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Payroll liability

In 2019 an employee tried to pay employees and somehow managed to have "red" in payroll liability to be paid.  Noticed later he was not updating payroll.  But amountWe are current with all payments but this amounts does not agree with any payroll going out.  Is there any way to adjust out?  Th


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QuickBooks Team

Payroll liability

I can help you with this, Chaser.


Yes, there's a way to adjust it. We can use a liability adjustment to correct your payroll information. This includes company contributions, employee additions, and deductions. I recommend reaching out to your accountant in doing this process to avoid messing up your books.


Before adjusting it, let's make sure that we're using the latest payroll tax table. You can refer to this link in updating your payroll: Get the latest payroll tax table update.


Then, let's run a Payroll Checkup to find the problems that affect your liabilities. This tool will review all your employee records and scan your payroll data for missing info and discrepancies.


We'll also have to pull-up the Payroll Summary report for the quarter you need to adjust for reference. Please take note of the amount on the payroll item that needs to be adjusted.


Here's how to adjust your payroll liabilities:

  1. Select Employees from the top menu bar.
  2. Choose Payroll Taxes and Liabilities.
  3. Select Adjust Payroll Liabilities.
  4. You can use the same date as the last paycheck of the affected quarter.
  5. Select Company Adjustment if you want the balance to be removed from the Payroll Liability Balances Report.
  6. Select Employee Adjustment if the item you're adjusting is a company-paid item.
  7. Choose an employee.
  8. Complete the Taxes and Liabilities fields.
  9. Select Accounts Affected and then click OK.
    • Select Do not affect accounts to leave balances unchanged for the liability and expense accounts. The adjustment will only change the year-to-date amounts on your payroll reports.
    • Select Affect liability and expense accounts to enter an adjusting transaction in the liability and expense accounts.
  10. Repeat for other employees if you need to, then hit OK.

Once done, let's run the Payroll Summary report again to check if everything looks right.


I encourage you to read this article to learn more about this process: Adjust payroll liabilities in QuickBooks Desktop. It also contains information in correcting a payroll liability check if you've already paid the liability.


I'll be right here to keep if you have any other concerns or questions about payroll liability adjustment. Feel free to tag me in your comment below.

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