In simple terms, the payroll liabilities account in a ledger is a place where payments due for the near future, but are yet to be issued are kept. Payroll taxes are an example of such expenses. In case you file quarterly or monthly payroll taxes, you must post the amount to your particular liability account that accounts for the expenses systematically. In simple words, comprehending the payroll liability account in QuickBooks is crucial to rectifying ledger reports.
Let’s first understand in simple terms, what are payroll liabilities.
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What are Payroll Liabilities?
Just like any other liability, payroll liability is the amount which has not been paid by you yet, and you owe it to your particular employees. This includes the payroll tax amount that is kept from the employees.
Here are some instances of payroll liabilities:
- Union dues
- 401 k contributions
- Contributions for health insurance
Now that we know what payroll liabilities are, we must understand the need to adjust the payroll liability.
Why do We need to Adjust the Payroll Liability in QuickBooks?
There are several reasons why you need to adjust the payroll liability. Here is a list of some of the reasons for payroll liability adjustment:
- If you have edited or rectified the YTD wages, additions, or deductions. It is for the particular employee who is not going to get additional paychecks
- You set up the incorrect tracking type of tax for the particular Health Insurance company contribution
- For the company contribution items, the amount is edited. Such items comprise 401k or HSA
How to Make Journal Entries Edit or Adjust the QuickBooks Payroll Liability Account?
In order to make journal entries to adjust the QuickBooks payroll liability account, you need to follow certain steps, like:
1. Increase the Liabilities
Step 1: Choose the option to add a general journal entry from the given Company menu. Enter the present date and allocate a number to the entry.
Step 2: Now, debit the particular payroll liability account for the adjusted amount.
Step 3: Credit the given payroll expense account that you wish to adjust. In case you are adjusting the taxes payable, make sure to credit that given ledger account.
Step 4: Now process the particular entry. Also, file the related documentation that aids the input of audit purposes.
2. Decrease Liabilities
Step 1: Make a general journal entry from the given Company menu. Add the present date and allocate a journal entry number.
Step 2: Now credit the particular payroll liability account with the specific reduction amount. Such entry is generally processed when the liability payments are usually processed.
Step 3: Make sure to debit the cash account with equal amount. To be precise, the liability account and cash account should be debited with the very same number and amount.
Step 4: Post the particular entry. Now file the related paperwork that aids the changes for audit purposes.
Note: There are typically four different methods for QuickBooks Payroll liabilities adjustment
, as per your requirement. Here are the different methods:
- Reconstruct the paycheck that has been deleted or voided
- Make sure the QuickBooks confirms and reconstructs data utility
- Upgrade QuickBooks to the latest version that is released
- Resolve wrongly paid through dates
Does it feel better to comprehend how to make journal entries to adjust the QuickBooks payroll liability account?
This was the actual goal of this article.
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How to Zero out the Liabilities in QuickBooks?
If you wish to delete your paid liabilities, you must do the following:
Step 1: Open the QuickBooks accounting software.
Step 2: Select the transactions from the particular Pay liabilities tab.
Step 3: Press on Delete that is present on the top of the window.
Step 4: Press Okay.
Why a Journal Entry is needed in QuickBooks?
With a journal entry, you can add transactions which you are not allowed to make anywhere in your accounting software. Not to mention, you can also edit the wrong data in your records.
What are the Different types of Payroll Journal Entries?
There are three kinds of journal entries for payroll. Here is the list:
Accrued Wages: This kind of wages showcase the wages that a particular company owes to its employees and has not paid them yet. These wages are recorded by accountants at the end of the accounting period. Now, when the company pays off the ways, accounts change the entries in the particular ledger to show the payment.
Early Recordings: Early recordings are the main entries for payroll accounting. They are the primary entries in a given ledger to show a transaction and can include the gross wages for a particular employee along with the withholdings from their particular pay.
Manual Payments: These are entries that show that the company has paid the employee manually, for instance, may be cash or check. It usually arises when the company needs to edit an employee payment. It can also arise when the company discharges any particular employee.
How to Minimize the Liabilities in QuickBooks?
Here are the steps to minimize the liabilities in QuickBooks:
Step 1: You need to add your user name at the banking.
Step 2: Navigate to the Payroll register and choose it.
Step 3: Check the liability by pressing the Liability Check. Choose Edit Liability Check from the given menu.
Step 4: In case your edits do not match with the particular payroll liabilities, then update them.
Step 5: You can choose Save and Close and then press Yes.