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How QuickBooks Reports Payroll Expenses and Liabilities

Problem Description
The dates on which payroll liabilities and expenses appear on reports such as the Payroll liability balance report and Payroll summary report, as well as financials such as the Profit and loss and Balance sheet may sometimes appear confusing. This is to do with the particular way that these accounts are handled in QuickBooks payroll.
Solution Description
Payroll liabilities are reported differently in QuickBooks depending on whether they are Company Contributions, or Employee paid liabilities. This is due to fact that a Company contribution is an expense to the company, whereas an Employee paid liability is an expense to the employee and not the company.

The payroll liability account is always affected on the paycheck date, regardless of what type of payroll item is used.

To see how accounts are affected by a particular paycheck, press Ctrl + Y  while on the paycheck screen to view the Transaction journal report.
To illustrate, here is an image of a paycheck which includes only two liabilities: one a Company contribution for $101, and the other an Employee paid liability (Federal Withholding) of $99. The total Earnings are $1000.
Now we will look at how these liabilities appear on the Transaction journal report:
Company contribution expenses and liabilities are both recorded on the paycheck date. As seen on the Transaction journal report,  the balance of the payroll item's liability account (the one you entered when setting up or editing the item) is credited, while the balance of the expense account is debited. When the liability is paid, the balance of the liability account is reduced (debited) by the amount paid.
An Employee paid liability also credits the liability account on the paycheck date. However, you won't see a separate expense for each liability in the transaction journal report, or even an amount for all the liabilities combined. Instead the liabilities are included as part of the gross earnings, the total amount of any earnings items. As with the Company contribution, when the liability is paid, the liability account balance is reduced (debited) by same amount.

Because of the way payroll expense amounts are posted it may be difficult at first to determine how the total payroll expense amount on the Profit and Loss is calculated. The amount does not normally match either gross or net payroll amounts for the same period. Instead this figure is usually the combined amount of all earnings items, plus company contribution items. In the example above, the paycheck would contribute an amount of $1101 ($1000 earnings plus $101 company contribution) to the various payroll expense accounts on the profit and loss.


KB ID# INF13063
10/27/2016 7:48:40 AM
QYPPRDQBKSWS09 9138 Pro 2017 e74fb6