Square Payroll Entered Manually Causes Payroll Liabilities to Accrue

Hello there, @JWinTX. I have a method for you to adjust and zero out your old liability account data in QuickBooks Desktop (QBDT).

You'll need to enter your historical tax payments made during the current or previous years without affecting your accounts in QuickBooks. This will determine your future tax deposits and help show the appropriate amount of your payroll liability account on the balance sheet.

To do this, you can use the backdoor process or enter your historical payments outside the Payroll Setup window. Here's how:

1. From the Help menu, choose About QuickBooks.
2. Press Ctrl + Alt + Y or Ctrl + Shift + Y to open the Setup YTD Amounts window.
3. Select Next until you reach the Enter prior payments section.
4. In the Enter Prior Payments window, select Create Payment to enter all prior payroll tax and non-tax payroll liability payments you have made during the current or previous years.
5. Enter the Payment Date and For Period Ending date. Note: If there is already an item with an amount selected under Taxes and Liabilities, select Next Payment. This may be a prior payment that you have already entered. 
6. In the Taxes and Liabilities field, choose the payroll tax item that you've already paid and want to record in QuickBooks Desktop. And enter the amount. You can add a memo to remind you what the payment is for. 
7. Select the Accounts Affected... button and choose the Do not affect accounts option. 
8. After you have completed your first payment, continue to the next by selecting Next Payment. Continue this process until you have completed all payments. Then select Done to save your work.
9. Click Finish to close the window.

Moving forward, you can use this method to adjust your payroll liability in QBDT. If you wish to know the other way to enter your historical tax payments, please refer to this article: Enter historical tax payments in Desktop payroll.

Also, you may want to check out this article as your reference in case you want to set up and use different reports to get a better understanding of your cash flow in QBDT: Track your cash flow in QuickBooks Desktop. 

Let me know if there's anything else you need or concerns about manually entering payroll data in QBDT. I'm always ready to help. Take care, and I wish you continued success, @JWinTX.

Hello and thank you for your help!

I think this has partially solved my problem. Previously when using QB Payroll, there wasn't a Balance Sheet entry for Payroll Taxes Employee Portion. This was a Liability Account I created after watching a YouTube video for how to handle payroll taxes in QB when manually entering data from Square Payroll. 

By using the method you suggested, I now have an entry for Payroll Taxes Employee Portion (a positive value which is growing) but also an entry showing for Payroll Liabilities Other (a negative number which is also growing). Yet the net result is that they effectively cancel each other out on the bottom line of total current liabilities. On accounts affected, I did select "Affect Liability Accounts But Not Bank Accounts". Unless there is another solution for this, having these two (growing) entries that zero each other out is something I can live with.

There is probably a MUCH better way to structure the accounts so I can manually enter payroll and not create this issue. Open to any other thoughts you have...

Thank you,

JWinTX

You're always welcome, @JWinTX.

I appreciate you for letting us know the result after following recommended steps on how to enter historical tax payments in QuickBooks Desktop. I suggest consulting with your accountant for further guidance on how to properly structure the accounts. If you don't have one, not to worry! I can help you run a search.

Here's how:
 

1. Visit the ProAdvisor site.
2. Enter your city or ZIP code in the Location field. It will display a list of accountants or bookkeepers near you.
3. You can also filter the service provided, industry served, and product supported to narrow down the results. 

Furthermore, you can check out our awesome guide on how to fix incorrect payroll liability balances. It also provides some common reasons why it happens. 

Feel free to visit the Community again if you need help with QuickBooks. We're always here to help. Have a great day ahead.