How do I prevent my paid payroll taxes from being recorded twice?

Taxes withheld from your employees shouldn't appear on your P&L at all, as they are not expenses to you.  Only employer paid taxes, like the employer portions of SS and Medicare, are expenses.

Payments made to agencies for taxes are not expenses and should not appear on the P&L.

Thank you for reaching out with your concern about the duplication of paid payroll taxes in QuickBooks Online, Anderson4. Let's review the steps to prevent this issue and verify your tax payments are recorded correctly.

To prevent your paid payroll taxes from being recorded twice in QuickBooks Online and ensure your Profit & Loss statement reflects accurate figures to address how the transactions are being entered and reconciled.

Here are the steps to help correct this issue:

Step 1: Identify Duplicate Transactions

1. Run a Profit & Loss Report: Go to Reports > Profit & Loss. Look at the sections where payroll taxes are recorded and identify any duplicates. 
2. Run a Transaction Report: Filter for the account types and transaction dates involved in the duplicate entries to identify the source of each transaction.
   
   

Step 2: Ensure Proper Categorization of Payroll Transactions

1. Payroll Settings: Make sure your payroll settings in QuickBooks Online are accurately configured to sync with your payroll provider. Adjust settings under the Payroll section if necessary.
2. Review Payroll Tax Entries: Confirm the tax liabilities are correctly categorized when payroll is processed. Payroll service entries should automatically record tax liabilities to the correct expense accounts.
   
   

Step 3: Categorize Bank Feed Entries Correctly

1. Bank Feed Entries: When reconciling bank feed entries for taxes paid:
   • Select the Correct Account: If payroll has already recorded these amounts, categorize bank feed transactions as payments to the liability account instead of recording them as expenses again.
   • Confirm Before Adding: Make sure not to duplicate expenses. If your payroll system has already recorded the expense, the bank feed transaction should match against the existing liability. Use the Match feature to match the bank transaction with the payroll liabilities recorded in QuickBooks Online. 

Step 4: Adjust or Delete Duplicate Transactions

If duplicate transactions are already recorded:

1. Locate the Duplicates: Find duplicates by comparing entries in the expense accounts with corresponding payments recorded in the bank feed.
2. Delete or Adjust Entries: Delete manually added duplicates from the bank feed that should have been recorded against the liability account:
   • Go to the Banking menu.
   • Find the corresponding bank feed entries.
   • Instead of categorizing them as new expenses, match them to their corresponding liability entries.

Step 5: Regular Reconciliation

1. Reconcile Accounts Regularly: Make it a habit to regularly reconcile your bank accounts to identify any discrepancies or duplicate entries.
2. Verify Payroll Liabilities: Regularly review the Payroll Liabilities account to ensure that payments are recorded correctly and balances are as expected.

Additionally, you may want to explore this helpful article: Payroll reports. This includes the Payroll Summary report and the Payroll Liability Balances report to check for discrepancies or duplicate entries.

Furthermore, you may want to explore QuickBooks Live Bookkeeping to streamline your accounting processes, ensure accuracy in your financial records, and provide expert support, allowing you to focus more on growing your business.

I appreciate you bringing this concern to our attention. It is essential to address these discrepancies for accurate bookkeeping and financial reporting. Please reach out if you encounter any further challenges or require additional assistance. We are here to support you every step of the way and ensure your accounting processes run smoothly.