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Level 1

Payroll Liabilities on Profit & Loss

Two questions please: Pro 2016

1. Payroll liabilities are not included in my P&L statement. How do I change this?

2. I do not have enhanced payroll. I paid my 2nd Quarter Federal electronically and since it was not paid by check it still shows in my liabilities as owed. How do I change this?

 

Thanks!

Jim

 

 

Solved
Best answer 08-28-2017

Accepted Solutions
Level 15

Re: Payroll Liabilities on Profit & Loss

You won't see Payroll Liabilities on the P&L, because the P&L is only one of at least 3 reports you should be using. The P&L is only One Part = income and expense. The Liability accounts are part of the Balance Sheet. You also run the Statement of Cash Flows. These three reports work together to give you the full picture. You will see they relate, because the reports run for the same timefram all show the same Net Income.

 

P&L = Income minus Expense. This contributes to the health and wealth of the business and is seen as Equity in the Balance Sheet.

 

Balance Sheet = what you Own, what you Owe, and the Equity is the "difference" or Net Assets. That's why the bottom line of the P&L also shows as part of Equity.

 

Here is an example for payroll:

Gross Wages + employer share of taxes = expense.

However, the Gross wages is Not what the employee got to Take Home. They had deductions, which you are holding to send in, on their behalf. That makes it Your Liability = you are Liable to send on funds you took from that employee's pay. Additionally, the Emploer share of tax expense that is posted but is not yet Paid, is offset as Liability = To Pay Later. That's why you pay the employee + the employer share of taxes From Liability. That isn't Expense; that is called Cash Flow = you cleared the liaiblity by spending funds. The Funds are Expenditure, not Expense.

 

2. Paying it "electronically" = Paperless check. You still need to Do The Bookkeeping in QB, by using the payroll function to Pay Liabilities, to show you Paid it. Instead of a real check #, you put "EFT" for the Check #.

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2 Comments
Level 15

Re: Payroll Liabilities on Profit & Loss

You won't see Payroll Liabilities on the P&L, because the P&L is only one of at least 3 reports you should be using. The P&L is only One Part = income and expense. The Liability accounts are part of the Balance Sheet. You also run the Statement of Cash Flows. These three reports work together to give you the full picture. You will see they relate, because the reports run for the same timefram all show the same Net Income.

 

P&L = Income minus Expense. This contributes to the health and wealth of the business and is seen as Equity in the Balance Sheet.

 

Balance Sheet = what you Own, what you Owe, and the Equity is the "difference" or Net Assets. That's why the bottom line of the P&L also shows as part of Equity.

 

Here is an example for payroll:

Gross Wages + employer share of taxes = expense.

However, the Gross wages is Not what the employee got to Take Home. They had deductions, which you are holding to send in, on their behalf. That makes it Your Liability = you are Liable to send on funds you took from that employee's pay. Additionally, the Emploer share of tax expense that is posted but is not yet Paid, is offset as Liability = To Pay Later. That's why you pay the employee + the employer share of taxes From Liability. That isn't Expense; that is called Cash Flow = you cleared the liaiblity by spending funds. The Funds are Expenditure, not Expense.

 

2. Paying it "electronically" = Paperless check. You still need to Do The Bookkeeping in QB, by using the payroll function to Pay Liabilities, to show you Paid it. Instead of a real check #, you put "EFT" for the Check #.

View solution in original post

Level 1

Re: Payroll Liabilities on Profit & Loss


@qbteachmt wrote:

You won't see Payroll Liabilities on the P&L, because the P&L is only one of at least 3 reports you should be using. The P&L is only One Part = income and expense. The Liability accounts are part of the Balance Sheet. You also run the Statement of Cash Flows. These three reports work together to give you the full picture. You will see they relate, because the reports run for the same timefram all show the same Net Income.

 

P&L = Income minus Expense. This contributes to the health and wealth of the business and is seen as Equity in the Balance Sheet.

 

Balance Sheet = what you Own, what you Owe, and the Equity is the "difference" or Net Assets. That's why the bottom line of the P&L also shows as part of Equity.

 

Here is an example for payroll:

Gross Wages + employer share of taxes = expense.

However, the Gross wages is Not what the employee got to Take Home. They had deductions, which you are holding to send in, on their behalf. That makes it Your Liability = you are Liable to send on funds you took from that employee's pay. Additionally, the Emploer share of tax expense that is posted but is not yet Paid, is offset as Liability = To Pay Later. That's why you pay the employee + the employer share of taxes From Liability. That isn't Expense; that is called Cash Flow = you cleared the liaiblity by spending funds. The Funds are Expenditure, not Expense.

 

2. Paying it "electronically" = Paperless check. You still need to Do The Bookkeeping in QB, by using the payroll function to Pay Liabilities, to show you Paid it. Instead of a real check #, you put "EFT" for the Check #.


 

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