FreshBooks offers cloud-based accounting software designed for service-based small businesses. FreshBooks features include time tracking, expense tracking, and invoicing.
Our integration with FreshBooks syncs detailed payroll expenses into your FreshBooks account. No need to manually transcribe payroll expenses — let Gusto help! You can create additional levels of granularity within FreshBooks based on expense type and Gusto departments.
You can start from either FreshBooks or Gusto to connect your accounts. You must have admin permissions in both Gusto and FreshBooks to set up the integration. If your company doesn’t have a Gusto account yet, you can also start one from FreshBooks and receive 2 months of free payroll.
Option 1: Connect to Freshbooks from Gusto
Your accounts are now connected. Stay signed in to Gusto and head to Step 2 to map your chart of accounts and choose your integration settings.
Option 2: Start a new Gusto account from FreshBooks
If your company doesn’t have a Gusto account yet, follow these steps to sign up for Gusto with 2 months of free payroll.
Your accounts are now connected. Stay signed in to Gusto and head to Step 2 to map your accounts and choose your integration settings.
Option 3: Connect to Gusto from FreshBooks
Your Gusto and FreshBooks accounts are connected. Return to Gusto to set up account mapping and customize your other integration settings.
Once your accounts are connected, next map your chart of accounts and choose your integration settings.
Map your chart of accounts
Customize your account mappings to designate which expense categories Gusto will use when sending expenses to FreshBooks. Only parent categories can be selected. If you use bank reconciliation with FreshBooks, we recommend consulting your accountant before mapping your accounts.
When expenses are sent to FreshBooks from Gusto, they’ll be assigned to the accounts you selected for each.
If you then want to group the mapped expenses by department, follow these steps.
Set up automatic payroll syncing
With auto syncing, total wages, taxes, reimbursements and contractor payments are automatically sent to FreshBooks each time you run payroll.
Each time you run payroll, the data will automatically be sent to "Expenses" in Freshbooks under 3 expense entries (total wages, total taxes, and total reimbursements). Contractor payments are listed separately. The name of contractor is included and there's no need to approve the expense.
Select the entry date for expenses
When Gusto sends expense info to FreshBooks, each expense is listed with an entry date. You can choose whether the entry date will be listed as the payroll’s check date, debit date, or at the end of the pay period.
The next time you run payroll, its data will be sent to FreshBooks with your chosen entry date.
View and manage your Gusto data in FreshBooks
You can also change the integration settings, view reports in Gusto, or run payroll in Gusto from your FreshBooks account.
The date of an entry dictates what period the expense information will fall in. For example, an entry dated September 30 would fall into Quarter 3 financials, while an entry dated October 1 would fall into Quarter 4 financials. When a pay period has a payday (or check date) that falls in a different month or quarter, this can create problems when you go to balance your books.
Entry date options
Our accounting integrations give you the ultimate flexibility for reporting, allowing you to choose from three entry date options.
Note: If you elect to have the end of the pay period as your entry date, Gusto will default to the check date for any payroll with no pay period, such as an off-cycle payroll.
Change your entry date options
You can change your entry date selection anytime in Gusto.
Your payrolls will now sync over with Entry Dates based on your selection. If you need to go back and retroactively sync any payrolls with these new settings, you can do so.
When setting up your mappings you will be prompted to add:
The more accounts you choose when setting up your integration, the more detail there will be in the invoice sent to Freshbooks. More detail in the invoice results in more detailed reports in Freshbooks.
For example, if you'd like all wages from all employees to go to the same expense account, regardless of what type of earnings they are, you would select the exact same expense account for all earnings items. For reporting purposes you would have one expense account item measuring all earnings.
If you'd like to break out different types of earnings into different expense accounts you can make different account selections for each earnings type by selecting Advanced in your mapping settings. For example, you could have one expense account for vacation pay and a different expense account for overtime.
Learn more about account mapping.
Department mappings are another way to add additional granularity. With department mappings you can use different accounts for the different payroll items within a department. This means you can have the earnings of one department go to one account and the earnings of a second department go to a different account. This will expand the entry we send over into the accounting software.
As an example, I have two departments: Design and Marketing. Before I enabled department mappings, all regular wages earned went to one "salaries and wages" expense account. After enabling department mappings, I can use two expense accounts: a "Sales Wages" expense account and a "Marketing Wages" expense account. When running reports in my accounting software I will have this additional breakdown.If you have an accounting integration, you can group your payroll information by department with your chart of accounts. Mapping by departments (as opposed to job codes or projects) is good for businesses who want to better understand payroll expenses of a department or a division.
These transactions will be exported by department to your accounting software account. Any employees or contractors not within the enabled department will sync using the Default Account Mappings.
Q: Do you book the wage expense as gross wages or net wages?
A: Gross wages, meaning the wage expense will include employee pay, employee taxes, and employee deductions. Employer taxes and employer contributions will have their own expense line item.
Q: Do you break out individual taxes?
A: We do not break out individual taxes. By transitioning to Gusto you will no longer have tax payments coming over to your balance sheet as a liability. Taxes are handled on a cash basis instead of an accrual basis, our tax debits for each payroll are considered a closed transaction.
Q: Can I post over individual employee payroll information?
A: Gusto does not currently support mapping for individual employees. Payroll information is pushed over at the company level.
However you can accomplish this by using Departments. Add one employee to each team, which can then map to specific accounts. Post this over to see the individual employee payroll details.
Q: What if I won't be using one of the payroll items listed?
A: The item will still need to be mapped to an account. If the payroll item isn't applicable, nothing will come over related to the account that is selected within your entry. Only payroll items that apply to a processed payroll will populate within the synced entry.
The individual payroll expenses will post to "Expenses" in Freshbooks under 3 expense entries (total wages, total taxes, and total reimbursements). Contractor payments are listed separately. The name of contractor is included and there's no need to approve the expense.
Q: What does the timestamp indicate?
A: The exact time Gusto successfully synced a payroll into the accounting software.
Q: Is there a way to retroactively sync all payrolls once I enable auto-sync?
A: Auto-sync will only work for the payrolls moving forward from the time it is set up. Any payrolls run before auto-sync was enabled will need to be manually synced.
Q: If I update my mappings, can I re-sync a payroll to update my Expenses?
When using an accounting software, there are two ways to reconcile and match expenses with withdrawals from the bank account.
Method 1: Cash is withdrawn > create a matching expense
Pull up the bank transactions from your integration with your bank account. When you see a withdrawal, create a corresponding expense.
Example: You bought a few items at the office supply store, and therefore see this bank withdrawal when looking at your bank transactions. You can now add a corresponding office supply expense for reporting purposes. The expense is now accounted for as demonstrated by the reduction in cash.
Method 2: Report an expense > cash is withdrawn > match the expense
Report a future expense. When you see the actual cash transactions, match the cash withdrawal with the expense that was previously reported.
Example: You forecast that supplies will cost $X amount of money at the beginning of the month, but the funds will not be withdrawn until the end of the month. You therefore report the expense. When the cash is withdrawn at the end of the month, you can indicate that the previously reported expense matches with this specific bank transaction.
When generating paper checks using your accounting software you may see an additional expense created on your books - this is because total gross wages are reported whether your employees were paid by direct deposit or by check.
This can cause issues when reconciling your expenses because the amount paid to employees may appear to be over reported.
Our preferred method is for you to print the checks from your Gusto account or hand write them to avoid expenses appearing as over reported. Then, you can easily reconcile the total payroll expense from Gusto when the checks are cashed by your employees.
If you are not handwriting or printing your checks through Gusto, below are the best options to avoid over reporting.
Example of over-reported checks
You run a payroll that costs $10,000, where your employee is receiving a $7,000 check from you. In the $10,000 expense synced over from Gusto, you can see line items for $9,000 of gross wages (this includes a $7,000 check + $2,000 in employee taxes) and $1,000 of employer payroll taxes.
When you create a check for your employee in your accounting software, it will also create an expense for $7,000. As a result, when you look at your total payroll expenses you will now see that payroll for this pay period costs $17,000. When reconciling your books, however, only $10,000 will be taken from your checking account ($3,000 for employee + employer taxes and $7,000 from the cashed check).
The check created by your accounting software has led you to over report your payroll expenses, so when you look at your profit for the year it is lower than it should be. You will need to use one of the solutions described below to reconcile the over reported check payment.
Steps to reconcile checks
Reduce the expense account associated with Gross Wages, indicated by your mappings in Gusto, by the amount of the employees' check prior to creating the check in your Freshbooks account. Reducing the Gross Wage expense by the check amount will prevent double counting.
Example: You sync over a total payroll expense of $10,000. Knowing that creating a check will over-report the expense by $7,000, you reduce the gross wage expense from $9,000 to $2,000.
How to edit a Gusto Freshbooks expense
FreshBooks does not support liabilities. Please handle your benefit expenses directly in FreshBooks.
Check out FreshBooks’s help center.