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CoffeeBean
Level 1

Paying from Payroll Liabilities

Hello. I use desktop Premier 2016. (I'll upgrade soon.)

 

Beginning January 1st, my small business began offering employer-sponsored medical insurance. The company is contributing 80% of employee premiums, and employees are paying 20%. This is easily set up through our payroll system, Gusto. Every time I run payroll through Gusto, I generate an iif file and import it into QB. It has worked perfectly until now.

 

Since setting up these benefits in Gusto, it is requiring me to map these withholdings and expenses as "Payroll Liabilities" to an account in Quickbooks – currently, the only account it allows me to map to is:
Name: 2100 – Payroll Liabilities
Type: Other Current Liabilities

 

When importing the IIF file from Gusto into Quickbooks, QB is slotting the full expense of the benefit costs into 2100 – Payroll Liabilities (the 20% employee deduction and the 80% employer contribution).

 

I've never used QB for payroll and, until this year, have never had a Payroll Liabilities account. Sorry to be a noob but I don't understand how it works, and Google hasn't been helpful.

 

My problem is this: I need to record the company's monthly payment of the medical insurance premiums in QB (the 100% of the premium that includes both the employee 20% and the employer 80%), but I presume that I cannot just use the "write check" to deduct the payment from the bank account. Instead, I think that I have to make a payment of the premium from the Payroll Liabilities account.

 

1) Is it true that the monthly premium payment made by my company must must come from, or be balanced with, the new Payroll Liabilities account?

 

2) If so, can you please describe through what procedure I can achieve that? (I am hoping that the paid add-on for payroll is not required as I don't use QB to issue payroll.)

 

Thanks so much in advance for any help you can offer!

Gary

5 Comments
Calisteve
Level 2

Paying from Payroll Liabilities


@CoffeeBean wrote:

Hello. I use desktop Premier 2016. (I'll upgrade soon.)

 

Beginning January 1st, my small business began offering employer-sponsored medical insurance. The company is contributing 80% of employee premiums, and employees are paying 20%. This is easily set up through our payroll system, Gusto. Every time I run payroll through Gusto, I generate an iif file and import it into QB. It has worked perfectly until now.

 

Since setting up these benefits in Gusto, it is requiring me to map these withholdings and expenses as "Payroll Liabilities" to an account in Quickbooks – currently, the only account it allows me to map to is:
Name: 2100 – Payroll Liabilities
Type: Other Current Liabilities

 

When importing the IIF file from Gusto into Quickbooks, QB is slotting the full expense of the benefit costs into 2100 – Payroll Liabilities (the 20% employee deduction and the 80% employer contribution).

 

I've never used QB for payroll and, until this year, have never had a Payroll Liabilities account. Sorry to be a noob but I don't understand how it works, and Google hasn't been helpful.

 

My problem is this: I need to record the company's monthly payment of the medical insurance premiums in QB (the 100% of the premium that includes both the employee 20% and the employer 80%), but I presume that I cannot just use the "write check" to deduct the payment from the bank account. Instead, I think that I have to make a payment of the premium from the Payroll Liabilities account.

 

1) Is it true that the monthly premium payment made by my company must must come from, or be balanced with, the new Payroll Liabilities account?

 

2) If so, can you please describe through what procedure I can achieve that? (I am hoping that the paid add-on for payroll is not required as I don't use QB to issue payroll.)

 

Thanks so much in advance for any help you can offer!

Gary


A couple of things. If you are uploading a file from Gusto. Everything should already be calculated. The wages, employer taxes, the employer share of the premiums should all be debits, the offset is the payroll liability account. When you write a check for the premium the offset should be payroll liabilities. Payroll checks and tax payments should all come out of the payroll liabilities account. this will zero out the payroll liabilities account once all the transactions are completed.

Calisteve
Level 2

Paying from Payroll Liabilities

1) The Gusto file upload did everything for you. All the debits are offset by the credit to Payroll Liabilities.

 

2) Wages, Employer Taxes, and Employer portion of the health premiums are debits. The credits are the offset and should equal the debits, which are the expenses.

 

3) Writing a check is a credit and the debit would be Payroll Liabilities. After all the transactions are completed the Payroll Liabilities account should be zero.

CoffeeBean
Level 1

Paying from Payroll Liabilities

Thanks so much for taking the time to reply, Calisteve. I'm not able to glean the needed solution from the information, though. I think it is due to missing something fundamental about the double-entry method. In the eight years I've run the books for the business, I've never intentionally created debit/credits. QB does that all in the background.

 

I'll try to clarify.

 

The IIF file that Gusto generates does indeed to do everything for me, including creating a journal entry.

 

Into the debit column of the the journal entry goes:

- "salaries & wages" account (take-home pay + employee portion of taxes)

- "payroll taxes" account (employer taxes for the employee)

- "salaries and wages" account again (employer contribution of health benefits)

 

Into the credit column goes:

- "payroll liabilities" account  (the 100% health benefit premium that the business will pay (employee + employer portion))

-  two lines for the bank account (one for sum of take-home pay, the other for sum of employer & employee taxes)

 

Every time I run payroll in Gusto and import the resulting IIF file, the employee pay and the payroll taxes reflect perfectly in the register. But the Payroll Liabilities account accumulates an increasing total each time payroll is run.

 

What I need to do is complete your #3: Record the business's payment of the monthly premiums so that the payment is: a) deducted from the bank account balance in the register and b) subtracted from the Payroll Liabilities account so that it reaches zero.

 

My logical sense of it was that I would use the write checks feature from the "Payroll Liabilities" account. When I attempt that, a pop-up appears notifying me that there is a problem because "you are about to pay your payroll liabilities." (See attached.)

 

It suggests that I instead use the "Pay Payroll Liabilities feature."

 

And this is where I hit a snag because it appears that to access the "pay payroll liabilities feature," I need to pay for QB's monthly payroll add-on, even though I don't use QB to issue payroll.


Are you available to describe the step-by-step procedure for recording the payment of the monthly premium in QB? (Not knowing how to do this, I've been unable to reconcile the monthly bank statements.)

 

Many thanks for your time.

Jeaneine
Level 2

Paying from Payroll Liabilities

Ok so I would suggest turning on Manual Payroll and that will allow you to use the feature to pay liabilities.  It also would allow you to actually enter the paychecks.  When you use a journal entry to input your payroll you lose a lot of payroll reporting features also.   If you run a payroll summary and you have only done payroll with an import the way you are currently doing it, your payroll summary comes up blank.  There are so many reports that include payroll data that you will not be able to run.  Of course, if you don't look at those kinds of reports it would not matter.  Once you turn on manual payroll you can choose  Employees -  Payroll Taxes and Liabilities - Create custom liability payments. then you just choose the period you are paying the payroll taxes for and create a check. 

to turn on Manual Payroll in desktop:

 

If you're trying to set up manual payroll without any payroll subscription, make sure that your computer is offline or is not connected to the internet. 

 

Then, proceed the following steps below to set up your company preferences for payroll:

  1. Click Edit at the top, and then select Preferences.
  2. On the left panel, select Payroll & Employees then go to the Company Preferences tab.
  3. In the QuickBooks Desktop Payroll Features section, select the Full Payroll radio button.
  4. Select OK

Once done, you can now create the manual payroll. Let me walk you through the steps:

  1. Click Help at the top, and then select QuickBooks Help (or press F1 on your keyboard).
  2. In the Search field, type manual payroll and press Enter on your keyboard.
  3. Select the topic Calculate payroll manually (without a subscription to QuickBooks Payroll).
  4. Under Set your company file to use the manual payroll calculations setting, click the manual payroll calculations link.
  5. Select Set my company file to use manual calculations link. When your company file is set up for manual payroll computation, QuickBooks inserts a zero amount for each payroll item associated with a tax.
  6. Close and reopen QuickBooks Desktop.

Hope this helps.

Teri
Level 9

Paying from Payroll Liabilities

You can also have Gusto make the payment for you and then post the payroll entries into QB.

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