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Deadwood Al
September 2, 2024
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Changing Payroll List Item coding assignments impact

  • September 2, 2024
  • 2 replies
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Enhanced Payroll included in QBES Gold:

I am relatively new to QB Payroll, and I don't know how far back changes would occur if I change some coding on Payroll Item List entries.

 

The prior setup of Payroll utilized one single liability GL account to track all employment tax liabilities. I would like to update the Payroll Item List to segregate federal tax liabilities (and expenses) and state liabilities. If I add additional payroll items with updated coding, what will happen with employee records for the previous payrolls of the current year, especially those in the current quarter where the 941 and state reports / payments haven't yet occurred?

 

 * EE and ER Social Security liabilities

 * FUTA liabilities on new employees

 * State SUTA liabilities (Re-employment Assistance, Investment tax, Administrative Fee)

 * Federal Income Tax withheld

 

Will those items from prior payrolls all be reclassed into the new GL codes? When I generate the 3rd and 4th Qtr reports and pay the liabilities, will the correct GL accounts be impacted for all the different items?

 

There were also instances where two accounts were created to track the same things ... example: PTO Salary and Salary PTO and Hourly PTO and PTO Hourly. Some employees have one payroll compensation item used and other employees have the other one. That one I'll leave as is until the end of the year prior to starting the new payroll 2025 and then make sure everyone has the same one and inactivate the others.

 

I have been unable to locate any documentation of the system to tell me what the impact of changes would be, how far back they would go, etc. The current company file goes back to 2002 so there is a lot of prior data out there. We'd really like to be able to reduce the size of the company file OR start a new company file with settings the way that they should have been from day 1.

Best answer by BigRedConsulting

RE: If I add additional payroll items with updated coding, what will happen with employee records for the previous payrolls of the current year, especially those in the current quarter where the 941 and state reports / payments haven't yet occurred?

 

You can't add new tax items for defined Federal and State taxes where the item is already set up. There can be only one item for each of these taxes.

 

However you can change the accounts being used for the existing tax items. When you do, you can choose if you want to change the account used on existing transactions, and if you do, how far back you want the change to go.

 

As you save the payroll item with a new account you'll get a message like this. There are several versions of the message, depending on the account(s) that are changed:

 

 

RE: I have been unable to locate any documentation of the system to tell me what the impact of changes would be, how far back they would go, etc. 

 

Based on the options above, you can make accounting changes to payroll items that have no effect or a limited effect on historic transactions, or that impacts them all.

2 replies

R
RogelioL
September 2, 2024

Updating the Payroll item list in QuickBooks Desktop can significantly impact your records, especially the historical data, @Deadwood Al.

 

Firstly, if the item already exists, we cannot create new tax items for defined Federal and State Taxes, as there can only be one item for each tax.

 

However, we can modify the accounts used for the existing tax items. When making changes, we can select whether to update the account used on existing transactions and how far back you want the change to apply.

 

In addition, you can make accounting adjustments to payroll items that will either have minimal or no effect or will impact all past transactions. 

Furthermore, please refer to this article to learn how to change the payroll items expense or liability account: Change an expense or liability account associated with a payroll item in QuickBooks Desktop Payroll.

 

Moving forward, for duplicate accounts like PTO Salary and Salary PTO, it’s best to wait until the end of the year to standardize and inactivate the redundant items. Doing this can help in maintaining consistency, which can help avoid confusion during the current year.

 

Also, since your company file is large and goes back to 2002, you might want to consider condensing the file or starting a new company file with the correct settings. QuickBooks Desktop offers a feature to Condense Data, which can help reduce the file size by summarizing older transactions.

 

Moreover, you can check out the articles below that can help you with your payroll:

 

Let me know if you wish to learn how to make these changes in QuickBooks Desktop. Keep safe.

D
Deadwood AlAuthor
September 2, 2024

" ...you might want to consider condensing the file or starting a new company file with the correct settings."

 

We were recently told that QB does not allow 2 company files with the same FEIN, so we shouldn't try to create a new company. I thought that would be a simpler solution, but had the following issue/questions and never received detailed feedback from QB.

 

1 - To start a new company file, the easiest way would be to begin Jan 1 2025 after the last payroll had been ran in the current company file. However, the 4th Q 941. the 940, and the state reports would not be done at that time, and wouldn't happen until after the 2025 payroll had occurred. How would we avoid having two companies with the same FEIN in that instance? We would not be generating new (2025) payroll data in the old file, but we would need to use the old file for the employment tax reports.

 

2. We understand that we could use software (IIF or something like that) to transfer virtually all of the "lists" data to the new company, although we would need to update all of them with the new GL #'s. (Yes, we are going to correct years of bad structure in the GL!) But it so far is unclear how we would transfer the open AR and AP balances to the new system ... manual entry of invoices offset to ??? 

 

Are there documents that describe the process for loading the GL with prior company data? Surely this must have been addressed when QB gets new customers who have been on a different system, or when they want to start over with a new QB company file ....???

 

3. Could we load the closing data from the old (current) system into the new company file as we are using the new company file? 

 

We have been told that starting a new company file is more work than modifying our existing data ... merging accounts, eliminating existing account & sub-account structures, correcting all the 1099 flags, etc. To me this seemed like more work than starting over with a new company file, but since we haven't done either, we don't really know.

 

Is there a way to have two companies with the same FEIN? I understand not having them both open at the same time, but what if they were not open at the same time? Is it possible to run the year end employment tax reports out of the old system after the new year payroll has started in the new system?

 

Who do we contact via telephone to discuss these issues with a very experienced QB professional to get clear and straight answers?

D
DebSheenD
September 2, 2024

I can share information about managing payroll and tax reporting while transitioning between QuickBooks company files and ensuring compliance with the IRS and state regulations, @Deadwood Al.

 

First, you can keep the old file active only for 4th Quarter reports and close it after filing. Do not process new payroll or transactions and ensure only one file is active. Use the old file for tax reports until the end of the year, then close it.


QuickBooks doesn’t support transferring open AR and AP balances via IIF files. Manually enter these balances by creating invoices for AR and bills for AP, using a "Transfer" or "Opening Balances" account to keep records organized. For lists like customers and vendors, we can use IIF files to import data into the new company file, updating GL accounts as needed. You can check this article for more information about importing IIF files: Export, import, and edit IIF files.

 

For your third question, Yes, you can transfer list data from your old system to the new QuickBooks file, but you’ll need to manually enter open AR and AP balances. Only one file can be opened at a time. Consider whether fixing existing data or starting fresh is easier for you.
 

To avoid sync issues we avoid using one FEIN for two company files. Transitioning to a new QuickBooks file is effective for compliance. Keep the old file open only for year-end tax reporting, then close it after filing. This lets you use the new file for future transactions, streamlining your financial management.


For further assistance, please reach out to our Support Team. They can offer additional information and address any concerns you may have.

Meanwhile, you can visit these articles to manage payroll items, and assign, and update pay schedules. 

 


You can always connect with me by clicking the reply button below. I'd be here to support you if you need further assistance managing your payroll item. Have a great day ahead!

BigRedConsulting
BigRedConsultingAnswer
September 2, 2024

RE: If I add additional payroll items with updated coding, what will happen with employee records for the previous payrolls of the current year, especially those in the current quarter where the 941 and state reports / payments haven't yet occurred?

 

You can't add new tax items for defined Federal and State taxes where the item is already set up. There can be only one item for each of these taxes.

 

However you can change the accounts being used for the existing tax items. When you do, you can choose if you want to change the account used on existing transactions, and if you do, how far back you want the change to go.

 

As you save the payroll item with a new account you'll get a message like this. There are several versions of the message, depending on the account(s) that are changed:

 

 

RE: I have been unable to locate any documentation of the system to tell me what the impact of changes would be, how far back they would go, etc. 

 

Based on the options above, you can make accounting changes to payroll items that have no effect or a limited effect on historic transactions, or that impacts them all.

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