the check date), the day wages are paid and reported on the W-2 and Form 941.

Each payroll makes its own expenses at gross, so the year's officer salary and wages are what your W-2s say. What leaves the bank for it (net pay, the taxes) is matched to your statement's lines instead of being booked again. Your payroll provider still runs payroll: EscBooks keeps the books of it.

• EscBooks keeps each person's first name and last initial. People on payroll don't have EscBooks accounts.
• No pay rates, addresses, Social Security numbers or bank details are kept, and no amounts per person: only each payroll's totals.

Paying yourself as an S or C corporation officer#

An owner who works in an S or C corporation (or an LLC taxed as one) is paid a salary through payroll, as an officer. Their gross pay is Officer salary, which goes on Compensation of officers: line 7 of Form 1120-S, line 12 of Form 1120. Everyone else's is Payroll, on Salaries and wages.

• Only a corporation has officers, so the Officer box shows only when Settings → Business says the business files as an S or C corporation. Anyone else's payroll is all Payroll (Schedule C line 26, Wages).
• What you take out beyond your salary isn't payroll: it's a distribution, on Owner (see Owner money).
• Tick or untick Officer for someone under People on Payroll. It's confirmed first, kept in Recent Activity, and applies to payrolls from then on: one already recorded keeps its split until you edit it.

Settings → Payroll#

Settings → Payroll holds the defaults each payroll starts with. Each one can be changed on a single payroll.

• Which payroll provider do you use? Gusto, ADP, Rippling, another provider, or No provider if you pay wages yourself and deposit the taxes. New payrolls start with it, and the import reads that provider's report. Payroll asks it too, until it's answered.
• Paid From: the bank account payroll leaves. New and imported payrolls start with it. Only bank accounts are listed; a client trust account never pays payroll.
• Payroll Taxes: Your payroll provider deposits them (full service, as Gusto and ADP RUN are: the taxes leave with each payroll) or You deposit them yourself (EFTPS) (each payroll's taxes stay in Payroll liabilities until your deposit is matched or marked paid).
• Pay Schedule: weekly, every two weeks (biweekly), twice a month (semimonthly) or monthly, and the next pay date. Twice a month also asks for its two days, such as the 15th and the last day of the month. Payroll shows the Next expected pay date, and Month-End lists a pay date with no payroll recorded within three days of it: No payroll recorded for Oct 15.
• Saved Import Columns: columns you matched by hand on an import, each with Forget. Only the column names are kept.

For a corporation, who's an officer is set on Payroll, under People on Payroll.

Record a payroll#

1. On Payroll, click Record Payroll.
2. Enter the Pay date (check date), the pay period if you like, the account it's Paid from (Settings → Payroll's account to start), and when the Money leaves the bank (Gusto takes it a few business days before payday; leave it blank for the pay date).
3. Under Gross pay, a line for each person: their name (optional), Officer or not, and their gross pay before anything is withheld. Add Person for each one more. The totals for officers and employees show underneath.
4. Under Withheld from pay: Employee taxes (income tax, Social Security and Medicare), Deductions (401(k) deferrals, the employee's share of health insurance) and Garnishments.
5. Under Paid by the business on top: Employer taxes (the employer's Social Security and Medicare, and federal and state unemployment tax), Benefits (company), Retirement (company) and any Reimbursements, with the category of what was bought.
6. Net pay is worked out for you: gross pay less what's withheld. Under it, What leaves the bank for it lists each payment and whether the provider takes it or it's owed until it's paid. Click Record Payroll.

• Taxes taken with this payroll, under More options, starts as Settings → Payroll says. Untick it for a payroll whose taxes you deposit yourself: they're owed until your deposit is matched or marked paid.
• Each field's short explanation is under it, in the form's own words.
• Click a payroll in the list to see it: its figures, the expenses it made, and each bank payment. Edit Payroll changes it, and Recent Activity keeps what it was. Remove, after a confirm, takes it and its expenses out of your books; it's refused while a bank line is matched to it, so undo that match on the statement first.

Import Gusto's Payroll Journal#

Home/Payroll

Payroll

Each payroll at gross on its pay date, and the bank lines that pay it.

Import from GustoRecord Payroll

Payrolls in 2026

Booked at gross on the pay date. A payment turns green once its bank line is matched.

No payroll recorded for 2026

Record each payroll from your provider's report, or import the report itself.

Step 1 of 7PauseStart over

1. 1On Payroll, click Import from Gusto.
2. 2In Gusto, export Reports, Payroll Journal, as a CSV: with job titles or without. Drop it in. It's read on your device.
3. 3Check the payrolls found. Each one is booked at gross on its pay day.
4. 4Officer is ticked for Maya, whose job title is CEO: her pay is Officer salary. Everyone else's is Payroll. Change any box before you import.
5. 5A payroll that doesn't tie out to the cent is left out, and says why. Fix it in Gusto and import the file again.
6. 6Click Import. The payrolls are in your books, and what each one takes from the bank waits for its statement line.
7. 7When the month's statement comes in, Gusto's NET and TAX lines match these payments, so nothing is counted twice.

1. In Gusto, open Reports, then Payroll Journal. Pick the dates and export it as a CSV. Either version works: the summary (one row per person) or the one with job titles (a row per pay type, with each person's Job).
2. On Payroll, click Import from Gusto, pick the account it's Paid from, and drop in the file. It's read on your device: only each payroll's totals and the people's first names and last initials are sent.
3. Check the preview: each payroll found, with its pay day, people, gross and net pay; and the people, each with an Officer box for a corporation.
4. Click Import.

• A job title like CEO, CFO, President, Owner or Founder ticks Officer for you, as a suggestion. "Vice President" and "Product Owner" don't. Someone already on payroll keeps what you set before, unless you change their box here.
• Every payroll is checked to the cent before it comes in: each person's gross less taxes and deductions is their net pay, and everyone adds up to the payroll's totals. One that doesn't is left out, with why, and the rest come in.
• A file with several payrolls brings each in on its own pay day.
• Importing the same file again changes nothing, and a payroll brought in before says so. A payroll Gusto has since changed is updated.
• A 401(k) or other retirement contribution goes to Pension and profit-sharing plans; other company contributions to Employee benefit programs.

How bank lines match#

When a statement comes in (see Reviewing and approving), a payroll provider's lines are read by their words. Gusto's codes: NET is net pay, TAX the taxes, REM reimbursements, CND contractors, FEE its fee.

• A line of the same amount as a payment a payroll owes, within 10 days of when it was due, from the account it's paid from, is Matched to payroll: "Payroll Oct 15: net pay", with a link to the payroll. Nothing is booked from it, so nothing is counted twice.
• A line with no payroll recorded yet waits as Payroll: record this payroll. Record Payroll beside it opens the form on the line's day and account, and says whether what you enter matches the line. Recorded, the payroll picks up its lines.
• A tax deposit can match up to 45 days after it was due, and one deposit can be several payrolls' taxes. An IRS EFTPS line matches only when it's a payroll's: the same line also pays estimated income tax.
• Any other money-out line can be matched by hand: What is this?, then Payroll…, and tick what it paid. The benefits carrier's pull or the insurer's premium is matched this way. A one-click "Payroll Oct 15 · net pay?" appears when a payroll owes exactly the line's amount.
• The provider's fee is an expense, as Fees.
• A payment made outside a statement (a tax deposit made by hand, say): open the payroll and click Mark Paid beside it.

In the general ledger, Payroll liabilities carries each payroll from its pay date until the bank pays it. When Gusto takes the money before payday, it shows paid ahead for those few days. On Payroll, each payment turns green once it's matched or marked paid.

Categories and form lines#

A payroll's expenses, each on its line of your tax form on Reports → Taxes:

• Officer salary: officers' gross pay, and an S corporation's shareholder health insurance. Compensation of officers (Form 1120-S line 7, Form 1120 line 12).
• Payroll: employees' gross pay. Salaries and wages (1120-S line 8, 1120 line 13, 1065 line 9), or Wages (Schedule C line 26).
• Payroll taxes: the employer's share. Taxes and licenses (Schedule C 23, 1120 17, 1120-S 12, 1065 14). What's withheld from pay is part of the gross wages, not a tax of the business's.
• Employee benefit programs: the company's benefit contributions (Schedule C 14, 1120 24, 1120-S 18, 1065 19).
• Pension and profit-sharing plans: the company's retirement contributions (Schedule C 19, 1120 23, 1120-S 17, 1065 18).
• Reimbursements go to the category of what was bought; contractors to Contract labor.

These expenses follow their payroll: change the payroll, and they change. On Expenses you can still add a receipt or change the description.

Shareholder health insurance#

An S corporation that pays health insurance for a more-than-2% shareholder includes it in their W-2 wages (Box 1) and deducts it as officer pay. Enter it as Shareholder health insurance, next to the officers' gross pay. It isn't in net pay: it's paid to the insurer, so it's owed until the insurer's bank line is matched to the payroll.

If health premiums are already booked this year as Insurance or Employee benefit programs, the form says Health insurance is already recorded as Insurance this year. If they're the same premiums, they'd be counted twice: keep them on the payroll, match the insurer's lines to it, and remove those Insurance expenses.

Contractors paid through payroll#

Pay contractors through Gusto? Add each under Contractors paid through Gusto with what they were paid. Each becomes a subcontractor once, by name, marked 1099 filed by Gusto.

• Their payments are Contract labor, on the payroll's pay date.
• On Reports → Taxes, the 1099-NEC table shows what went through payroll, and Filed by Gusto: the provider files their 1099-NEC, so EscBooks leaves those payments out of the ones you send (see Subcontractors and 1099s).

At year-end#

On Reports → Taxes, Before You Meet Your Accountant checks the year's payroll:

• Officer salary and wages in your books against the payrolls recorded: what the year's W-2s should total (gross pay, with the shareholder's health insurance in officer pay, as in W-2 Box 1).
• Officer salary or payroll booked with no payroll behind it, most often a bank line booked at net pay. Record that payroll (or import the report), and remove the expense booked from the line.
• Shareholder health insurance that may be counted twice, as above.