Payroll Process: Running Payroll and Property-Wise Allocation

Payroll for rental property operations involves more than issuing checks — it requires precise calculations, correct tax handling, proper liability tracking, and accurate posting into the accounting system. Brookside Accounting specializes in payroll for rental property owners who employ both W-2 staff and 1099 independent contractors. Our bi-weekly payroll is designed to be accurate, transparent, and fully compliant. We can seamlessly integrate the payroll Journal Entry every 15 days to the rental property accounting software we sue such as Buildium, Appfolio, and also to the more generic Quickbooks Online, Xero etc.

Payroll Calculation Formulas

1️⃣ GROSS PAY = (Total Hours Worked × Rate) + PTO + Bonuses/Commissions/Incentives

2️⃣ NET PAY = Gross Pay − Employee Taxes

3️⃣ TOTAL TAX IMPOUND = Employee Taxes + Employer Taxes

4️⃣ 401(k) Employee Contribution: Net Pay − Employee 401(k) Contribution = Employee Check Amount

5️⃣ Employer 401(k) Match is funded separately

6️⃣ Cash reimbursements are recorded separately and do NOT affect Net Pay.

Payroll Journal Entries

1️⃣ Accrual Entry (on Payroll Date):

DR Payroll Expense CR Payroll Liabilities

2️⃣ Cash Payment Entry:

DR Payroll Liabilities CR Cash

3️⃣ Tax Payment Entry:

DR Payroll Liabilities CR Cash

The Payroll Liabilities account is a clearing account. When running an ALL-DATES report, this account should always show a zero balance once all checks and taxes have been paid.

We would like to share a glimpse of the GL Code scheme we use for the Income Statement Payroll Expense accounts:

Worker’s compensation and employee benefit programs are distinctly recorded.

GL Coding and Property/Project/Class Tracking

Brookside Accounting assigns payroll expenses to the correct GL codes every time, including:

✔ W-2 Employee Wages ✔ Employer Payroll Taxes ✔ Employee Payroll Taxes ✔ 401(k) Employee Contributions ✔ 401(k) Employer Match ✔ Payroll Service Fees ✔ Cash Reimbursements

We make sure to trackemployee costs project/property-wise as may be your requirement.

We have used a bunch of platforms such as Gusto (personal favorite), Intuit Payroll, Deel, ADP Payroll etc. among others

With Brookside Accounting, payroll becomes precise, compliant, and stress-free.