Su Brown and Associates, PLLC

  Certified Public Accountants

   77 Southway, Suite B,  P.O. Box 1454,  Lewiston, Idaho  83501

Telephone

208-743-7790

Fax

208-743-7363

QuickBooks Tip

Paying Payroll Liabilities

Frequently when making a payment for payroll taxes, QuickBooks users either enter a bill or use the Write Check function and apply the payment against a tax expense category.  While this does post the payment for bank reconciliation purposes, it does not use the full payroll functionality of QuickBooks and in most cases overstates payroll tax expenses.  It also creates problems if you have QuickBooks create the 941 and 940 payroll tax returns.

If the taxes are set up as Payroll Items, then they will accrue taxes as paychecks are created.  QuickBooks keeps track of how much of each tax it thinks needs to be paid.  These taxes will continue to accrue until payment has been made through the Pay Liabilities feature.

Go to Employees, then Pay Payroll Liabilities.  QuickBooks will prompt to Select Date Range for Liabilities.  Keep the beginning date as shown (in most cases 01-01-yy) and change the ending date if needed.  A list of payroll items with the amounts accrued will be shown.  If paying a monthly 941 payment, checkmark Federal Withholding, Medicare, and Social Security.  This total should balance to the Federal Withholding, Medicare Employee, Social Security Employee, Medicare Company, and Social Security Company on a Payroll Summary report for the month needed.  Click the Create button and a check window will be shown.  If the amount to be paid is different than what is shown in the window, it may be adjusted by clicking the expense tab.  In the account field, choose Payroll Tax Expense.  In the amount field, put in the difference (plus or minus) needed to balance to amount actually paid.  This should be only a few cents.  If it is more, you may need to do some looking to see why it is off.  Change the amount in the upper part of the check to the actual amount to be paid and click Save and Close.  QuickBooks will prompt if the amounts do not balance.

Follow the same procedure for other payroll liabilities as needed.  Some liabilities are paid monthly and other quarterly so you will need to keep track of each.

If you need to know which Payroll Items need to have the Pay Payroll Liabilities function used on them, go to the Pay Liabilities window.  Every item listed needs to use this function in order to be correct in QuickBooks.

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