This is mostly for my understanding.
My QBO has (4) payroll liability accounts set up. These (4) accounts are sub accounts of "Payroll Liabilities" which I see totals the (4) liability accounts. The accounts are as follows:
"Payroll Liabilities"
Payroll Liabilities>Federal Taxes (941/944)
Payroll Liabilities>Federal Unemployment (940)
Payroll Liabilities>MD Income Tax
Payroll Liabilities>MD Unemployment Tax
When I issue a paycheck(I'm using enhanced payroll subscription), the withheld amounts from each check are stored into the correlating liability accounts mentioned above - this much I understand.
I then also have an expense account called "Payroll Expenses:Taxes".
My question is how to categorize payments of these taxes when I pay them quarterly.
So, when I write a check to pay for example my quarterly Federal taxes(941), how do I categorize this transaction? Do I post it to the mother liability account "Payroll Liabilities" or do I post it to the expense account "Payroll Expenses:Taxes"?
The way I understand this is that as I issue paychecks, the system adds the withholdings to the liability accounts, and when I pay my liabilities, it clears the liability account out and transfers the data to the expense account. Why am I so confused?
