Adjust QuickBooks Payroll Liabilities

Published on 15 October 2020 at 10:14

How exactly to fix common Payroll errors in QuickBooks

Payroll tax returns have now been prepared and filed showing no balance due (with no notices to the contrary have now been received) Payroll, (and inventory discussed elsewhere), are a couple of areas where QuickBooks® is less forgiving and clients are more likely to make mistakes. Most often the errors would be the result of incorrect or inconsistent procedures.

The most typical error in this region is that the Pay Payroll Liabilities feature had not been used; rather payroll tax payments were entered using Write Checks or Enter/Pay Bill functions. If you want to know about Adjusting QuickBooks Payroll Liabilities then Contact our Proadvisors.

Common Error: Clients Write Checks (or use check register) to pay payroll tax liabilities.


Payroll Liabilities are higher than expected
Payroll Tax Expense is higher than expected
Bank account balance appears correct
Warnings Reduce Errors

QuickBooks does warn users in a number of times when the recommended procedures are not followed. If users heed the warnings, errors tend to be avoided. However, some users will click past these warnings and still process the payroll incorrectly perhaps for a lack of understanding as to how to do otherwise.

A customer must first sign up for one of Intuit’s payroll offerings for payroll to be established. Once payroll is installed, a Payroll Setup Tool walks your client through the process.

QuickBooks payroll works best when all payroll activity is performed from within the payroll menus. This includes paying accrued payroll taxes to your respective taxing authorities. If the company has written checks or used the Enter/Pay Bills entered bills functionality to cover these liabilities, as well as the QuickBooks-created Payroll Liabilities account was assigned, the following warning message appears:

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This message warns but does not prevent users about utilizing the wrong form of payment (for example., Write Checks or Enter/Pay Bills) when trying to make payroll liability payments. As soon as the user clicks the Pay Payroll Liabilities button when you look at the warning message, the user is directed to the Select Date Range for Liabilities dialog. The message directs the user to make use of the Pay Payroll Liabilities feature to create a payroll liability check.

Find Incorrectly Paid Payroll Liabilities

In the Client Date Review, the Find Incorrectly Paid Payroll Liabilities tool, generates a report of all of the manual check transactions coded to a Payroll Tax vendor. The entries made outside of the Pay Scheduled Liabilities function within the Payroll Center are displayed.


Correcting Payroll Liability Payment Errors

Payroll tax liability payments can be corrected via two methods. First, if a check or bill payment was used to pay for a payroll liability, see whether the check or bill payment check has been cleared in a bank reconciliation. Or even, void the existing check or bill that is paying the payroll liabilities and recreate the check correctly by selecting Employees > Payroll Taxes & Liabilities, then Pay Scheduled Liabilities.

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The 2nd method ought to be used in the event that check or bill payment check was used and that check has been cleared in a bank reconciliation. If the check or bill payment check is voided, the bank reconciliation with be affected. Using a Journal Entry is never a preferred way to result in the correction, instead the Payroll Liability Adjustment option should always be used to really make the correction.

Getting the Red Out – Clearing Out Past Due Liabilities

The Pay Scheduled Liabilities section into the Payroll Center might have red overdue amounts showing when none exist. The liabilities amounts appear into the section when a payroll is generated and are also only reduced once the Pay Scheduled Liabilities method is used to cover the taxes due. If the liabilities were recorded through any kind of method, such as a check being written and coded to the Payroll Liabilities account, the liabilities shown as due will not be reduced.

1. First, verify that the liabilities have now been paid.

2. find the appropriate item through the Pay Scheduled Liabilities window as shown below and click the View/Pay button.


3. within the Liability Payment – Checking window, replace the check add up to zero.

4. Add additional lines when you look at the expenses area for the same accounts already listed with a negative amount to counterbalance the entry.

5. Include the check number actually used to pay for the liabilities into the memo section as a reference.

6. The effect will soon be offsetting amounts into the liabilities accounts which will clear the Pay Scheduled Liabilities window, yet not affect the general ledger accounts.


Additional Areas to Troubleshoot Payroll Errors

Need for Payroll Item Account Mapping

Payroll items needs to be assigned a merchant account so payroll transactions may be properly recorded into the general ledger. Errors into the set up of the payroll item mapping may be located through a Payroll Items Listing report. Select Reports > Lists > Payroll Item Listing report. This report shows the payroll earnings, deductions, and tax items along with the current tax table limits and rates. Utilize this report to guarantee the desired General Ledger account is being used. Double-click on any item which will make changes. Changes could be applied to all transactions, future and prior, only prior transactions from a night out together forward or no prior transactions.


Reconciling Payroll Transactions in the Bank Reconciliation Process

The Intuit payroll subscription will determine whether all federal and state payroll tax forms for filing are available within QuickBooks. In the event that you or perhaps the client is preparing the payroll, it is advisable to first complete the financial institution reconciliation to find out any payroll liability payments which may have not cleared and handle them accordingly.

Locating Non-Payroll Transactions

Users sometimes override error message and record transactions that should appear on payroll reports. Identifying these ahead of the payroll tax statements have decided and filed can save enough time to amend or correct these payroll returns in the future.

Through the Employees menu, choose Employee Center, then your Transactions tab. Using this area, select the Non-Payroll Transactions and in the Date area, choose the period of time for which the payroll reports are increasingly being generated.

Shown when you look at the example below is a non-payroll check issued to Gregg. While the check might be recorded properly, this check are often recorded improperly. This review is going to make that determination.


Creating Payroll Liability Checks Directly within the Checkbook Register

To properly process payroll liability checks, select Employees > Employee Center > Payroll tab, then View/Pay Scheduled Liabilities. Payroll Liability checks must certanly be generated with this section. However, checks in many cases are created directly from the register or via Write Checks. The Pay Scheduled Liabilities section into the Payroll Center is then incorrect. Begin to see the Getting the Red Out—Clearing out Past Due Liabilities section earlier for detail by detail instructions on the best way to correct these entries.

If the liabilities have to be adjusted together with banking account has been reconciled in QuickBooks, another way to improve the liability is by selecting Employees > Employee Center > Payroll tab and choose Related Payment Activities > Adjust Payroll Liabilities. The Liability Adjustment window appears and changes may be made either to or otherwise not to affect the General Ledger accounts based on how the checks to cover the liabilities were originally written.

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