Hi, I use Quickbooks Online Payroll. We are seeing FUTA credit reduction as a liability on our 2025 balance sheet. How do we close out that liability? We already paid it.

Thank you for bringing this to our attention, Julianne. First, let me extend a warm welcome to you as a new member of our Community forum. It's my pleasure to assist you in addressing the liability shown on your balance sheet. I'm here to guide through this process smoothly.

I understand that the FUTA credit reduction is still reflecting as a liability on your balance sheet despite being paid. To rectify this, I recommend creating a Journal Entry to accurately close it.

Here's how:

1. Start by logging into your QuickBooks account.
2. Click + New and select Journal entry.
   
   
    
3. Enter the Date: Specify the date for the journal entry, ideally the one when the transaction occurred.
4. In the Account column, choose the account related to your liability (example: FUTA credit reduction).
5. Specify the Debit or Credit amount depending on your need. Remember that credits and debits must be equal to balance your accounts.
6. Describe the transaction in the Memo field for future reference.
7. After ensuring all fields are correctly filled and balanced, click Save or Save & Close.
   
   

Moreover, I highly advise you to consult with an accountant to ensure that entries are correctly recorded and that your financial statements accurately reflect your business's activities.

In addition to this, feel free to explore this resource for future reference: Understand how your payroll taxes are calculated. The details of how payroll taxes are calculated in QuickBooks clarify why certain liabilities, like FUTA, appear on financial statements.

Since you're using QBO payroll, I wanted to let you know about a powerful tool we offer that can greatly enhance your payroll management. It helps handle tasks like closing out your liabilities and addressing concerns similar to the ones you've raised. If you are interested in discovering more about how this can benefit you, I encourage you to Explore QuickBooks Payroll.

If you have any additional questions or require clarifications regarding your balance sheet or any other aspect of QuickBooks, feel free to share them with us. Since you're the first to raise this particular concern, you can start a new thread by clicking the Reply button. This will allow my team and I to easily track your inquiries and offer the support you need. We're here to ensure you receive the assistance you deserve. Until then, have a wonderful day!