cancel
Showing results for 
Search instead for 
Did you mean: 
QuickBooksHelp
Intuit

Pay or adjust payroll liabilities

Most businesses must submit their last month's payroll deductions to the Canada Revenue Agency (CRA) by the 15th of the current month. Check with the CRA or your accountant to see what's right for your business. Then consider setting up a reminder note in the To Do list.

When you are ready to pay your payroll liabilities, QuickBooks Desktop lets you choose all or just some of them to pay and creates cheques to pay them. You can also add penalties, expenses, and discounts to the cheques, if you need to. Before your payroll liabilities can be paid, you must have a payee name associated with each liability.

This article also explains how to use a liability adjustment to correct an employee's year to date (ytd) information contained in payroll items such as company contributions, employee addition and deduction payroll items.

Pay payroll liabilities

  1. Choose Employees > Payroll Liabilities > Pay Payroll Liabilities.
  2. In the Date Range window, enter the start and end dates of the period when you incurred the liabilities you want to pay now. Then click OK.
    • Note: Check the dates carefully as QuickBooks Desktop uses them to create the  PD7A and Payroll Liability Balances reports. By default, the date range shows your liabilities as of the last day of the previous month.
  3. In the Pay Payroll Liabilities window, select the To be printed checkbox to print the liability cheques using QuickBooks Desktop, or clear it if you are writing them by hand.
  4. Choose the chequing account to write the cheque from (not your Payroll Liabilities account).
  5. In the Payment Date field, enter the date that you want to appear on your liability payments.
  6. From the Sort By drop-down list, choose how you want QuickBooks Desktop to sort your list of liabilities: alphabetically by payee name, alphabetically by payroll item, or by amount (largest first).
  7. Choose whether to review the liability payment cheques before QuickBooks Desktop creates them.
  8. Verify the date range shown in the Show liabilities from / through fields. (These values came from the previous window in Step 2.)
  9. Select the liabilities you want to pay.
    • Some liabilities can be selected and paid only as a group. For example, CPP Employee, CPP Employer, EI Employee, EI Employer, Federal Income Tax Withholding, and other federal withholding items can only be selected together.
  10. (Optional) If you want to pay less than the full amount of a liability you marked, enter the amount you want to pay in the Amt. To Pay field.
  11. Click Create.
  12. QuickBooks Desktop writes a single cheque for all liabilities paid to the same supplier.

After you create a cheque, the Payroll Liability Balances report shows a decrease in the amount you owe to reflect the payment. However, the PD7A Summary report shows the amount you owed for the period regardless of payments you've made

Make instalment payments for payroll liabilities

Step 1 - Create an asset account to track the instalment:

  1. Go to the Lists menu and select Chart of Accounts.
  2. Click the Account button and select New.
  3. Select Other Account Types and select Other Asset for the type.
  4. Name the account Instalments-Payroll.
  5. Enter a description of the account, if desired.
  6. Click Save & Close.

Step 2 - Pay the instalment

  1. Go to the Banking menu and select Write Cheques.
  2. Select the desired bank account.
  3. Select the date of the cheque.
  4. In the Pay to the Order of field enter the tax agency (Receiver General).
  5. A warning message may appear. Click Cancel.
  6. In the Memo field enter your business number for payroll and any required information.
  7. In the Expenses tab, under Account, choose the Instalments-Payroll account.
  8. Leave the Tax column blank.
  9. Enter the payment in the Amount column.
  10. Click the Print button to print the cheque, if needed.
  11. Click Save & Close to record the cheque. The account Instalments-Payroll will be increased by the amount of the cheque created.

Step 3 - Remit the payroll liabilities for the period

  1. Choose Employees > Payroll Liabilities > Pay Payroll Liabilities.
  2. Enter the date range for the remittance. It is recommended that the date be from January 1st of the current year to the last day of the remittance period. This ensures that all adjustments and transactions are included in the remittance.
  3. Click OK.
  4. Select the desired bank account in the Chequing Account drop-down list.
  5. Select the payment date of the liability cheque.
  6. Select Review liability cheque to enter expenses/penalties.
  7. Click the Report button.
  8. Use the report to fill out your remittance form.
  9. Close the Payroll Liability Balances report.
  10. Check mark the payroll liabilities to be remitted.
  11. Click Create.
  12. The Liability Cheque displays. Click the Expenses tab.
  13. In the Account column, select Installments-Payroll.
  14. In the Amount column, enter the amount of the cheque as a negative amount.
  15. Click Recalculate.
  16. The cheque amount should be zero. Click Save & Close.

If the Installments-Payroll account has an amount remaining at year-end, confirm with your tax agency if the remaining amount will be carry forward to the next year. If the Installments-Payroll account has a balance owing (a negative amount), you may need to remit the balance to the tax agency.

Adjust payroll liabilities

Click here for a list of common scenarios that can be corrected by doing a liability adjustment.

  • You set up Health Insurance Company Contribution with the wrong tax tracking type and need to correct the liability amount after creating a new payroll company contribution item with the correct tax tracking type.
  • You need to adjust year to date (ytd) wages, deduction or addition payroll items for an employee who will not be receiving any more future paycheques (i.e.: terminated employee)
  • You need to increase or decrease an amount for company contribution items.

You can adjust more than one liability at a time during one liability adjustment transaction by selecting the payroll items in the payroll item column provided. You can use only one effective date for a liability adjustment. If you need to make adjustments for more than one period, then you must use a separate adjustment transaction for each period. Also make sure that the adjustments are correct by selecting the appropriate reports when finished.

Adjust payroll liabilities for the company

Company Adjustments are used if the balance simply needs to be removed from the Payroll Liability Balances Report or removed because it causes a balance to appear in the Chart of Accounts.
If the adjustment will impact or change the data on your quarterly return, you might consider doing a quarter to date (qtd) adjustment instead of a year to date (ytd) adjustment.

  1. To locate the correct amount that should be remitted, create the PD7A report for the period in question.
    1. From the Reports menu, select Employees & Payroll, then PD7A Report.
    2. In the Dates field, select the required date range. Example: If you are doing an adjustment for the 1st quarter your report should have a From Date of 01/01 through 03/31.
  2. Choose Employees > Payroll Liabilities > Adjust Payroll Liabilities.
  3. In the Date field, enter the date for which you are making the adjustment.
    • Note: QuickBooks Desktop prefills today's date, but you should enter the date that you want the adjustment to be effective.
  4. In the Effective Date field, enter the date that you want this adjustment to affect your liability balance. The effective date will depend on whether the adjustment should be reflected in the period that it occurred or in the next remittance period. QuickBooks Desktop uses this date to calculate amounts on your PD7A, TPZ-1015, and on the payroll liability balances report.
  5. In the Adjustment is for section, select Company.
  6. In the Taxes and Liabilities section, click the Item Name column and select the correct payroll item.
  7. Insert the amount of the adjustment in the corresponding field (negative amount to decrease the amount of the liability and positive amount to increase the amount of the liability).
  8. (Optional) Use the Memo column to note what the adjustment is for, for future reference.
  9. Click Accounts Affected, choose Do not affect accounts or Affect liability and expense accounts.
    • To leave the balances unchanged for the liability and expense accounts that track the payroll items you are adjusting, select Do not affect accounts.  The adjustment will still change the year-to-date amounts on your payroll reports.
    • To enter an adjusting transaction in the liability and expense accounts that track the payroll items you are adjusting, select Affect liability and expense accounts.
  10. Click OK to close the Affect Accounts window.
  11. Click OK again to record the adjustment.

Adjust payroll liabilities for the employee

Employee adjustments are used to change an employee's year-to-date (YTD) information. Note: Do this even if the item being adjusted is a company-paid item. It updates the YTD information reported on the employee T4 form.

  1. Create a payroll summary report to get the amount on the payroll item that needs adjustment.
    • Change the date range on your Payroll Summary Report to match the effective date on your liability adjustment. Example: If you are doing an adjustment for the 1st quarter your report should have a From Date of 01/01 through 03/31.
  2. Choose Employees > Payroll Liabilities > Adjust Payroll Liabilities.
  3. In the Date field, enter the date for which you are making the adjustment.
    1. Note: QuickBooks Desktop prefills today's date, but you should enter the date that you want the adjustment to be effective. Otherwise, this item will not show up in the appropriate Payroll Summary Report.
  4. In the Effective Date field, enter the date that you want this adjustment to affect your liability balance. QuickBooks Desktop uses this date to calculate amounts on your PD7A, TPZ-1015, and on the payroll liability balances report.
  5. In the Adjustment is for section, select Employee.
  6. Select the Employee from the drop-down list. The adjustment can affect the T4 for that employee.
  7. In the Taxes and Liabilities section, click the Item Name column and select the correct payroll items.
  8. Insert the amount of the adjustment in the corresponding field (negative amount to decrease the amount of the liability and positive amount to increase the amount of the liability).
  9. (Optional) Use the Memo column to note what the adjustment is for, for future reference.
  10. Click Accounts Affected, choose Do not affect accounts or Affect liability and expense accounts.
    • To leave the balances unchanged for the liability and expense accounts that track the payroll items you are adjusting, select Do not affect accounts.  The adjustment will still change the year-to-date amounts on your payroll reports.
    • To enter an adjusting transaction in the liability and expense accounts that track the payroll items you are adjusting, select Affect liability and expense accounts.
  11. Click OK to close the Affect Accounts window.
  12. Click OK again to record the adjustment.

You may be required to remit an amendment. Contact the CRA for more information.

To fix the Payroll Liability Balance Report and the Liability Cheque

  1. Go to your payroll Bank Register and locate the liability cheque you created for the old payroll item
  2. Right click on it and select Edit Liability Cheque.
  3. Under the Payroll Liabilities tab, replace the old payroll item with the new one.
  4. Click Save & Close and click Yes to the message to record changes.

Note: Company-side adjustments (not the same as company-paid items) lower the liabilities on the Payroll Liabilities Balances report, but they do not affect the Payroll Summary Report.

Was this helpful?

You must sign in to vote, reply, or post

Need to get in touch?

Contact us