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DaveQuinn
July 3, 2023
Question

3rd Party Payroll Journal Entry

  • July 3, 2023
  • 2 replies
  • 0 views

The previous bookkeeper waited until she confirmed the Payroll processor's draft of bank account then she would write a check in QB Desktop.   She added gross wage expenses to the check details then negative liabilities for payroll taxes and deductions.  How do I clear these entries?

2 replies

Q
QueenC
July 3, 2023

Hello there

 

When creating paychecks outside of QuickBooks, we should also need to keep those on track inside QuickBooks to keep your payroll and account data all in one place.

 

While the article that contains steps on how to enter payroll paychecks in QuickBooks Desktop (QBDT) isn't available, I'll be providing you this link from QuickBooks Online (QBO) as both have the same concept: Manually enter payroll paychecks. 

 

The process involves creating a manual tracking account first to track your payroll liabilities and expenses. If you haven't created one, please follow these steps:

 

  1. Go to the Lists menu then select Chart of Accounts.
  2. Click New in the Account ▼dropdown.
  3. Choose an account type then select Continue.
  4. Fill in the necessary details then click on Save & Close.

 

After which, you may now follow the process from the article above, and here's how you can create journal entries in QBDT:  Create a journal entry in QuickBooks Desktop.

 

With regard to clearing those entries that you've already entered, I'd recommend consulting with your accountant so he can provide hands-on support from technical and accounting perspectives and decide whether to delete those entries and follow the provided steps above or stick to your process.

 

 Additionally, I've included this article that'll help you learn how to import journal entries from your accountant in QuickBooks Desktop: Import journal entries from your accountant.

 

Let me know if you need further assistance with managing your payroll paychecks in QuickBooks Desktop. It would be my pleasure to be of assistance. 

Rainflurry
Rainflurry
July 3, 2023

@DaveQuinn 

 

The negative liabilities on the check (credit balances on your balance sheet) should have been cleared when the liabilities were paid to the IRS, state, etc.  How were the liability payments recorded?

D
DaveQuinnAuthor
July 5, 2023

Thank you for responding RainFlurry!  The  payroll taxes and deductions for benefits  were always recorded as a negative liability and never cleared. It is a mess!

Rainflurry
Rainflurry
July 5, 2023

@DaveQuinn 

 

When you say negative liability, you just mean that it was recorded as a negative amount on the check, correct?  They should show as positive liability balances on your balance sheet. 

 

You are going to need to hunt down the payments made to the IRS, state, etc. for the payroll taxes that should have reduced/eliminated those balances.  When those liabilities were recorded, they were recorded with an offsetting expense (company portion of FICA, SUI, etc.) and when the payments were made, they should have had those liability accounts assigned to the payments, thereby reducing the liability balances.  Since the payments obviously weren't recorded properly, how were they recorded? 

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