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Pay or Adjust Payroll Liabilities in QuickBooks

Pay or Adjust Payroll Liabilities in QuickBooks

When it comes to QuickBooks, most users are not aware of the fact that they can adjust the payroll liabilities. Even if they are aware of it, they mostly are not aware of the right methods to do it.  If that’s the case, you need not worry. With this article, we will guide you on how you adjust payroll liabilities in QuickBooks.

What is Payroll Liability Adjustment?

Any payroll-related payment that your company borrows but hasn’t yet made is referred to as the payroll liabilities adjustment in QuickBooks. It covers wages that employees due, withheld taxes from them, and other expenses.

In summary, payroll liability adjustment pays for these overpaid or incorrectly taxed liabilities. To put it simply, it corrects the inaccurate payroll liabilities.

Here are examples of payroll liabilities:

What are the common reasons to make liability adjustments?

Here are the mentioned some possible causes of Payroll liabilities:

  • You might have fixed a payroll item with the wrong tax tracking type. 
  • Correct YTD wages, taxes, and deduction items
  • Change the amount for company contribution items such as HSA or 401(k) company match.

Why Do You Need Payroll Liability Adjustment?

The situations below will require you to make changes to your payroll liabilities in QuickBooks:

  • If you have mistakenly set up the incorrect tax tracking type for health insurance company contributions.
  • When an employee no longer receives paychecks, you may need to make changes to the employee’s deductions, additions, or YTD wages.
  • When you need to make changes to a 401(k) Company Match or a Health Savings Account (HSA) that is part of the company contribution items.

Let’s move on to changing the payroll tax liabilities in QuickBooks, but first, make sure you have the most recent payroll tax table updates installed.

How does the payroll liability adjustment work?

QuickBooks computes the taxes, corporate payroll contribution items, and deductions as you enter payroll. The payroll liabilities account has a record of it.

If you have a QuickBooks Desktop payroll subscription, it occurs automatically.

The liabilities account grows and shrinks in response to payroll taxes or other liabilities as you issue paychecks. Complying with statutes includes making wage payments on time.

Things to Do Before Adjusting Payroll Liabilities in QuickBooks:

Before you adjust payroll liabilities in QuickBooks, there are a few steps that must be completed to ensure what needs to be changed, and doing so makes a permanent change to your company file. The actions that you must take are as follows:

Make a backup of your company file:

A payroll liabilities adjustment will result in a permanent change to your company file, so it is crucial to make a backup so that you have a copy of your current file in case you need it later.

Check the Payroll:

You can use Payroll Check-up to identify problems that may have an impact on your liabilities. This device will:

  • To verify your current configuration, check your payroll data for errors and missing data.
  • Verify the documentation for your employee, the creation of payroll items, their pay, and their tax liabilities.
  • Find out if there are any differences in the tax amount for a flat-rate tax. The tool will also suggest ways to fix the problem.

Run a summary report for payroll:

Run a payroll summary report for the quarter or year that needs adjustment and make a list of everything that needs to be changed.

For Standard, Enhanced, or Basic Payroll:

The effective date, item name, and other fields for payroll liability adjustments must all be filled out.

Adjusting Overpaid Payroll Liabilities in the Company File:

The following steps are only applicable to users of the Enhanced, Basic, and Standard payroll services.

Company Adjustment:

  • Select Payroll Taxes and Liabilities from the Employees tab of your QuickBooks Desktop application’s dashboard.
  • Select Adjust Payroll Liabilities and then enter the date you want the adjustment to take effect.
  • Now, for the adjustment, choose an Effective Date.
  • Choose Company from the Adjustment for the segment menu.
  • Now, in the Item Name drop-down list, select the adjustment item.
  • Enter the minus amount you paid for the adjustment.
  • In the Memo section, write down your explanation for the transaction.
  • Click the Affected Accounts button.
  • If you want your accounts to be affected, click Affect Liability and Expense Accounts; otherwise, click Do Not Affect Accounts.
  • On the Affect Accounts screen, click OK.
  • Click OK once more to save the change.

Employee Adjustment:

  • Steps one to three of the Adjust Your Company method are outlined above.
  • Select Employee from the Adjustment for Segment drop-down menu.
  • Click the name of the employee for whom you want to make the change from the drop-down list.
  • Select the payroll item for adjustment from the Taxes and Liabilities section and enter the negative amount.
  • To save the changes, repeat steps 7 through 11 from the Adjustment for the company method.

How do you Adjust Payroll Liabilities in QuickBooks?

Step 1: Find Payroll Discrepancies 

  • Run a payroll checkup: (QuickBooks, Desktop Basic, Standard, and Enhanced Payroll Only). In case you need to run a payroll checkup for a previous year, you must change your computer’s system date to the last day of that year. 
  • Now Run a Payroll summary report, for the month or quarter you need to adjust. Now take note of the amount of Payroll items that need adjustments. 

Step 2: Adjust your payroll liabilities. 

  • Select Payroll Taxes and Liabilities after selecting Employees.
  • Choose Payroll Liabilities Adjust.
  • Choose the last paycheck date of the impacted month or quarter in the Date and Effective Date columns.
  • To update your employee’s YTD information, choose Employee Adjustment under the Adjustment is for section. Next, choose the name of the worker. Even if the item being changed was paid for by the corporation, still do this.
  • Choose the payroll item you want to change from the Item Name column.
  • Enter the adjustment amount.
  • To increase if the item is under-withheld, provide a positive quantity.
  • To decrease if the item is over-withheld, provide a negative quantity. 
  • If there is a wage base adjustment that needs to be made, enter the amount under the Income Subject to Tax column.
  • Add a note regarding the adjustment under Memo for future reference.
  • Choose Affected Accounts, then click OK.
  • Choose Don’t make any changes to the accounts to maintain the liability and expense accounts’ balances. Only the year-to-date numbers on your payroll reports will be altered by the modification.
  • If you would like the transaction to appear in the liability and expenditure accounts, select Affect liability and expense accounts.
  • To exit the Affect Accounts window, click OK.
  • If you need to enter adjustments for additional employees, select Next Adjustment. If not, choose OK to apply the modifications. 

Step 3: Verify that the liabilities have been changed.

  • Execute the payroll summary report one more time to make sure everything is accurate.
  • Verify the amounts to be paid by running the payroll liabilities balances report.

Conclusion!!

So this is all we could gather for adjusting payroll liabilities in QuickBooks. We have gathered all the important steps that you might require. In case you still face any issues, feel free to reach out to us.


FAQs


  1. How would I delete the payroll liabilities adjustments in QuickBooks?

    In the Payroll Center, you locate the “Pay Liabilities tab” from the drop-down menu, there is a connection “Adjust Payroll Liabilities”. In case you click on this connection, then enter your click on the “Previous” button until you get liability to adjust.

  2. How might I reduce my payroll liabilities?

    To reduce your organization’s payroll tax rate burden, you can consider these ways: You can offer tax-exempt fringe advantages rather than more cash. Even though you might need to remunerate employees with rewards, bonuses, or raises, consider them tax-exempt.

  3. Will payroll liabilities be zeroed out?

    All records of the liability account should be zeroed out at long last since it should be paid. In case net compensation is paid to employees that coordinate with net compensation calculated in payroll then the wages payable record will zero out.

  4. How can I check previous payroll transmissions on the Account Maintenance page?

    💠 Locate Employee
    💠 Click on Send Payroll Data
    💠 Below Item received previous reports display.
    💠 Choose a preferred report and then hit on View.
    💠 Select Print to print the report

  5. What are payroll liabilities?

    The payroll liabilities are the amount you owe for the payroll item that is not yet paid. The liabilities list contains payroll taxes that your company owes for specific payroll processes. It includes 401 (k) plan contributions, health contributions, and child support garnishments.

  6. What are the primary causes of discrepancies in Payroll liabilities in QuickBooks?

    💠 Damaged data in a Company file
    💠 Wrong date in the liability payments
    💠 Not updated Version
    💠 Incorrect account number of monitoring current liability
    💠 If a Paycheck is voided or deleted, then you will view a liability in a payroll liability balance report
    💠Trying to access an inactive account

  7. How do I modify QuickBooks payroll withholding?

    This is how:

    💠 Select Employees from the Payroll menu.
    💠 After selecting the employee’s name, select the pencil icon next to Pay.
    💠 Click the Pencil icon next to the area where the employee’s withholding or W4 is configured.
    💠 In the Extra withholding field, alter the amount.
    💠 Press Save.

  8. How Can I Void a Tax Payment in QuickBooks?

    💠 Return to the Pay Liabilities section.
    💠 Choose the All Payments tab from the Payment History section.
    💠 To open the check, locate it and double-click it.
    💠 Choose Void from the Delete drop-down menu.
    💠 When you’re finished, click Save and Close.

  9. How do I make payroll adjustments?

    💠 Choose Employees from the Workers menu.
    💠 Choose Pay check List from the drop-down menu below. Payroll should be processed.
    💠 Change the date range, then choose which paychecks to delete.
    💠 Choose to Delete, then check the box to confirm the deletion.
    💠 Select the Delete paycheck option.

  10. What happens when you adjust payroll liabilities in QuickBooks?

    The Payroll Liabilities Adjustment will affect only the year-to-date amounts on your payroll reports. if you want the transaction to reflect your liability and expense accounts then you need to select the Affect liability and expense accounts option.

  11. How do I clean up payroll liabilities in QuickBooks?

    Below are the mentioned steps to clean up payroll liabilities in QuickBooks, follow all steps carefully:

    1. First, you need to go to the Employees and click on Payroll Taxes and Liabilities.
    2. Then, you need to select Adjust Payroll Liabilities.
    3. After that, click the previous button and find the liability adjustment which you want to delete.
    4. When you find the transaction you want to delete, click the Edit button in the menu bar.


Infographic of Solutions for Zero Out Payroll Liabilities in Quickbooks

Infographic of zero out payroll liabilities in QuickBooks

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