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Intuit
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Payroll Liability and/or Balance Sheet Report shows incorrect amounts for payroll liabilities

Problem

Your company's Balance Sheet report shows incorrect figures for payroll liabilities.

Expected Outcome

Payroll liability figures can be reported correctly for your company on the Balance Sheet report.

Assumptions

You have an active and up-to-date version of QuickBooks Desktop.

Details

Payroll liabilities include the following:

  • Payroll taxes, both employee and company-paid
  • Employee-paid liabilities that were deducted from paychecks (for example, 401(k), health insurance deductions, garnishment, etc.)
  • Company-paid payroll liabilities that were included in the paychecks (for example, 401(k) company match, company-paid health insurance)

You affect the balances of your payroll liabilities every time you do the following tasks in QuickBooks Desktop:

  • Process paychecks with taxable wages, employee and/or company-paid liabilities.
  • Void and recreate paychecks that have already been sent to Intuit.
  • Enter year to date adjustments for your employees.
  • Adjust payroll liabilities.
  • Make general journal entries that post to payroll liabilities. (This does not affect the Payroll Liability Balances report.)

Below are common scenarios that may cause liability balances and instructions on how to fix them. Review each scenario to determine which one applies to you.

Create Payroll Liability Balance Report to determine the source of payroll liability balances:

  1. To view the details of the payroll liabilities from the balance sheet, double-click the amount to see the Transaction by the Payroll Liability Item report. Double-click on any amount to review the paycheck or liability adjustment associated with the balance. The balance amounts that appear are the amounts of the payroll liabilities associated with that paycheck.
  2. Run a Payroll Liability Balance report to view any outstanding balances that need to be paid or deposited by selecting Reports at the top menu bar then Employees and Payroll and then Payroll Liability Balances.
  3. Look for Payroll Liability Payments or Liability Refunds that were not entered correctly in QuickBooks Desktop:
    • If there are credits (negative amounts) showing in the Payroll Liability Balance report, It may be due to the following:Customers have a credit/refund that they have not entered yet or they entered the deposit outside of payroll module using Make Deposit.To zero out negative balances resulting from entering deposit through Make Deposit, do the following:
      1. In QuickBooks Desktop, delete the deposit entered through Make Deposit.
      2. Using the same deposit date, recreate the deposit using Deposit Refund of Liabilities. For steps, see Record a payroll liability refund check.
    • If there are unpaid liabilities (positive amounts) showing on the report, these need to be paid through Pay Scheduled Liability or Custom Liability Payment.
      • If Write Check or Bill Pay was used to crate payments, see Correct liability payments made in Write Checks instead of Pay Liabilities.
      • To clear non-payable liability or payroll liability not paid to a third party, such as personal use of a company car or taxable group term life insurance, see Adjust payroll liabilities for more information. If you have to adjust payroll liability to zero out the balance, be sure to select Company Adjustment as your option so you do not affect employee's year to date payroll data.

Note: Balances may also be due to the wrong amount entered on the Liability Check or Deposit Refund. For example: if your total payable liability for 401(k) is $ 1,000.00 but the amount you entered in the liability check is 1,100.00, the difference of $100.00 will appear on your liability balance report as (negative) -100.00 indicating you overpaid by this amount.

You may have posted the payroll item to the wrong account in your Chart of Accounts.

Payroll Liabilities should post to a Liability Account in your Chart of Accounts.

To review the payroll item set up and edit as needed, see steps below:

  1. Go to Reports at the top menu bar, and select Employees and Payroll then Payroll Item Listing.
  2. Review the Expense and Liability Account columns to verify that the accounts are correct for each payroll item.
  3. If the account is incorrect, double-click on the account name from the report to open/edit the payroll item.
  4. Select Next.
  5. Edit the account.
  6. Select Next until you can click Finish and then select Finish.
  7. Open a new Balance Sheet report to verify that this solved the inconsistency.

Negative balances may be due to voiding a paycheck after you have paid or created the liability check.

If you void a paycheck after you have already paid the liabilities associated with the paycheck, negative balances will show on your Payroll Liability account for payroll items and taxes that were reported on that check.

If you void a Direct Deposit paycheck after you have already sent it to Intuit, your Direct Deposit Liability Account will also show a balance for the amount of Direct Deposit. To fix balances in your Direct Deposit Liability Account, see Account balance for Direct Deposit liability is not zero.

These balances will also reflect on your financial reports. To learn more about the consequences of void and how to fix your report, see Recreate a voided or missing Direct Deposit paycheck or Assisted paycheck.

Payroll liabilities deducted from an employee paycheck (such as 401(k), 403(b), and garnishments) were not paid to vendors using Create Custom Liability Payments or Pay Scheduled Liabilities.

To correct the payment of the liabilities:

  1. Run a Payroll Liability Balances report to see if the balances exist in this report.
    • Choose Reports at the top menu bar and select Employees and Payroll then Payroll Liability Balances.
  2. Record the liability check correctly through Create Custom Liability Payments or Pay Scheduled Liabilities.
  3. Delete the Write Check or the Bill Payment originally used to record the liability payment.

You may have a missing or voided liability check from Assisted Payroll, creating positive balances for taxes paid for you by Intuit.

To find and fix a missing Assisted Payroll liability checks:

  1. Run a Vendor QuickReport for QuickBooks Desktop Payroll Service (only applies to Assisted payroll customers).
    • Choose Vendors on the top menu bar and select Vendor Center. Right-click QuickBooks Desktop Payroll Service then choose Quick Report.
  2. Review the Quick Report to verify whether all liability checks are recorded.
  3. Contact us to recreate the missing or voided liability check.

Liability adjustments are set to Do not affect accounts.

Setting Do not affect accounts when entering liability adjustments will cause the adjustments to not show up in the bank register, and not change the payroll liability and expense accounts.

To find and correct this:

  1. Go to Employees at the top menu bar and select Payroll Taxes and Liabilities then Adjust Payroll Liabilities.
  2. Select the Previous Adjustment button until you find the adjustment affecting the report.
  3. Select the Accounts Affected button.
  4. Choose Affect liability and expense accounts and then select OK.
  5. Select the OK button to prompt an error to save the transaction. Save the transaction to prompt an additional message requiring you to choose an Expense, Asset, or Liability Account for employee liabilities.
  6. Select OK.

You may have created journal entries for liabilities paid by Intuit, causing you payroll liability balances to be overstated in the Balance Sheet.

Journal entries affect the Balance Sheet but not Payroll Liability Report.

If the balances on your Balance Sheet are caused by manual entries outside of the payroll module that were posted to your Liability Account, you can remove or edit them. We recommend that you check with your accountant before deleting a journal entry that was made incorrectly.

You may have company file data damage causing this issue.

If your Payroll Liability Balance Report is zero but data does not match your Balance Sheet, check for data damage. Data damage in the mapping of accounts can cause error inflow of data from one transaction or report to another. Run the Verify Data/Rebuild Data processes to correct any data damage.

For Assisted payroll customers only

  • If your Payroll Liability Balance report shows a zero amount, do not create a liability adjustment to make corrections on the Balance Sheet. Doing so might alter the payroll data and negatively affect the payroll taxes that Intuit files and pays on your behalf.
  • If the problem is caused by missing or incorrect amounts in the QuickBooks Desktop payroll liability check, contact us for assistance.

Related Articles

Account balance for Direct Deposit liabilities is not zeroHow to use QuickBooks to pay payroll taxes and other liabilities

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