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Level 1

Payroll Liabilities

When I set up my Quickbooks at the beginning of 2018, I inadvertently created a new Expense category called Payroll Taxes.  I did not use Payroll Liabilities and was not even aware that it was there.  Now I have a huge payroll liabilities amount that I need to correct, and am not finding much help on how to do this...

5 Comments
QuickBooks Team

Re: Payroll Liabilities

Hello there, @trdavis55.

 

Thank you for dropping by. I can help you edit your payroll items to correct your payroll liabilities mapping and pay your taxes.

 

Let's start with editing your payroll item's liability account from Payroll Taxes to Payroll Liabilities. Please follow the steps below:

  1. Click Lists.
  2. Choose Payroll Item Lists.
  3. Double-click the payroll item to edit it.
  4. Click Next.
  5. Make sure to select Payroll Liabilities for the Liability account field (see screenshot).
  6. Click Next.
  7. Click Finish.

After updating the liability account, there will be a pop-up message that will allow you to update your transactions according to the date you specify.

 

 

 

Once done, you can proceed with paying your liabilities. In case you've already paid them, you have to make sure you record them in QuickBooks. To do that, you can use the enter prior payroll feature.

 

 

That information should get you on the right path.

 

Let me know if you have additional questions about payroll. I'd be glad to help you more. Wishing you and your business continued success.

Level 15

Re: Payroll Liabilities

Are you stating you paid taxes manually as Expense, or have you at least been using the Pay Liabilities tools? As long as you Paid Liability using the tool, then in QB, edit any payroll item that is supposed to be Expense + Liability (employer taxes) or only liability (employee taxes) and after you fix the item, let QB move existing data. Review this with your CPA, since Expense has been wrongly stated for the periods you did this.

 

If you never used the Pay Liability tool and always use manual Write Check as expense, that is a much deeper error to fix.

Level 1

Re: Payroll Liabilities

I have never used the Payroll Liability tool.  I now know that the fix is going to cost me some time, but cannot determine the path to fix it...

QuickBooks Team

Re: Payroll Liabilities

Thank for providing extra details, @trdavis55.

 

I agree with qbteachmt. You can write a check as an expense since you're not using the Pay Liability tool. Here are the steps:

  1. Click Banking.
  2. Choose Write Checks.
  3. Enter the important details.
  4. Click Save & Close.

 

I recommend getting in touch with your accountant for guidance about recording liabilities and writing checks in the best way for your business.

 

Let us know if you have other concerns about payroll in QuickBooks. I'd be happy to help you more. Wishing you all the best.

Level 15

Re: Payroll Liabilities

@HoneyLynn_G

 

You have just given the worst guidance possible. Please learn from what I am going to explain, as this is Important to all QB desktop users that also use the program to run payroll.

 

You never use Write Check for payroll. The special Liability Check needs to be created. Look at the Tabs; a regular Write Check has an Expense and an Items tab. You need to be looking at a Pay Liability check, which has the Expense and the Liabilities tab. You need to use the function because when you are running payroll, every data flow to the accounting is controlled by the Payroll items. If you use Bills or Checks or Journal Entries, or even Credit Card Charges as the transaction type, you just Broke the relationship between the Payroll functions, Payroll Liabilities tracking, due dates, State and Federal Reporting. Even if the accounting seems correct, because someone at the least knew to post a payment from Liability and not as More Expense, they still Broke QB Payroll.

 

The Payroll Center has the functions for Paying Liability. If you see nothing listed there for paying liabilities, that just means no one took advantage of the Setup function as a reminder. This is called Schedule Liabilities, which allows you to have the program remind you by showing "this is due monthly" and "this is due quarterly", etc. So you would use Create Custom Liability Payments, for each Liability Period cycle, to see and select and Pay what you accrued from each payroll run. Open any Paycheck details. See the tax items on the bottom left and right? These Payroll Items are part of what is Listed when you properly Pay Liabilities. The Payroll Item flows all data for you. Run the Payroll Liability Balances Report, set it for All Dates, and Columns by Year. This is supposed to be Total = 0, if you think you paid everything.

 

And this is not going to be resolved via a text-based forum. The errors made by using regular Checks, and double-error posting it as More Expense, means the payroll tools were not used properly, and these prior payments need to be corrected or offset using the proper Pay Liability function. The entry of that Banking as Expense means the P&L is wrong for these timeframes, as well. And the State and Federal Reporting will need to be reviewed and likely corrected or amended. Plus, if this happened in prior tax reporting years, the business tax reporting might also need to be amended.

 

It's time to get direct personal help from a local provider who can review methods and accounting, and get you on track. Find someone that understands QB Payroll.

 

You never use Regular Checks, JE, Bills or Credit Card Charges for QB Desktop Payroll; these bypass payroll and are raw accounting. Not Payroll.

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