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How QuickBooks calculates payroll liabilities

Payroll liabilities are the amounts you owe but have not yet paid the government or other agencies (such as an insurance company) for employee tax withholdings and company contributions.

When you do your payroll, QuickBooks calculates how much you owe for each tax, deduction, and company contribution payroll item and records it in the Payroll Liabilities account. With each paycheck you write, the balance of this liability account increases.

When you pay your payroll taxes or other payroll liabilities, QuickBooks decreases the balance of this liability account.

Note: It decreases them for the period that includes the date range you entered in Show Payroll Liabilities fields in the Pay Liabilities window. (The actual check date does not matter.)

Important: Always use the Pay Liabilities window to pay your payroll liabilities. Otherwise, your payments will not be reflected in the Payroll Liabilities account.

Some payroll liabilities are not company expenses but instead are amounts that you withhold from employees' pay and that you hold temporarily until you turn them over to the government. Examples of these are federal and state income tax withholding.

The amount you owe for a payroll liability is also affected by the following:

  • Liability adjustments for an effective date within the specified period

  • Employee YTD transactions dated within the specified period

  • YTD liability payments for an effective date within the specified period

See also

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