Just started using direct deposit with quickbooks. A couple of days before the paycheck date a liability account called "Direct Deposit Liabilities" appears on the balance sheet. As soon as the payroll date arrives the account disappears. The balance in the account is a debit balance and so the liability account is showing a negative balance
How do I fix this?
Now that I'm aware of your situation, I will help you fix it, Pshelly.
The Direct Deposit Liability account should always be zero. When it is negative, it is because you have missing paychecks, duplicate liability checks, modified paycheck, or voided direct deposit check. We have different ways to fix it depending on the cause. Check this article for the detailed steps (Follow steps under To fix a negative balance in your Direct Deposit liabilities account): Account balance for Direct Deposit liabilities is not zero.
If you have other payroll concerns, you're always welcome to post in the Community.
The account has a zero balance until two days before the pay date when a negative balance appears. The negative amount immediately disappears on or the day after the pay date. All this happens by simply changing the date on the balance sheet report. No need to make any adjustments.
I don't think the solution that has been proposed has anything to do with my problem.
There are two things that I can think of on why this happened, pshelley.
It's possible that there's a missing direct deposit paycheck or liability check. That is why the negative amount will just disappear after the pay date of your direct deposit.
Here's how to check it:
If there's a missing direct deposit liability or payroll check from the transaction list, you'd have to recreate it.
I've got you the articles that'll help you fix the issue:
Please keep me posted if you have more questions.
I followed your steps. All liability checks are present and in the checking account. All paycheck direct deposits are present and in the correct checking account.
We appreciate you for performing the recommended troubleshooting steps, pshelley.
Cases like this, it would be best to contact our Payroll Support Team. They'll help you review the payroll report and further investigate what's causing the negative balance in your liability account.
Here's how to reach them:
You can always visit the Community if you need anything else.
There is no need for correction. This is the normal functionality of QuickBooks payroll using direct deposit. This negative balance appears because it is the amount being drafted from your bank 2 days before the upcoming payroll. It should match the net amount of your upcoming payroll and I believe it will also include the fees charged by Intuit per check. Once you hit the pay date and the funds are sent to the employees bank accounts the balance zeros out. Hope this clears everything up for you.