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Level 1

Double expense for 401k payment to provider

I set up Quickbooks Online Payroll for an Individual 401k for the company I own. I ran payroll with an employee contribution and employer contribution. I then went to the website of the 401k provider (Vanguard) and made a payment from my checking account to match the sum of the employee and employer contributions on the paycheck.

 

When the bank transaction for the payment to Vanguard synchronized, I wasn't sure which category to select. I picked Payroll Expenses:Company Contributions:Retirement. However now the amount of the 401k contribution is double in the Profit and Loss report: the amount created by Quickbooks Payroll shows up in Wages (employee contribution) and Payroll Expenses:Company Contributions:Retirement (employer contribution); the amount from the bank transfer shows up in Payroll Expenses:Company Contributions:Retirement (sum of employee and employer contribution).

 

My 2 questions are:

  1. How do I fix this now, after the fact?
  2. What is the proper process to avoid this situation in the future?

I read this question as it seems the same as mine but I don't see a clear answer. I'm not sure what "You are supposed to Pay Liabilities, not put this into Bills or even pay more Expense at all." means.

 

Solved
Best answer 12-25-2018

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Level 15

Double expense for 401k payment to provider

"I wasn't sure which category to select. I picked Payroll Expenses:Company Contributions:Retirement."

 

You need to have already "done the bookkeeping" by showing you Paid Liabilities, in payroll. The functions for paying Taxes go through Intuit, but not to the Brokerage, nor child support. For these providers, you issue the Banking transaction.

 

You cannot use the banking download to Match to your existing transaction, if you never made the transaction to start with.

 

For this: " I'm not sure what "You are supposed to Pay Liabilities, not put this into Bills or even pay more Expense at all." means."

 

It means this is Not Expense, and stop adding it to an expense account. You need to process payroll liability as Paying Payroll Liability. What you described is a Paperless Liability check. First, you use the function to Pay Liability, and instead of a check #, just put EFT for it = electronic funds transaction.

 

Now, when the Banking downloads, your system has the entry you made, and the Match is ready to go.

 

This is never Expense, again. You already computed  that expense are are holding the Liability value, which is waiting for you to Pay Liabilities. That is how you do the bookkeeping of the payroll liability check that later, the banking will show it got processed from what you entered online.

View solution in original post

4 Comments
Highlighted
Moderator

Double expense for 401k payment to provider

Thanks for your time seeking our help, julien.

 

I can help you fix the doubled amount of your 401K contribution payment.

 

The doubling of the 401K amount in your Profit & Loss report is caused by adding the bank transactions from your register instead of matching them. To correct this, let's undo your bank transaction and match it with the correct one in QuickBooks Online.

 

Here's how:

  1. From the left menu, select Banking.
  2. On the Banking page, select the In QuickBooks tab.
  3. Locate the downloaded transaction to unmatch.
  4. In the Action column, select Undo.

All transactions that are unmatched will be transferred to the For Review tab.

 

Here's an article for more information about unmatching downloaded transactions: Unmatch and delete downloaded transactions in QBO.

 

Once done, you can now match this transactions from the For Review tab. I'd be glad to show you how below:

  1. From the left menu, select Banking.
  2. On the Banking page, select the For Review tab.
  3. Click the downloaded transaction your working on.
  4. Fill in the radio button for Find match.
  5. Select a transaction to match.
  6. Click Save.

I've got you an article to learn more about matching downloaded transactions in QBO: How to add and match downloaded banking transactions.

 

Attached below are some screenshots so you can have a better view.

 

 

There you have it. Should there'll be anything else I can assist you or questions while working with 401K contributions, feel free to keep in touch. It would be my pleasure to help. 

Highlighted
Level 15

Double expense for 401k payment to provider

"I wasn't sure which category to select. I picked Payroll Expenses:Company Contributions:Retirement."

 

You need to have already "done the bookkeeping" by showing you Paid Liabilities, in payroll. The functions for paying Taxes go through Intuit, but not to the Brokerage, nor child support. For these providers, you issue the Banking transaction.

 

You cannot use the banking download to Match to your existing transaction, if you never made the transaction to start with.

 

For this: " I'm not sure what "You are supposed to Pay Liabilities, not put this into Bills or even pay more Expense at all." means."

 

It means this is Not Expense, and stop adding it to an expense account. You need to process payroll liability as Paying Payroll Liability. What you described is a Paperless Liability check. First, you use the function to Pay Liability, and instead of a check #, just put EFT for it = electronic funds transaction.

 

Now, when the Banking downloads, your system has the entry you made, and the Match is ready to go.

 

This is never Expense, again. You already computed  that expense are are holding the Liability value, which is waiting for you to Pay Liabilities. That is how you do the bookkeeping of the payroll liability check that later, the banking will show it got processed from what you entered online.

View solution in original post

Highlighted
Level 1

Double expense for 401k payment to provider

Thanks for the explanation! This issue is not completely solved for the previous case and I know what to do for the next time.

 

What I didn't understand in the other answer I linked to in my question what where to click in Quickbooks Online to "use the function to Pay Liability".

Here are the exact steps I did to do this:

  1. Click + then Check in the top bar
  2. Enter the amount and date of paying the 401k contribution to the provider
  3. Use EFT for the check number
  4. Use account Payroll Liabilities:Vanguard
  5. Save and Close

Then I followed the steps in the other answer to Undo adding the downloaded bank transaction as an expense, then clicked Match and selected the check I had created.

Highlighted
Moderator

Double expense for 401k payment to provider

Thanks for keeping us posted, julien.

 

I appreciate the detailed information you've provided. It's nice to know that you already figure out what to do the next time you encounter this type of situation.

 

The steps you did when you try to Pay Liabilities is correct. Once done, you can undo and match your downloaded transactions with the check you created.

 

Get in touch with me if you have other questions or clarifications when dealing with 401K contributions. I'm here to help you sort things out.

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