Skip to main content
Z
zipswich
January 27, 2019
Solved

What is the correct way to record EFTPS payroll tax payment?

  • January 27, 2019
  • 1 reply
  • 0 views

I create paychecks within QB,and the payroll taxes (e.g. social security, Medicare, unemployment...) are reflected on profit and loss reports correctly as expenses.

I make payroll tax payments through EFTPS, and record them as taxes.   They also show up on P&L reports as expenses.   This means payroll taxes are counted twice on P&L reports. 

Could anyone offer a tip on how to handle this?

Best answer by qbteachmt

Thank you all.

 

I believe I got all your points and have created one liability check successfully.  Everything looks right to me.

 

The only missing part that I did not explain well is the matching part.

Let me use one example to explain this.  I created paychecks and paid taxex online back in 2016.  

The online payment transaction was downloaded back in 2016.   Today in January 2019, I created a liability check, but dated it October 10, 2016, a few days before the downloaded transaction date.   

My question is: how can I match this newly created liability check with the transaction downloaded in 2016?

In the future, I will create the liability check first before downloading corresponding transactions.  I want to fix the existing problems first.


"Today in January 2019, I created a liability check, but dated it October 10, 2016"

 

Let's review: you are Catching up the bookkeeping. So, you date it the same as if you just did it = Your Date = the date you Paid it Online. Dates matter and need to match your reality.

 

"a few days before the downloaded transaction date."

 

Meaningless. What you have is proof that it actually and finally got to the bank and was processed. This date is Not Yours and you don't use it for your own financial records. It's an activity that you were hoping to see = verified that the EFTPS got processed. Now you will confirm that the Amount you entered into EFTPS is the same amount QB told you that you owed, because you Already have the entry in QB.

 

If you pay me by check in Nov 2018 and I didn't cash it until Today, you Spent that in 2018 and that is your 20148 business tax reporting expense. Banking Date is not Your perspective.

 

"how can I match this newly created liability check with the transaction downloaded in 2016?"

 

Is your Banking in QB fully reconciled? If not, then you have the EFTPS check, already. The "download" isn't even in the Banking Center, is it? If your banking is reconciled, you will Delete the wrong entry, because you just made it using the Right Function. It is no big deal to re-reconcile. You do all your housekeeping. Let's pretend that all of this is up to Dec 2017 and nothing beyond is reconciled, because you are Catching up all bookkeeping and taxes were never reported and are later. Once you fixed everything, you use the Dec 2017 bank statement's ending balance and date, you ignore the Beginning balance, since you know your housekeeping changed, deleted, and otherwise affected previously reconciled transactions. You Rereconcile to that ending balance for that date, and you see all the housekeeping entries are showing that you know previously were cleared, so you clear them now. You still get to a different of 0 and now you are On Track with the Replacement Transactions.

 

You can decide to Never Use banking downloads. They are a Helper function, to prereconciliation, as a way verify entries you made are on track = that is the Match function. And if your QB system, for instance, has entries differently, then there might not be a Match, but as long as the Amounts are right, you can mark the downloads selectively as Ignore = delete the download, I am not going to use it. Example: You decided to use Write Check to enter the Refunds to an employee but you wanted to list actual Vendor or Payee, and in reality, you wrote that employee one check. That means Banking Download won't be an exact match to Multiple Transactions but the Total is right. There are ways to use QB to prevent that, or you know the Values are right and you like your method = Ignore the one Check entry from Banking download. You still reconcile just fine. Or, I have a client that uses Receive Payment and wants each to post individually to the Checking account, even though she batches one large deposit. She won't use the method of Undeposited Funds to batch it, and she won't use the function the Add More Details, to match the batched deposit to individual open invoices. I won't fight her on this, because the Bank reconciles fine. Her method is crude, but it is Fine.

 

"In the future, I will create the liability check first before downloading corresponding transactions.  I want to fix the existing problems first."

 

You don't use Download Banking historically. You manage your Banking. You make sure things are right, and Reconcile to each statement, working your way forward. You don't need Banking download at all. It's a Helper tool, not a requirement. Don't use a tool that makes More Work for you, for the historic housekeeping you need to do, now.

1 reply

qbteachmt
qbteachmt
January 27, 2019

This is what you did Wrong: "and record them as taxes.   They also show up on P&L reports as expenses.   This means payroll taxes are counted twice on P&L reports."

 

You do your Bookkeeping of the Payment by using Pay Liabilities, and this is a Paperless Check and you put EFTPS because you need to indicate you Paid Online.

 

Never use Write Check or Bills for payroll in QB. You need to see that the Special Liability Check has a Liabilities Tab on it = it lists each Payroll Item you paid as taxes. Please see my attachment.

    Z
    zipswichAuthor
    January 27, 2019

    Thanks a lot for the explanation.

     

    I think that I was moving in the direction you pointed out and this is why I also asked another question following this one, but probably I am missing the last piece to put to puzzle (for me) together.  Let me explain the whole process for one tax payment:

    1. Create paychecks, hence produce tax liabilities.
    2. Pay tax through EFTPS or other means online.
    3. Download transactions from TD Bank including the the online EFTPS payment accepted as tax.
    4. Create a liability check and try to match it with the downloaded  EFTPS payment.

    As my understanding of your explanation, I did step 3 wrong.  What should I to correct it? 

     

    qbteachmt
    qbteachmt
    January 28, 2019

    Now you have this in Two Places. Let me restate: Do Not Use Write Check and you cannot accept this from Banking Downloads. I showed the image, that it is a Special Transaction with the listing of the Payroll Items.

     

    The Payroll Items control the flow of the data in and out of your Accounts. And a critical difference is that "PERIOD" field on Liability checks = That is how your Payroll functions and payroll reporting keep track if you paid on time and paid the right amount and the Forms get filled in by the program from that info. Example:

    Paychecks in Dec 2018, FICA is due and payable for you by Jan 15, and that means the PERIOD in the FICA pay liability check has to be Dec 1-31, for the system to understand that the Dec FICA was paid in Jan. That way, PERIOD does not overlap a month end, quarter end or year end, even though the Payment was made in Jan 2019.

     

    These are not Banking. These are Payroll Activities and Functions.

     

    Yes, step 4 = do your own Bookkeeping of the Liability Check, but this is not to be printed or sent; it is a Bookkeeping entry that this Pay Liability happened. Put EFTPS for the Check # = Paperless.

     

    Yes, Step 3 is wrong if you did not already Make the entry using Payroll Center to Pay Liabilities. This is not Banking. It's Payroll.

     

    Do step 4 before step 3. You cannot Match to something that does not exist.

      Terms & ConditionsAccessibility statement