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2021 Guide to employee pay stubs with Hector Garcia | QuickBooks Payroll - YouTube
Channel: QuickBooks
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what is a pay stop hi folks in this
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video we're going to talk about pay
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stubs
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what they are and what information is to
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be in them
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i'm hector garcia i'm a cpa quickbooks
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consultant
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and business owner i'm a big fan of
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intuit quickbooks and i'm partnering
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with them
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to produce this video series all about
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payroll
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in fact i have an entire youtube channel
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where i have tons of videos about
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quickbooks accounting
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tax and a bunch of important small
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business topics
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hit that like button if you're
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interested in seeing more videos
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on these topics now let's dive right in
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into everything you need to know about
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these pay stubs
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pay stops show details about each of the
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employees paychecks
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for each period they typically accompany
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physical paychecks however most
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employers offer direct deposit
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and they make these pay stubs available
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electronically
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to make the paycheck process totally
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paperless
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pay stubs are particularly important
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because they keep
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employees informed they also help
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employees get a clear picture
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of their wages deductions and net
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paycheck
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which is a cash that they actually
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receive
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pay stubs are required by federal law
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but most states
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legally require employers to give
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employees
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pay stubs or equivalent information in a
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timely fashion
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check with your state for details about
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that now let's talk about
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what actual information we're expecting
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to see in a typical pay stop
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first we're gonna see employee details
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name address
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that sort of thing then you're gonna see
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the dates covered in the pay period
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for that paycheck date and of course the
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actual date of the paycheck
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you're going to see information such as
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gross wages or salaries
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which could include hours worked and pay
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rate
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if they're hourly employees you're going
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to see tax related and non-tax-related
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deductions
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and finally you're going to see other
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non-taxable additions
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such as an expense reimbursement now
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let's take a look at these terms in more
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detail
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gross wages are the full amount an
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employer pays
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before deductions are made gross wages
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could be a fixed salary an hourly rate
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overtime bonuses vacation or
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sick pay etc all these forms of
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compensation
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are generally subject to tax next one is
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deductions
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which are the cash amounts taken from
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the employee's gross wages
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some deductions are considered to be
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pre-tax
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which means they actually reduce the
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amount of taxable wages
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a 401k is a great example of this an
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employee can contribute to their
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retirement plan and reduce their taxable
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wages
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they will save on taxes immediately but
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also render
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a smaller check with this deduction
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there are special tax rules that set the
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limits to how much an employee can
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contribute
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to their employee plan in an annual
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basis
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next there are taxes to be deducted
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usually they include
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fica taxes that go towards funding
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medicare
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and social security as well as federal
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and state
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income tax withholding which employees
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eventually reconcile
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at year end with their tax return there
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are also
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other deductions that are considered to
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be after
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tax which means they reduce the total
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amount of the net paycheck
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without affecting the taxable wages or
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the actual taxes being paid
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an employee paying back a previously
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non-tax
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loan from the employer is a great
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example of this
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in some cases you will see after-tax
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additions
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to the net pay such as a non-taxable
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reimbursement
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that could be incurred by the employee
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during a pay period
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such as a office supply or a travel
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expense
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another example of this could be a
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parking fee associated with a business
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meeting
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net pay is the amount remaining after
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all deductions
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have been accounted for and this is the
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amount the employee usually receives in
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cash
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the pay stub helps reconcile the
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employee's gross wages
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with their actual net take-home pay
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you will also notice that most pay stops
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represent these numbers
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in two forms one for the current pay
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period related to that specific paycheck
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and the other the cumulative amount for
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the entire
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year to date essentially the last pay
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stub of the year
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will contain the same amount of
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information
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that will be ultimately reported to the
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irs and state
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in the w-2 form now let's take a look at
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a couple of based off examples
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the first one is a simple example of a
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business that doesn't offer
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many benefits you can see it includes
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employee details
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dates covered gross wages
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hours worked rates paid deductions
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and ultimately the net wages
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here's another example of larger
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deductions section
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which may accompany a more extensive
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benefits package
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as an employer you should keep an
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archived copy of these pay stubs
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for at least four years because of irs
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requirements
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a number of other federal regulations
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require information to be archived
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as well beyond what's captured on the
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pay stub
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such as timesheet data original hiring
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forms
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and any relevant tax information
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provided by employees
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if you use bookkeeping software such as
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quickbooks for your accounting
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and quickbooks payroll most of these
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records
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are kept in these systems for future
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reference
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i want to leave you with some best
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practices when it comes to pay stubs
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first one make sure your employees can
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access their pay stubs on demand
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as required by the laws in your state
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sometimes this means
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printed paper copies but ideally you
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would provide access electronically
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through a payroll portal second all the
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base up details we discussed in this
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video
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such as employee details dates covered
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gross wages
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hours worked rates paid deductions
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after tax reimbursements and net wages
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need to be clearly displayed in the pay
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stop
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and easily understood by the employee if
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the employee uses direct deposit
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make sure to include that information as
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well pay stubs
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or any historical wage information for
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that matter
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are often required as stressful moments
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like applying for a loan
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or filling out a rental application
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employers can reduce
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that stress by removing any unnecessary
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barriers
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and making the pay stops available on
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demand
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that's it for this discussion about pay
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stubs if you found this information
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helpful
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make sure to click that like button
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subscribe to the quickbooks youtube
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channel
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and ring that notification bell comment
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below and let me know if you have
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other questions about payroll thanks and
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see you next time
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[Music]
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you
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