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KatRan7
November 18, 2024
Question

Accounting

  • November 18, 2024
  • 1 reply
  • 0 views

The payroll check info was entered correctly in QB, but then the check was written for the gross amount. It has been deposited by the employee and cleared my bank. How do I fix this?

1 reply

S
ShangY
November 18, 2024

I understand that the check for the gross amount has already been deposited by your employee and cleared your bank, and I know how concerning this can be, @KatRan7. Rest assured, I'm here to help you resolve this smoothly. I’ll outline a couple of options to help you settle this and ensure everything is in order.

 

Here are your options:

 

  • If you'd like the funds returned, have the employee pay back the extra amount they received. There's no need for any changes on your end.
  • If the employee is unwilling to return the extra amount, consider setting up an agreement with them to deduct it from their upcoming paycheck. This will lead to higher deductions, as QuickBooks will adjust the total year-to-date salary for the employee accordingly.

 

To correct overpayments in employee wages, you'll need to create a payroll item for deductions and attach it to the next paycheck.

 

Here’s how to do it:

 

  1. Go to Lists, then select Payroll Item List.
  2. Click the Payroll Item button and choose New.
  3. Select Custom Setup, then click Next.
  4. Choose Deduction, then hit Next.
  5. Enter a clearly identifiable name for the payroll item, then proceed to click Next.
  6. In the Liability account field, enter the same expense account used for the original compensation item related to overpayment Once done, select Next.
  7. Choose a tax-tracking type of Compensation. Click Next twice. Please know that selecting Compensation is neccessary to adjust the Year-to-date taxes withheld because of the overpayment.
  8. Lastly, Select Calculate this item based on Quantity if the employee was paid hourly, or select Neither if the employee was paid with a salary item. Select Next then Finish.

 

You can now add a new deduction payroll item and specify the amount to withhold from the paycheck of the overpaid employee.

 

In addition to that, keep in mind that when adding the deduction item, it must be linked to a paycheck with earnings that match or exceed the amount being deducted. Otherwise, QuickBooks won’t allow you to create a paycheck that results in negative net pay.

 

If the employee was paid hourly, just enter their hourly rate in the Rate field and the number of hours they were overpaid in the Quantity field. For salaried employees, simply enter the total amount of their overpayment without filling in the Quantity field.

 

If you have any questions or need more clarification on the options I’ve shared, or if you want to discuss anything about processing payroll checks in QuickBooks Desktop Payroll, feel free to add them in the comments below. I’m here to help and want to make this as hassle-free as possible for you. Your peace of mind matters to me, so just let me know if there's anything else you need.

K
KatRan7Author
November 18, 2024

Settling this with the employee is not a problem. How do I show this accurately in QB? In other words, my check register shows the net amount which was automatically added from Payroll, and therefore the check (written with gross amount) will not reconcile. QB will not let me change the amount.

C
CarlSJ
November 18, 2024

I'd be glad to lend a hand in correcting the paycheck amount that is currently shown as a gross amount in QuickBooks, @KatRan7. This adjustment will help prevent reconciliation issues and ensure the accuracy of your financial data.

 

This problem is due to inconsistencies between the paycheck amount entered in QB and the corresponding amount on your downloaded bank statement. Since QB will follow what is written on the bank statement for easier reconciliation, we need to gross up the paycheck so you can match them.

 

Before we get started, please know that the gross up process will only be available in QuickBooks Desktop Payroll Enhanced and Assisted.

 

To begin with, let's edit the paycheck by creating a gross up so the amounts will be matched for reconciliation:

 

  1. Open your QBDT company file.
  2. Go to the Employees tab and select Pay Employee.
  3. Choose either Scheduled or Unscheduled Payroll.
  4. Choose your employee. You'll be prompted to Find Existing Paychecks or click Continue.
  5. If you click the Continue button, select Open Paycheck Detail.
  6. Enter an earnings item like salary or bonus with 0.00 amount.
  7. Remove all non-earnings payroll items from the check.
  8. Select Enter net/Calculate gross. Then, enter the net pay amount.



  9. Select Save & Close. Then, run payroll as normal.

 

This process may result in overpaying the employee. However, we can deduct the overpayment from their next paycheck. For detailed steps on creating deductions, please refer to my colleague's instructions above.

 

Moreover, we recommend generating payroll reports to get a clear picture of your business's financial health. This will allow you to review your paycheck information and other important payroll-related details.

 

We'd love to hear from you! If you have any questions about payroll checks, please don't hesitate to reply below. We're here to assist you and provide the information you need to continue your accounting tasks smoothly.

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