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Affecting accounts when adjusting payroll liabilities

QB2003

The Adjust (Payroll) Liabilities dialog window gives you the option of affecting accounts. If a certain Payroll Item is not a company expense, but is simply withheld from paychecks at employee expense and passed on to the service provider (insurer, etc.), no expense account is involved, only a liability account.

What is the best way to handle adjustments to such Items? If you attempt to affect accounts in the adjustment process, the dialog insists on an expense account, which doesn't exist in this case. What I've been doing is not affecting accounts, and then making a separate journal entry to ensure that the liability account tracks the Payroll Item. I'm not sure what account to enter against the liability account in the journal entry. I've been using an equity account for the purpose.

Thanks for any insight.

Reply to
jw
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You did not indicate in which direction the adjustment to the liability account is going (up or down). If up then will the employees be making up the difference. If down will the employees get a refund. Don't leave us in the dark.

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Reply to
Allan Martin

Not enough information. How is the payment being made to the supplier? What is the cross account on that payment to the supplier? How it the payroll item set up?

Is this something like an employee sends something FedEx on the company tab and you are taking a deduction from the paycheck? To do this one right you should set up an advance to employee account in the balance sheet and put the charge on the FedEx bill to that account. When you get the money back from the paycheck put it to pay down that advance.

If it is health insurance the same thing applies. You can handle it through a balance sheet account for employee's part of company prepaid health insurance. To do this you will need to split that health insurance bill into company paid parts and employee paid parts. Sometimes this is a bit too much to do when the bill comes in or you don't want the data entry person to know that someone has a different deal. The other way is to enter the bill as all expense and the reimbursement from the paycheck as a contra entry to the same expense account. It all comes out in a wash.

You also might want to take a careful look at the payroll item list. It can help a lot as you can send these reimbursements to any g/l account you need. Just make a new item for each kind of reimbursement.

Reply to
Golden California Girls

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