How to Zero Out Payroll Liabilities in QuickBooks?
Managing payroll is one of the more complicated aspects of running a business, particularly when it comes to liabilities that are payroll-related. This generally refers to wages that are earned and not yet paid, as well as taxes that are owed to the government. If you find yourself looking to zero out payroll liabilities in QuickBooks, you're certainly not alone. Here, we'll guide you through a process that makes sure your payroll liabilities are zeroed out and in the most accurate manner possible.
What is Payroll Liability?
Understanding payroll liabilities is essential before we explain the process on how to zero it out. Payroll liabilities usually include:
Employee Wages: Payments due to employees for working hours.
Taxes Withheld: Federal and state income taxes, Social Security and Medicare, as withheld from the employee's wage
Employer Taxes: Taxes, such as Social Security and Medicare contribution, unemployment insurance, and other.
QuickBooks tracks these liabilities for you, but you may sometimes need to zero them out-for example after applying a payment, correcting an error, or at the end of a payroll period.
Zero Out Payroll Liabilities Step-by-Step in QuickBooks
Step 1: Review Current Payroll Liabilities
Before making any changes, review your current payroll liabilities. You can do this by:
To navigate to Reports: Under Reports, select it.
To select the Payroll Report: On this, you have the Payroll Summary or Payroll Liabilities.
To check accounts: From here, any disparity or amount will be noticed and reviewed.
Step 2: Determine which Liabilities are to be Zeroed Out
Now that you have a clear view of your liabilities, choose the specific ones that need to be zeroed out. Some common reasons to do so are:
Payments recorded wrong.
Employee terminations where final wages are adjusted.
Tax filings adjustments.
Step 3: Record Payments or Adjustments
If you have payroll liabilities you want to pay, you can do so by paying via posted payments or journal entries:
For Payments Made:
You open the Payroll Center: From the QuickBooks Dashboard, click on the "Employees" tab and select "Payroll Center."
Choose "Pay Liabilities": This displays your outstanding liabilities.
Select the Liabilities to Pay Down: Click on any of the liabilities you want to pay down.
Input Amount You are Paying Off: Be sure that the amount you input is the amount you are paying off
Complete Payment: Follow the instructions on completing payment and saving your changes.
For Adjustments:
Access "Employees" Menu: Go to the menu "Employees".
Open Select "Edit Employee": Find the employee whose liability you want to change.
Make Any Alterations Needed: If you need to change any wage amounts or tax rates, do that now.
Save Changes Made: Be sure that any changes you made are saved appropriately.
Step 4: Verify Your Adjustments
Once you've entered payments or adjustments, verify to ensure your liabilities have been zeroed out properly:
Run Payroll Liabilities Report Again: Next, you should run the payroll liabilities report again to confirm whether the figures are being reflected with the changes.
Verify Payments: Confirm that the payments made were correctly reflected in your accounts.
Step 5: Account Reconciliation
Now that you have zeroed out necessary payroll liabilities, you need to account reconcile your accounts so they can be right:
Go to Banking Menu: Choose "Banking" from the QuickBooks menu.
Click Reconcile: Answer the steps to reconcile your bank statement with your records in QuickBooks.
Check All: Make sure all the transactions will match, including payroll liabilities.
Step 6: Record Changes
Lastly, document all adjustments that you have made for future use. Documenting all the adjustments gives you clarity on your financial statements and helps to make an audit process much easier.
Bonus Tips
Check Payroll Liabilities Regularly: Checking your payroll liabilities regularly helps identify errors faster before they impact your financial statements.
Ask for a Professional: If you have so many queries about payroll liabilities, then get a CPA or QuickBooks ProAdvisor that can help guide you according to specific needs.
Use QuickBooks Resources: There are quite a number of resources, such as tutorials and community forums, which provide further information on QuickBooks.
Conclusion
Zeroing out payroll liabilities in QuickBooks is a very important task for any business owner or payroll administrator. The following steps could be able to help you ensure your payroll liabilities are accurately reflected, maintaining the financial health of the business. If still you have some doubts and confusions, then you can ring up to our QuickBooks payroll customer support team at +1-800-761-1787, and they will surely clear all your clouds of confusion. Our QuickBooks ProAdvisors are dedicatedly providing professional assistance to all users round the clock. For more information, give us a call today!
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