Skip to main content
G
GlynnPH
February 22, 2021
Question

How to set up Employer paid benefit contributions without creating a liability

  • February 22, 2021
  • 1 reply
  • 0 views

I have set up a company contribution for the employer paid benefit plan but have ran in to some issues when it automatically stuck this into a payroll liability. The Benefit plan is paid and added to a expense account when we receive the insurance bill. Now by using the employer contribution its created an additional liability.

 

Is there any way to fix this so that the contribution doesn't affect the accounts or do I have to adjust the insurance bill to pull from the liability account?

 

Thank you

1 reply

Rebecca R
Rebecca R
February 22, 2021

Hi there GlynnPH,

 

Choosing the correct accounts is an important part of the bookkeeping process, especially when it comes to Payroll. It's crucial that you're able to select the appropriate accounts to have your Employee Deductions and Employer Contributions go to and come from. Let me give you a hand with this.

 

By navigating to the Gear icon, then choosing Payroll Settings, you can select Accounting. This'll bring you to a page that'll allow you to map your Payroll accounts. Once you've added your new Employer Contribution, you'll be able to scroll down until you find it on the list and use the blue arrow to access a dropdown menu of accounts. Choose the appropriate Expense account and hit OK. 

 

This should remedy the issue you're running into. If you have more questions about how to map your Payroll accounts, consulting with your accountant is the best move. Invite them to QuickBooks by navigating to the My Accountant tab and using the invite field. If you don't hae an accountant just yet, you can use the Find a pro to help button to navigate through our database of QuickBooks-certified ProAdvisors to find one in your area to give you a hand.

 

I know you'll get this sorted in no time. Have a great day!

G
GlynnPHAuthor
February 26, 2021

Thanks for the reply.

 

This solution isn't solving the problem of a the double entry, its just changing the account where the double entry is going.

 

Only a portion of the monthly insurance bill is a taxable benefit, so when I receive the insurance bill, I enter this as an debit to Employee Benefits Expense account and credit our chequing account for the payment.

 

Say $300 for the monthly bill ($150 in taxable benefits)

 

But in order to calculate and report the appropriate income for the employee's, I wanted to add the taxable potion onto their paycheque using the company contribution, but this is creating an additional entry in as a expense and liability. (debit expense, credit liability)

 

So now for a $300 bill I have the following entries:

debit $450 Employee Benefits expense

credit $300 for payment to insurance company

credit $150 liability which we don't actually owe to the insurance company

 

Is there something I need to do when entering the insurance bill to reconcile this liability? Or am I missing something?

 

Thanks!

 

    J
    JamesM4
    February 27, 2021

    Hi GlynnPH. Glad to hear from you again. It's vital you're able to record your transactions the right way in order to prevent discrepancies in your books. At this point, I highly suggest contacting an accounting professional for expert advice on this. I'll be happy to answer any other questions in the comments below. Feel free to reach out. 

    Terms & ConditionsAccessibility statement