How to record employer paid health insurance in quickbooks

If you own a small business that offers group health insurance to employees, you likely pay a portion of the employee’s premium while the employee pays the remainder. Each pay period, after making payroll deductions from employees’ paychecks, you pay wages and salaries and close out the payroll. You likely pay insurance premiums to the carrier monthly and make the necessary accounting entries on a monthly basis as well. The latter requires you to post health insurance premium payments to the general ledger, which houses all financial transactions that flow through the business.

1. Record your gross payroll for the month as a debit to the wages and salary expense account. This shows the amount of your entire payroll before any liabilities or deductions occur.

2. Post payroll taxes and garnishments withheld from employees’ paychecks for the month as a credit to the individual accounts in the general ledger. Taxes include federal income tax, Social Security tax, Medicare tax, and applicable state and local income taxes. Garnishments include wage withholding orders, and child support and alimony withholding. These payables are subtracted from the gross payroll to equal the net payroll if there are no other liabilities, including health insurance.

3. Enter employees’ withholding for health insurance as a debit to the health insurance expense account, if applicable. This process lowers the amount paid to the insurance carrier by the withholding amount to show the company’s total expense for health insurance. It also shows the net payroll after health insurance premiums are deducted.

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