How to Make Journal Entries to Adjust QuickBooks Payroll Liability Account?

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.

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.

While searching the solution for this query, you may find topics related to QuickBooks payroll liability. Make sure you do not get confused by it. We have a team of experts who can point you in the right direction and help you to make the journal entries. Our Dancing Numbers team of professionals will guide you from the beginning to the end.

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