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SusanCDI98
December 13, 2022
Question

2% Shareholder Medical Liability Account question

  • December 13, 2022
  • 1 reply
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We have the 2% shareholder medical payments setup. They show on W2s correctly and appear as a Payroll Liability after processing each payroll. However, we pay this 2% shareholder insurance premium together with all other employees premiums in advance on the 1st of each month as a lump sum premium payment. Therefore, there is not an actual 'liability' to pay. How do I clear this liability account for 2% shareholders after each weekly payroll? Again, the expense for the insurance premium is already accounted for when we pay the Insurance Premium on the 1st of each month. We simply need the 2% shareholder portion to show on their W2, not actually post to a liability account. Any help on this is appreciated.

1 reply

Rainflurry
Rainflurry
December 13, 2022

@SusanCDI98 

 

If QB is creating a liability entry (a credit) when you run payroll, it must also be creating a debit entry.  That debit entry is important to know in order to resolve this.  Go to Reports > Journal (under 'For my accountant') and find the entries that are posted to that payroll liability account.  What is the offsetting debit to the payroll liability credit?  Is it an expense?  If so, and you are recording that same amount as an expense when you write the check for the health insurance premiums, you are double counting the expense which, in turn, leaves a balance in the liability account as you described. 

 

It is normal for this to post to a liability account when you run payroll.  Then, when you write the check for the premiums, you should assign the >2% shareholder premium portion of the payment to the liability account, not to an expense account.  That will reduce the liability.  

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