Skip to main content
9
9questions
September 27, 2022
Question

Payroll Expense Accounts - double counting

  • September 27, 2022
  • 1 reply
  • 0 views

Using QBO for nonprofit. 

 

We set up a new budget this year and revised chart of accounts significantly. Earlier in the summer we had to update payroll mapping to our chart of accounts. All seems well. ...Except for payroll contributions from the employer.

 

I read elsewhere that company contributions to insurance/IRA/etc hit the Payroll Expenditure account rather than the liability account. When we pay our insurance premiums, of course these are recorded against that same expense account. Both are recording as debits, so rather than offsetting the liability account as we expected we are double our budget in our insurance expense account.

 

How do I get QBO to either record the "expense" from payroll as a credit or send it to the liability account as a payable? The account mapping doesn't allow for this since it doesn't consider (why??) the company contribution a liability but an expense.

 

Alternatively, should we be recording actual premium expenses differently so they don't double in this account?

 

Thanks for any counsel.

-PF

1 reply

KlentB
KlentB
September 28, 2022

Let me share some information about payroll expenses, PF.

 

Health insurance premiums, retirement plan contributions, and other benefit programs are funded through payroll withholding. The worker’s contributions are deducted from pay and are not employer expenses. However, the employer’s share of the costs is treated as payroll expense in QBO.

 

The premiums paid by the employer are not withheld from pay and are included as business expenses. The worker’s share of premiums is deducted from pay and is not a payroll expense. To ensure that your contributions will be accurately reported, you may need to change the mapping of the company contribution to its original setup (Payroll Expense). Here's how:

 

  1. Click the Gear icon.
  2. Choose Payroll Settings, then go to the Accounting section.
  3. Revert the changes you've made to the company contribution mapping.
  4. Select the old dates once QuickBooks ask you if you want the changes to affect your historical transactions.
  5. Click Save, then Done.

I'm also adding this article to learn how to track, edit, and remove company-paid contributions: Set up and manage company contributions.

 

Keep me posted if you need more help in dealing with your other payroll tasks. Stay safe and have a great rest of the day. 

9
9questionsAuthor
September 28, 2022

@KlentB 
Thank you for replying. I apologize for not making my post more clear. Your reply is informative, but this is the data I was trying to establish as the basis for the problem.

 

Yes, QBO considers these employee payments for benefits as payroll expenses. This is determined by the account mapping as you point out, and as I tried to make clear in my post. The problem is that these cannot be mapped differently (you can't force account mapping to accept a liability account in the "expenditure" category for Payroll Settings>Accounting>Company Contribution Expense Accounts).

 

Therefore, these company expenses hit the same budget/line item that the actual premium payment hits, therefore double counting the expense - one time attributed to each employee paycheck and the second time for the actual expenditure to the third party vendor providing the benefit (i.e. health care company or IRA broker).

 

So this issue is not removing company paid contributions but getting QBO to map these correctly. It seems that the only option may be to have my actual premiums (expenses) hit the *liability* account rather than the expenditure account, thus acting as the contra account for these payroll expenses generated at each pay period by the account mapping in the Payroll Settings. This seems counter intuitive and perhaps will create other accounting problems down the road...?

 

Is that in fact the way QBO is designed to handle/reconcile payroll expenses versus actual outgoing expenses when realized?

 

Thank you,

PF

JessT
JessT
September 28, 2022

Thank you for bringing this to our attention, PF.

 

I'd like to step in, clarify the mapping of insurance deductions in QBOP, and provide a workaround.

 

For some reason, QuickBooks Online Payroll (QBOP) is not working like the desktop version, where insurance deductions can be mapped to a liability account. I understand that this setup in QBOP can double the posting of the insurance expense when you create a paycheck and record a payment to the insurance provider. Please submit your feedback by clicking on the Gear icon and choosing Feedback.

 

You can also contact our QBO Payroll team so they can gather more details for investigation.

 

As a workaround, you can journal the amount from the expense to a liability account after payroll. Then, use the same liability account when you record the payment for the insurance provider.

 

Feel free to go back to this thread if you have any other questions in mind about payroll. Take care and have a good one.

Terms & ConditionsAccessibility statement