cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Not applicable
Solved

How do I manually enter employer payroll liabilities into Quickbooks online?

We do not run our payroll in house. We outsource our payroll to a third party. Can you please show me the journal entry I should use in order to record the liabilities Also after I record the Journal Entry, do I need to write a check towards the liability after it has been paid in order for the account to have a zero balance in the balance sheet? Can you please be as detailed as possible. Previous links that I have used have different answers. The more detailed the better

Best answer 10-15-2018 07:27 PM

Accepted Solutions
Community Manager

Hi khaleds, According to this article, Recording payroll...

Hi khaleds,

According to this article, Recording payroll transactions manually, you may use either the Expense or Liability account when creating a Journal Entry (for payroll transactions). If you use the Expense account, there's no need to write checks. If you use the Liability account, you'll need to write checks. This will zero out the liability or lower it to the current amount outstanding.

Please take time to read the article above. It'll help you record the payroll transactions correctly. 

I'd be glad to help you if you have other questions about recording payroll transactions. 

30 Comments
Community Manager

Hi khaleds, According to this article, Recording payroll...

Hi khaleds,

According to this article, Recording payroll transactions manually, you may use either the Expense or Liability account when creating a Journal Entry (for payroll transactions). If you use the Expense account, there's no need to write checks. If you use the Liability account, you'll need to write checks. This will zero out the liability or lower it to the current amount outstanding.

Please take time to read the article above. It'll help you record the payroll transactions correctly. 

I'd be glad to help you if you have other questions about recording payroll transactions. 

Not applicable

After I did this Journal entry, my payroll liability acco...

After I did this Journal entry, my payroll liability account is about negative -$3000. Am i Supposed to zero it out? How would I do that? I tried writing a check towards it and it  and it turned into negative -$6000. We already paid the liability and it has cleared our bank account for the $3000
Community Manager

Hi @khaleds, Thanks for letting me know how it goes. Plea...

Hi @khaleds,
Thanks for letting me know how it goes.
Please undo the Journal Entry and a Check you've created.
How did you previously record the check for this payroll liabilities? Can you tell what account did you select when creating a check?
Not applicable

I must be doing something wrong, so let me break it down...

I must be doing something wrong, so let me break it down for you. Maybe you can help me find the error. The first thing I do is after I call in to give the third party payroll services and give them my employees hours. Then they give me a break down of what is to be charged to my bank account the following day.

Using the numbers I create a Journal Entry:

employee Gross Wages (debit)               10,859.58
employee Social Security  (debit)             835.20
employee Medicare (Debit)                      195.33
Employee Fed income tax                         1159.03
employee state income tax                       121.24
employer Social Security  (debit)               835.20
employer Medicare (Debit)                        195.33
employer Fed Unemp.(debit)                      21.24
Employer state unemployment (debit)        120.38
Employer State employee Training (Debit)  3.54
Paychex processing admin fees  (debit)       618.98
Delivery fee (debit)                                       11.00
Checking Account (credit)                                               15,276.57

Then do I  check my balance sheet and I have a negative -3787.01 in the payroll liabilities section. How do I zero it out. Am I doing something wrong?
Community Manager

Hi @khaleds, I appreciate you posting the details. Let me...

Hi @khaleds,
I appreciate you posting the details.
Let me take a look at this for a moment. I'll have to replicate it in my QuickBooks Online account to find where the error is. Than you so much for your patience.
Not applicable

Thank you so much. You have been a big help.

Thank you so much. You have been a big help.
Community Manager

It's my pleasure to help you. I'll let you know once I go...

It's my pleasure to help you. I'll let you know once I got the result.
Not applicable

Sounds good.

Sounds good.
Community Manager

Hi @khaleds, Thank you so much for your patience. Here's...

Hi @khaleds,
Thank you so much for your patience.
Here's what I've got. I assume that you are responsible of paying the payroll tax liabilities. According to the article above, you will need to credit the payroll liabilities (employee taxes) and debit payroll expenses (employer taxes) when creating a Journal Entry. The Paychex processing admin fee isn't part of the employee liabilities but it's an employer expense. Please check this out:

Payroll Expenses: Gross Wages                                  (Debit)    10,859.58
Payroll Liabilities:   Employee Social Security              (Credit)                      835.20
Payroll Liabilities:   Employee Medicare                       (Credit)                      195.33
Payroll Liabilities:   Employee Fed Income Tax            (Credit)                   1,159.03
Payroll Liabilities:   Employee State Income Tax          (Credit)                      121.24
Payroll Expenses:  Employer Social Security              (Debit)         835.20
Payroll Expenses:  Employer Medicare                        (Debit)        195.33
Payroll Expenses:  Employer Fed Unemploy...             (Debit)          21.24
Payroll Expenses:  Employer State Unemploy..            (Debit)        120.38
Payroll Expenses:  Employer State Emp Train...           (Debit)           3.54
Payroll Expenses:  Paychex Processing Ad Fee          (Debit)        618.98
Checking (use to offset the Paychex fee)                      (Credit)                      618.98  
Expenses:  Delivery Fee                                                (Debit)          11.00                               
Checking (use to offset the Delivery fee)                       (Credit)                        11.00
Checking (used for processing paycheck net amount) (Credit)                    9,724.47  

As I have understood, the employee gross wage is 10,859.58. Let's deduct the employee taxes for a total of $2,310.80 ($835.20 (SS)+$195.33 (Medicare)+$1,159.03 (FIT)+$121.24 (SIT)) to the gross wage that is equal to the employee paycheck net amount $8,548.78.

In the last line item, QuickBooks Online automatically adds the paycheck net amount and employer taxes. Since the net amount is $8,548.78, it adds the employer taxes of $1,219.25 ($835.20 (SS)+ $195.33 (Medicare)+ $21.24 (FUTA)+ $120.38 (SUTA)+ $3.54 (State Emp. Training)) that is equal to $9,724.47.

Now there is $2,310.60 sitting in the Payroll Liability accounts (Employee SS, Employee Medicare, Employee SIT, Employee FIT) waiting to be paid. You will create a check for this liability and you will use the liability accounts that were used in the Journal Entry. This will zero out the liability or lower it to the current amount outstanding.
In your Balance Sheet report, it should show positive amounts for the employee tax liabilities. After you've created checks for these taxes, they will go away from that report.

Please let me know if you need further clarification.
Community Manager

Please check the attached screenshots above for your refe...

Please check the attached screenshots above for your references.
Not applicable

Thank you so much. I followed the steps now I have a rema...

Thank you so much. I followed the steps now I have a remaining negative balance on the Employer Liabilites. Do I create a check to zero them out?
Community Manager

Thanks for your prompt reply, @khaleds, I don't think tha...

Thanks for your prompt reply, @khaleds,
I don't think that the employer liabilities should be in your Balance Sheet report. Let's try to review the journal entry above.

The employer taxes (Medicare, SS, SUTA, FUTA, and Training) are categorized as Payroll Expense accounts. If the detail type of these taxes is Other Current Liabilities, you'll need to change it to Payroll Expense. Then, there's no need to write a check for these taxes. Once you update the accounts, the Journal Entry will also be updated.

Payroll Expenses:  Employer Social Security              (Debit)         835.20
Payroll Expenses:  Employer Medicare                        (Debit)        195.33
Payroll Expenses:  Employer Fed Unemploy...             (Debit)          21.24
Payroll Expenses:  Employer State Unemploy..            (Debit)        120.38
Payroll Expenses:  Employer State Emp Train...           (Debit)           3.54

Let me know how it goes.
Community Manager

Please see the attached screenshots above. The checks (to...

Please see the attached screenshots above.
The checks (to the IRS and State agency) are for the employee's payroll withholding. Do not include the employer's taxes. Please try to edit the Check you've created and remove the employer taxes. Then, the negative amount for the employer liabilities in your Balance Sheet report will go away.

Please let me know the result. Thank you so much.
Not applicable

Okay. It worked. Thank you so much for all your help.

Okay. It worked. Thank you so much for all your help. :relieved:
Community Manager

Yay! I'm so happy that I was able to help you, @khaleds....

Yay! I'm so happy that I was able to help you, @khaleds. I hope that you'll have a happy weekend. Thank you for posting here in the Community.
Not applicable

Are the employer payroll expenses supposed to show up in...

Are the employer payroll expenses supposed to show up in my Profit and Loss Statement?
Community Manager

Hi @khaleds, Yes, they are. Employer taxes are company's...

Hi @khaleds,
Yes, they are. Employer taxes are company's expenses.
Not applicable

okay. thank you so much

okay. thank you so much
Community Manager

You are most welcome.

You are most welcome. :+1:
Super Contributor **

Re: I must be doing something wrong, so let me break it down...

 
Super Contributor **

Re: After I did this Journal entry, my payroll liability acco...


@khaleds wrote:
After I did this Journal entry, my payroll liability account is about negative -$3000. Am i Supposed to zero it out? How would I do that? I tried writing a check towards it and it  and it turned into negative -$6000. We already paid the liability and it has cleared our bank account for the $3000

 

QuickBooks Team

Re: After I did this Journal entry, my payroll liability acco...

Hi there, Beltranisaias0.

 

Thanks for joining the Community today. I'm want to make sure you'll get the best help possible.

 

May I ask in which specific part of this thread you need assistance with? I just need some more details about the issue to ensure that were on the same page.

 

I'll be on the lookout for your reply and look forward to further assisting you. Wishing you and your business continued success.

  

 

 

Experienced Member

Re: Yay! I'm so happy that I was able to help you, @khaleds....

@GarlynGayafter reading this post I have a follow-up question if you could help! My employer taxes are in payroll expenses like you said but what do I do with the epayment to submit these federal taxes, does the payment also go in the payroll expenses account? also the example I followed to enter the check Gross amount to payroll expenses, with a negative to payroll liabilities (employee portion) and a negative to Payroll expenses-employer taxes to equal the net amount of the paycheck- this makes my payroll expense-employer taxes account show negative. Is that correct? Thank you for your help!! @kodabookkeeping
QuickBooks Team

Re: Yay! I'm so happy that I was able to help you, @khaleds....

Thanks for your prompt response, KobaBookkeeping.

 

Allow me to bring clarifications with your concern about handling payroll transactions in QuickBooks Online (QBO).

 

Yes, your e-payments will go in the payroll expenses account. Also, liability payment (epayment) will also be taken out of the liability account to reduce or zero out the liabilities.

 

For the taxes it should be Negative For payroll expenses then positive for the payroll liabilities.

 

Don't hesitate to get back to me if you have other questions while working with payroll transactions. I'll be around to help you.