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Level 1

Handling accrued payroll with new setup

Setting up QB desktop as of 01/01/19. Small business, 1 employee (me). Accrued a payroll/tax expense on 12/31 for 2018 that's a liability on 01/01/19. Where/how do I put this in the chart of accounts for the new setup? Also, is there a correct way to pay this liability for 2019? Going forward, was hoping to do manual journal entries for payroll/taxes, as I only pay myself quarterly. Is that feasible?

Solved
Best answer 08-08-2019

Accepted Solutions
Moderator

Re: Handling accrued payroll with new setup

Hello, dwolfe,

 

I'm happy to help share information on how to handle accrued payroll in QuickBooks Desktop.

 

Based on the information you've provided since those are from last year, it shouldn't affect the current calendar year and shouldn't be recorded upon setting up payroll for the current year.

 

What you can do is to create a liability account and enter an opening balance on how much was payable. To set up a Liability account, here's how:

  1. From the Lists menu, click Chart of Accounts.
  2. In the Chart of Accounts, right-click anywhere and select New.
  3. In the Add New Account screen, click the Other Account Types radio button and from the drop-down and choose either:
    • Other Current Liability: for short-term loans payable over one year.
    • Long Term Liability: for long-term loans payable over a longer period.
  4. Click Continue.
  5. Enter a name and number for the account.
  6. Click on Enter Opening Balance button, then enter amount.
  7. Click OK.
  8. Click Save & Close.

Once done, you can now write a check and pay the liability.

 

Additionally, I'm attaching some articles that you may find helpful in the future:

If you have any other questions about payroll, please let me know by replying below. I'm more than happy to offer additional assistance.

View solution in original post

3 Comments
Moderator

Re: Handling accrued payroll with new setup

Hello, dwolfe,

 

I'm happy to help share information on how to handle accrued payroll in QuickBooks Desktop.

 

Based on the information you've provided since those are from last year, it shouldn't affect the current calendar year and shouldn't be recorded upon setting up payroll for the current year.

 

What you can do is to create a liability account and enter an opening balance on how much was payable. To set up a Liability account, here's how:

  1. From the Lists menu, click Chart of Accounts.
  2. In the Chart of Accounts, right-click anywhere and select New.
  3. In the Add New Account screen, click the Other Account Types radio button and from the drop-down and choose either:
    • Other Current Liability: for short-term loans payable over one year.
    • Long Term Liability: for long-term loans payable over a longer period.
  4. Click Continue.
  5. Enter a name and number for the account.
  6. Click on Enter Opening Balance button, then enter amount.
  7. Click OK.
  8. Click Save & Close.

Once done, you can now write a check and pay the liability.

 

Additionally, I'm attaching some articles that you may find helpful in the future:

If you have any other questions about payroll, please let me know by replying below. I'm more than happy to offer additional assistance.

View solution in original post

Level 1

Re: Handling accrued payroll with new setup

Well that sure worked! Thank you!!! One small question. Prior to creating this 2018 payroll liability account and now writing 2019 checks towards it, I had entered in capital stock, depreciation, and fixed assets as journal entries and balanced them in an opening balance equity item. Inputted the bank account opening balance as well. Had to make a journal entry for retained earnings. At that point the 2019 trial balance looked good. Once I created the 2018 liability account and paid from my 2019 cash in QB, this opening balance equity then went to the debit balance. Technically my company had a positive retained earnings for YE 2018. My question is does this opening balance equity number, apparently adjusted by the liability inputs, affect anything accounting-wise long term, or does it just go away at year end? Retained earnings and capital stock are my important numbers, and those still show up correctly in my 2019 trial balance.
QuickBooks Team

Re: Handling accrued payroll with new setup

Hi there, dwolfe.

 

Thank you for posting here in the QuickBooks Community.

 

 

Yes, when you input a liability account, the opening balance equity is adjusted.

 

It won't clear at year-end and will calculate based on the recorded tax in your books.

 

I suggest consulting an accountant to confirm if there's a need to make changes to the journal entries.

 

 

I'll be glad to help you if you have any other questions.​ Have a good day!

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