3rd Party Payroll Journal Entry

Hello there

When creating paychecks outside of QuickBooks, we should also need to keep those on track inside QuickBooks to keep your payroll and account data all in one place.

While the article that contains steps on how to enter payroll paychecks in QuickBooks Desktop (QBDT) isn't available, I'll be providing you this link from QuickBooks Online (QBO) as both have the same concept: Manually enter payroll paychecks. 

The process involves creating a manual tracking account first to track your payroll liabilities and expenses. If you haven't created one, please follow these steps:

1. Go to the Lists menu then select Chart of Accounts.
2. Click New in the Account ▼dropdown.
3. Choose an account type then select Continue.
4. Fill in the necessary details then click on Save & Close.

After which, you may now follow the process from the article above, and here's how you can create journal entries in QBDT:  Create a journal entry in QuickBooks Desktop.

With regard to clearing those entries that you've already entered, I'd recommend consulting with your accountant so he can provide hands-on support from technical and accounting perspectives and decide whether to delete those entries and follow the provided steps above or stick to your process.

 Additionally, I've included this article that'll help you learn how to import journal entries from your accountant in QuickBooks Desktop: Import journal entries from your accountant.

Let me know if you need further assistance with managing your payroll paychecks in QuickBooks Desktop. It would be my pleasure to be of assistance. 

@DaveQuinn 

The negative liabilities on the check (credit balances on your balance sheet) should have been cleared when the liabilities were paid to the IRS, state, etc.  How were the liability payments recorded?

Thank you for responding RainFlurry!  The  payroll taxes and deductions for benefits  were always recorded as a negative liability and never cleared. It is a mess!

@DaveQuinn 

When you say negative liability, you just mean that it was recorded as a negative amount on the check, correct?  They should show as positive liability balances on your balance sheet. 

You are going to need to hunt down the payments made to the IRS, state, etc. for the payroll taxes that should have reduced/eliminated those balances.  When those liabilities were recorded, they were recorded with an offsetting expense (company portion of FICA, SUI, etc.) and when the payments were made, they should have had those liability accounts assigned to the payments, thereby reducing the liability balances.  Since the payments obviously weren't recorded properly, how were they recorded? 

I have the same problem. Because the payroll is done by a third party.  The money gets deducted from our bank account by the payroll company and they pay all IRS and state liability. I record them in QB as " employee payroll withholdings" and "employer tax liabilities". And they show a "negative" sign in the balance. How can I correct these mistakes?

I have the same mistake. The payroll is done by a third-party company that withdraws the money to pay the payroll tax liabilities. The monthly bank account statements show the amount deducted for employment taxes. So, I entered in QB the amounts withheld from employees as "employee's payroll withholding" and the amount paid by the employer as "Employer payroll tax liabilities". This has caused those amounts shown in the balance with a "negative" sign in front.

How can I correct these mistakes?

Thank you

Thanks for joining the thread, @Clau4. I know how important it is to ensure your books will be accurate in recording without the negative balance. I'm here to make sure this gets taken care of.

Since the payroll is handled by a third-party company, you may also review the payments made to the IRS. You can check the answered post of Rainflurry above on other ways to resolve the negative balance.

To validate the negative amount, you should check the amount that was entered in QuickBooks and into your employee's paycheck to ensure that everything is configured properly. If it's set up properly, I'd advise speaking with your accountant. They can look through the negative amount and assist you in making an adjustment so that it balances with what you have paid to the IRS and recording in QuickBooks.

If you don't have an accountant, you can find one using this link: Find-a-ProAdvisor website.

I've also added these articles that will enable you to view relevant data regarding your employees and business. This will allow you to monitor the information that is most significant to your company:

• Create a Payroll Summary Report
• Customize Payroll and Employee Reports

Please feel free to contact me if you have any queries concerning payroll or anything else. I'm here to offer additional help. Enjoy your day!