How to account for penny differences in payroll liabilities due to rounding?
This question is regarding my state reemployment (unemployment) tax. I have been manually running payroll for one employee this year. I create a journal entry for each paycheck, recording my payroll expenses and payroll liabilities. On each paycheck, I record the reemployment tax liability, which is 2.7%. Due to rounding over 8 paychecks, the actual amount I paid to the state is $.02 more than the amount in my liability account and payroll expense account. Should I just make a journal entry to debit payroll expenses and credit the liability account by $.02 before categorizing the bank payment made to pay the taxes?
How to account for penny differences in payroll liabilities due to rounding?
Yes, you can do that. However, to make sure your Payroll Expense account always agree with the total expenses of all payroll periods, I would suggest to debit Reconciliation Expense 0.2 instead.
You have clicked a link to a site outside of the QuickBooks or ProFile Communities. By clicking "Continue", you will leave the community and be taken to that site instead.
