
The liabilities are the amount that is not paid by an employer to the employees. Payroll liabilities should be zeroed out in QuickBooks Desktop and Online if the payroll liability report indicates that your accounts are incorrect. The sums that an employer owes to workers, insurance companies, governments, and other organizations are known as payroll liabilities, and they are what cause payroll processing. You can pay these expenses on a specified date. You can also edit the wrong payroll liability report. In this blog, we will describe Payroll liabilities and their types in brief and how to zero out payroll liabilities in QuickBooks Desktop and online versions.
What are the types of Payroll Liabilities QuickBooks?
There are different types of Payroll liabilities in QuickBooks Desktop and online versions. These include the following:
- Income taxes– Federal income taxes can be held by employers from the payment of their employees. Income taxes can also be charged by many states and local jurisdictions.
- Federal Insurance Contribution Act (FICA) taxes– Generally, these taxes are used for Social Security and Medicare taxes. A portion of these taxes are paid and an equal amount can hold back from the wages of their employees by the employers. An additional medicare tax can also be withheld by them.
- Compensation paid to employees– Bonus and commissions are the types of compensation that can be paid to employees by employers.
- Cost of payroll processing– In this payroll liability, a fee gets charged by the employees when they work with a payroll provider.
- Employment taxes– The employment taxes must be deposited and reported by the employers, which they stop paying money to their employees.
- Paid-time off– In this payroll liability, the employers can pay money to the employees for vacation or sick leave.
- Voluntary Deductions– The employees are withholding the amounts from their paychecks. Health insurance premiums and contributions of retirement plans are some programs that can be funded by withholding payroll liability.
How to Zero Out Payroll Liabilities in QuickBooks Online?
Adjust Payroll Liabilities in QuickBooks is an essential need for Businesses, if these adjustments make any issues. So, you can zero out payroll liabilities in QuickBooks online account. These are the following steps:
- Open the Quickbooks online account and visit the Payroll Center on this website. After that, you can pay a checkmark against a payroll liability in which you can make a particular payment by check or cash.
- Choose the View or Pay tab, which opens a liability check-up.
- After selecting the View or Pay tab, choose the expense option and visit the dropdown menu of the account on the QuickBooks Online website.
- After navigating to the drop-down menu of the account, select expense account which is selected at the time of recorded payment.
- Add the sum of negative value which is equal to the value of Payroll liability in the particular amount section.
- Choose the recalculate option for which the payroll liabilities are converted to zero amounts in the QuickBooks online account.
- After completing all the steps, click on the Save and Close button.
How to Zero Out Payroll Liabilities in QuickBooks Desktop
First, you have to download and install Quickbooks Desktop software in your system. Then follow the steps given below to zero out payroll liabilities in QuickBooks Desktop:
- The first step is to create a paycheck before zeroing out the payroll Liabilities in QuickBooks Desktop. These are as follows:
- Open your QuickBooks Desktop account and click on the Employee option at the top of the navigation in this accounting software.
- After selecting Employee, go to Payroll Center and click Pay Employees.
- Select Pay Employees and click the Start Unscheduled button in the QuickBooks Desktop.
- After selecting this option, choose an employee and click the Continue button.
- Click on the Open Paycheck Detail button to open a Paycheck Preview Page in QuickBooks Desktop. After that, fill in the required information under Earnings and Rate.
Note: After creating a paycheck, you can deduct items to zero out Payroll liabilities in QuickBooks desktop. These are the following steps:
- Click the drop-down arrow and choose Add New in the Other Payroll Items.
- After selecting Add New, choose the Deduction option and click on the Next button in QuickBooks Desktop.
- In the Enter name for deduction field, type net pay offset in the Add new Payroll item (Deduction) window. After that, click on the Next button.
- Change the liability account to the affected or correct account in the agency for the employee paid-liability window.
- Click on the Next button after changing the liability account.
- In the drop-down list of tax tracking types, choose the None option and click on the Next button.
- In the Taxes section, an individual should not select any taxes in the QuickBooks Desktop account.
- Click on the Next button.
- In Calculate based on quantity field, choose Neither option and click on the Next button.
- In the Gross vs .Net window, select the net pay option and click on the Next button.
- Click on the Finish button. An offset payroll item is created in Intuit QuickBooks Desktop.
- An employee can enter the amount in the Net Pay or Check Amount field in the rate column.
- Hit the tab key on the keyboard, which will step off from the field of other payroll items. The amount on the net field changes to zero in the Employee Summary section.
- An employee should not select the Use Direct Deposit checkbox in the Preview Pay Check window.
- Click on the Save and Close button.
Conclusion
This blog describes how to zero out payroll liabilities in QuickBooks Desktop and Online. The purpose of zeroing out the payroll liabilities is to edit the wrong payroll liability report in this accounting software. If the negative amount is displayed by the payroll liabilities is not a good thing for the employees and employers. It can only happen due to overpayment of taxes or the wrong tax rate.