Question

How do Employer pension contributions get included in 'Business Expenses' under 'Income Taxes'?

Forum|Forum|3 years ago
July 12, 2022
1 reply
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Using standard payroll and QBO. Go to Taxes>Income Taxes and have list of business expenses. One of these is Wages. That includes Gross salary (fine) + Employer NI (also fine) but then for Employer pensions it has two sections - one saying Employer pension expense and the other saying Employer pension liability - and these two net off to zero. this means the actual amount i am paying is not being included (which it should be).

I just pay the contributions directly from business bank account (and i am assuming i should somehow therefore be logging this... although this is how i also pay the salary and no issue there),

How do i fix this?

Many thanks!

J

JamaicaA

Thanks for taking the time to reach out to the QuickBooks Community, @Rob160. I'll lay down solutions to help you change the account to which the pension contribution expense is allocated.

Employer Pension Expense Account is used to track your pension expense transactions. On the other hand, Employer Pension Liability Account is like a clearing account that tracks your pension liability transactions.

To transfer it into Business Expenses, you’ll need to manually change the account of the employer pension contribution. You can do this through journal entry generated when running payroll for the pensions.

You also have the option to create a journal entry to correct the Employer NI expense and liability amounts. With this, I highly recommend consulting your accountant to assist you in posting these transactions to the correct account.

Here’s how:

Here's how to create a journal entry:

Go to the +New icon and select Journal Entry.
Choose a journal date.
Fill out the fields to create your journal entry.
Tap Save and new or Save and close.

Please check this article to see a table that contains how account balances are affected by debits and credits in QuickBooks Online: How accounts are affected by debits and credits.

Regarding the Income tax, please know that its set based on the pension provider’s taxation method. To learn more about this, see this article: Workplace pensions in QuickBooks Online Standard Payroll.

Additionally, I've added these articles to learn more about workplace pension:

See this article to view your employee’s contributions and pensionable earnings: View workplace pension reports in QuickBooks Online Standard Payroll.

Feel free to reach out to me again with any questions you may have regarding payroll or handling your employees. I'll be more than happy to help. Take care.