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brookeanne
Level 3

health insurance deductions

Hello,

 

Our health insurance is billed a month out. I pay the insurance at the beginning of the month and then deduct that month's premium from the employee checks after i have paid it. My health insurance liability amount is never correct. I have to wait to pay the liability in QB until I have ran all of payroll for that month. Also, for the months with 3 payrolls, it completely throws off my balance. Any ideas how I can make this a "cleaner" process? Thank you

Solved
Best answer June 02, 2020

Best Answers
Teri
Level 9

health insurance deductions

No, not a sub account.  Just a normal account.  "Contra" means opposite, so all your expense accounts are normally debit balances and this contra account will always have a credit balance, offsetting account above.

View solution in original post

10 Comments
JamesDuanT
Moderator

health insurance deductions

Hello brookeanne,

 

Health insurances can be track within QuickBooks by setting up a payroll item. Then, you can assign it to the employee and include it when you run payroll. It is easily set up by following these links:

After running payroll, you can pay your liabilities. With that process, you visit these links for reference:

Aside, you can also ask your accountant if there is another process that they can suggest. They know what's best for your books.

 

Keep us posted if you have additional questions.

Teri
Level 9

health insurance deductions

@brookeanne I find that semi-monthly payroll works best for all of my clients. This is with payroll periods ending on the 15th and EOM.  Then there are always two pay periods each month so total of 24 vs. 26.

This makes it much easier to split monthly premium amounts since you are just splitting them in half.

john-pero
Community Champion

health insurance deductions

The payroll item for deduction from employees can post to your regular insurance expense account. Pay the gross insurance and then each pay period a portion is deducted and your overall expense is reduced

Teri
Level 9

health insurance deductions

@brookeanne @john-pero 

I agree, I normally setup a contra account right below the health insurance expense account, so i can see total company pays and right below that see a credit for the amounts employees' contribute from payroll.

brookeanne
Level 3

health insurance deductions

Could you expand on how I would set this type of deduction up....it would make it so much cleaner

brookeanne
Level 3

health insurance deductions

Could you expand on how I would set this up? I really like the idea of this way better than using payroll liabilities account. 

Teri
Level 9

health insurance deductions

Hi @brookeanne -  

 

Two suggestions:

 

1) Semi-monthly payroll with timesheet periods ending 15th and EOM (for monthly billing).

Suggest paycheck dates of 10th and 25th, to allow process time, avoid changes for holidays. 

Make sure your system or service provider can handle this change -- Dollar impact is negligible

Make sure your employees know that you are changing these dates for timesheets and paydays

 

2) In QB, setup contra account below expense account used to pay health insurance, for example, 

Account 6500 - Health Insurance - ER Paid -- Charge here when health insurance paid by company.

Account 6510 - Health Insurance - EE Paid -- Credit here for employee payroll contributions to this. 

This way you see how much company pays in total and how much of that is paid by employees for planning & budgeting purposes as well as for easily seeing if numbers "look proportionally right."

 

brookeanne
Level 3

health insurance deductions

Thank you SOOOO much Teri. Forgive me, but how do I set up a "contra" account? Would it be a "sub account"? 

Teri
Level 9

health insurance deductions

No, not a sub account.  Just a normal account.  "Contra" means opposite, so all your expense accounts are normally debit balances and this contra account will always have a credit balance, offsetting account above.

View solution in original post

brookeanne
Level 3

health insurance deductions

Ha! ok! Thank you so much Teri! So Helpful!!!!!!

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