Payroll liabilities - something seems wrong here ...

Big-Al · ‎September 09, 2022

As an example: We receive an invoice from our group health carrier. We enter it as a debit to expense and credit to liability Insurance Payable. The employees make a deduction from pay, which to our mind should post as a credit to the expense, NOT as an increase to a liability. Unfortunately, the Payroll Item List shows an entry for a liability account, and we have been unable to change it. How do we go about doing this? I have looked at the documentation on this and so far haven't found anything that addresses this problem. There are some other Payroll Items that need tweaking as well. What am I missing about understanding how QB thinks this should work?

Adrian_A · ‎September 09, 2022

Hello there, Big-Al.

Thank you for adding a screenshot. It gives me a visual representation of your concerns. I'm here to explain why the payroll item shows as an increase to a liability account.

The payroll item will reflect under a liability account when it's to be paid by your employees. If it's a company-paid contribution, it will increase your expense account. That said, I'd recommend reaching out to your accountant so they can guide you if there's a need to create a new item or just modify the account.

I've also added these articles for more resources in modifying the payroll item:

You can add a reply to this thread if there's anything that I can help about managing payroll.

View solution in original post

Adrian_A · ‎September 09, 2022

Hello there, Big-Al.

Thank you for adding a screenshot. It gives me a visual representation of your concerns. I'm here to explain why the payroll item shows as an increase to a liability account.

The payroll item will reflect under a liability account when it's to be paid by your employees. If it's a company-paid contribution, it will increase your expense account. That said, I'd recommend reaching out to your accountant so they can guide you if there's a need to create a new item or just modify the account.

I've also added these articles for more resources in modifying the payroll item:

You can add a reply to this thread if there's anything that I can help about managing payroll.

Big-Al · ‎September 09, 2022

Thank you. That addressed the issue ... I have to create a new item, I can't change an existing one.

I think the problem is that the employee deduction is not going to pay the entire amount of the health premium, it is only a partial payment. That means the carrier bills us for the full amount due, and that is the liability we record via the vendor bill. The deduction from the employee is only for a part of the monthly charge for each employee, so that amount for each employee doesn't change the liability at all, it only reduces the company expense by the deduction amount. QuickBooks seems to think that employees are paying the entire total, which is not the case.

Thanks for your quick response. It is appreciated.

katherinejoyceO · ‎September 09, 2022

Thanks for your prompt updates on what you have accomplished, @Big-Al. Glad to know that my peer's resolution addressed the issue.

I'll leave this article with links related to taxes for your future reference: Manage taxes in QuickBooks Desktop.

We're always here to guide you some more if you have addtional or other concerns.

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Payroll liabilities - something seems wrong here ...