Try These Pro Tips To Adjust Payroll Liabilities in QuickBooks

QuickBooks users often face difficulties adjusting the discrepancies in their statements that affect the liabilities and do not zero out with the deposited amounts. Due to these liabilities, the users cannot reconcile their bank statements with QuickBooks. The accounting doomsday begins when users from non-technical backgrounds start to search for negative payroll liabilities in the balance sheet to fix them. To adjust payroll liabilities in QuickBooks successfully, follow the blog till the end.

“When you adjust payroll liabilities in QuickBooks, it is important to have an accountant’s supervision to prevent common user errors. However, if you don’t have one, call on the QuickBooks Customer Service Number 1-(855)-856-0042 and get immediate assistance from a QB professional”

You may also see: How to enter a refund in QuickBooks

What are some of the Usual Grounds to do a Payroll Liability Adjustment in QuickBooks?

Every liability adjustment has its own rationale behind it, and it totally depends on the user’s intention. However, below are given some of the most common reasons to adjust payroll liabilities in QuickBooks.

1. The user has set up a wrong tax tracking type while adjusting a Health Insurance Company Contribution.
2. An employee will not be receiving more paychecks from the company, and the user has to edit his or her YTD wages, deductions, or additions accordingly.
3. The user needs to update the amount for company contribution items such as Health Savings Account (HSA) or 401(k) Company match.

What are the Steps to do before Adjusting the Payroll Liabilities in QuickBooks?

Before you adjust the payroll liabilities in QuickBooks, you need to find the payroll discrepancies to correct. To look for problems affecting the liabilities in Payroll, you need to run a Payroll Checkup by following the given steps.

1. Open QuickBooks and go to the Employees menu.
2. Click on My Payroll Service and select Run Payroll Checkup.
3. Follow all the on-screen instructions by clicking on Continue.
4. The tool will offer some suggestions after:
   1. Reviewing the current setup through Payroll data scans to look for any missing info and discrepancies.
   1. Verify the employee records, payroll item setup, and wage and tax amounts to identify flat-rate tax problems.

As a supplemental to the above rundown, the user can also run the Payroll Summary Report by following the listed steps.

1. Go to the Reports menu and click on Employees and Payroll.
2. Choose Payroll Summary and set the date range correctly.

How to Zero out Liabilities in QuickBooks Desktop?

Below are mentioned the steps to adjust payroll liabilities in QuickBooks.

1. Open QuickBooks and head over to the Employees menu.
2. Select Payroll Taxes and Liabilities and choose Adjust Payroll Liabilities.

Note- To complete the fields correctly, follow the below-mentioned tips.

1. Under the Effective Date, fill the same date as mentioned on the affected quarter’s last paycheck, if it is the current quarter, mention today’s date. The set date will be used to calculate amounts on the 940 and 941 forms, also the Payroll Liability Balances Report.
   1. Click on Employee Adjustment if the adjustable item is company-paid. This will affect the YTD info given on the employee’s W-2 form.
   1. Click on Company Adjustment if you want to remove the balance altogether from the PLB report.
2. Choose the Employee and fill in the required information on the Taxes and Liabilities fields while taking notice of the below-listed instructions.
   1. Choose the Item Name you need to edit and mention the Amount of the adjustment using a positive number or a negative number to increase or decrease the amount, respectively.
   1. Enter the Wage Base, although it is rarely needed even if the user overrides a paycheck’s tax amount.
   1. If you are not entering the wage base, there is no need to use Income Subject to Tax.
   1. Under the Memo field, type a short note explaining the adjustment for future reference.
3. Click on Accounts Affected and select OK.

Note- If you want the balances for the liability and expense accounts to be left unaffected, click on Do not affect accounts. However, the adjustment will still affect the year-to-date amounts on the payroll reports. Otherwise, choose Affect liability and expense accounts to update transactions in the liability and expense accounts.

• Repeat the above steps for other employees too if required.
• Click on OK and run the Payroll Summary Report again to verify the adjustments.

FAQs

How to Adjust Payroll Liabilities for Taxes already Paid?

The user has to enter the prior payments as such by following the given steps.

1. Open QuickBooks and go to the Help menu.
2. Click on About QuickBooks and press CTRL + ALT + Y or CTRL + SHIFT + Y to pop-up the Setup YTD Amounts window.
3. Keep clicking Next until you reach the Enter Prior Payments section.
4. To enter all the previous payroll tax and non-tax payroll liability payments that you have already cleared, click on Create Payment and enter the correct dates on Payment Date and For Period Ending calenders.
5. Under the Taxes and Liabilities field, click on the previously paid payroll tax item and mention its amount.
6. Click on the Accounts Affected… Option to choose how the payment shall affect your Chart of Accounts. If you don’t want the prior payment to show up in the bank register, select the Do not affect accounts option. Otherwise, click the other options.
7. Select Next Payment after your first payment is done and repeat the steps for all the previously paid tax payments.

How to Disable the Do not affect accounts Settings for an Adjustment in Payroll Liabilities?

If you want the Payroll liabilities adjustments to show up in the bank register, follow the steps mentioned below.

1. Open QuickBooks and visit the Employees menu.
2. Click on Payroll Taxes and Liabilities and select Adjust Payroll Liabilities.
3. Choose the Previous Adjustment option until you find the adjustment you want to show up on the bank register.
4. Click on Accounts Affected and select the Affect liability and expense accounts option and click on OK.
5. Keep clicking on OK to save the changes.

How to Adjust Payroll Liabilities if the Payroll item is Posted to the Wrong account in the Chart of Accounts?

1. Go to QuickBooks and open the Reports menu.
2. Click on the Employees and Payroll and select Payroll Item Listing.
3. Verify the Expense and Liability Account columns to look for the incorrect account and double-click on it to open or edit it.
4. Click on Next and make the necessary changes.
5. Keep clicking on Next until you reach Finish, and then click on it.

How to Correct a Payroll Liability Check?

If you have paid the liability already, you need to correct the liability check to avoid any discrepancies in the Payroll reports by following the mentioned steps.

1. Open QuickBooks and visit the Banking menu.
2. Click on Use Register and choose the register you use for payroll.
3. Click on OK and right-click on the Liability Check.
4. Choose the Edit Liability Check option and click on Save & Close.
5. If prompted, select Yes.

How to record a Payroll liability refund check?

In order to enter a payroll liability refund check, you need to follow the given instructions step-by-step.

1. Go to QuickBooks and open the Employees menu.
2. Click on Employees & Payroll and choose Payroll Liability Balances. Create a manual bank deposit and send it to Payroll Expense if there are no credits.
3. Hover back to the Employees menu and click on Payroll Taxes and Liabilities.
4. Choose Deposit Refund Liabilities and choose the vendor with the refund check.
5. Mention the deposit date under the Refund Date field.
6. Enter the affected pay period’s first day in the For Period Beginning and select whether you want the deposit to affect the bank register or not.
7. Under the Taxes and Liabilities, choose the payroll item/s inflicted by the refund and enter the positive amount under the Amount field.
8. At last, click on OK.

You may also read: How to Fix QuickBooks Error UEXP

At the very end of our blog on the process to adjust payroll liabilities in QuickBooks, we hope that the information provided above is easy to understand and shows relevance to the user’s query. However, we would also like to offer a last resort to our readers if the above steps do not help you or are too technical to follow. Call on the QuickBooks SUpport Toll-free Number 1-(855)-856-0042 and get immediate expert assistance on the line anytime.

Erica watson

Erica Watson is writing about accounting and bookkeeping for over 7+ years, making even the difficult technical topics easy to understand. She is skilled at creating content about popular accounting and tax softwares such as QuickBooks, Sage, Xero, Quicken, etc. Erica’s knowledge of such softwares allows her to create articles and guides that are both informative and easy to follow. Her writing builds trust with readers, thanks to her ability to explain things clearly while showing a real understanding of the industry.