QuickBooks Payroll Bank Reconciliation

Published on 8 January 2021 at 07:23

QuickBooks Payroll Bank Reconciliation

Payroll tax returns have been prepared and filed showing no balance due (and no notices into the contrary have already been received) Payroll, (and inventory discussed elsewhere), are a couple of areas where QuickBooks® is less forgiving and clients are more inclined to make mistakes. Most frequently the errors would be the consequence of incorrect or inconsistent procedures.

The most typical error in this region is the fact that the Pay Payroll Liabilities feature had not been used; rather payroll tax payments were entered using Write Checks or Enter/Pay Bill functions.

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Common Error: Clients Write Checks (or use check register) to pay for payroll tax liabilities.


Payroll Liabilities are more than expected
Payroll Tax Expense is more than expected
Banking account balance appears correct
Warnings Reduce Errors

QuickBooks does warn users in several times when the recommended procedures are not followed. If users heed the warnings, errors tend to be avoided. However, some users will click past these warnings and still process the payroll incorrectly perhaps for a lack of understanding on how to complete otherwise.

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A client must first sign up to one of Intuit’s payroll offerings for payroll to be established. Once payroll is installed, a Payroll Setup Tool walks the client through the procedure.

QuickBooks payroll is best suited when all payroll activity is carried out from in the payroll menus. This consists of paying accrued payroll taxes to your respective taxing authorities. In the event that company has written checks or used the Enter/Pay Bills entered bills functionality to cover these liabilities, and the QuickBooks-created Payroll Liabilities account was assigned, the following warning message appears:


This message warns but will not prevent users about with the wrong type of payment (in other words., Write Checks or Enter/Pay Bills) when wanting to make payroll liability payments. Once the user clicks the Pay Payroll Liabilities button into the warning message, the consumer is directed towards the Select Date Range for Liabilities dialog. The message directs an individual to make use of the Pay Payroll Liabilities feature to create a payroll liability check.

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Find Incorrectly Paid Payroll Liabilities

When you look at the Client Date Review, the Find Incorrectly Paid Payroll Liabilities tool, generates a report of the many manual check transactions coded to a Payroll Tax vendor. The entries made outside of the Pay Scheduled Liabilities function within the Payroll Center are displayed.


Correcting Payroll Liability Payment Errors

Payroll tax liability payments may be corrected via two methods. First, if a check or bill payment was used to cover a payroll liability, determine if the check or bill payment check happens to be cleared in a bank reconciliation. Or even, void the prevailing check or bill this is certainly paying the payroll liabilities and recreate the check correctly by selecting Employees > Payroll Taxes & Liabilities, then Pay Scheduled Liabilities.

The 2nd method should be used if the check or bill payment check was used and therefore check has been cleared in a bank reconciliation. If the check or bill payment check is voided, the bank reconciliation with be affected. Using a Journal Entry is never a preferred way to make the correction, instead the Payroll Liability Adjustment option should really be used to really make the correction.

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Getting the Red Out – Clearing Out Past Due Liabilities

The Pay Scheduled Liabilities section in the Payroll Center might have red overdue amounts showing when none exist. The liabilities amounts appear when you look at the section when a payroll is generated and are also only reduced when the Pay Scheduled Liabilities method is employed to pay the taxes due. In the event that liabilities were recorded through every other method, such as for example a check being written and coded to your Payroll Liabilities account, the liabilities shown as due will never be reduced.

1. First, verify that the liabilities have been paid.

2. Select the appropriate item from the Pay Scheduled Liabilities window as shown below and then click the View/Pay button.


3. within the Liability Payment – Checking window, change the check amount to zero.

4. Add additional lines into the expenses area for the same accounts already listed with a negative amount to counterbalance the entry.

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5. Include the check number actually used to pay the liabilities when you look at the memo section as a reference.

6. The end result is supposed to be offsetting amounts to the liabilities accounts that will clear the Pay Scheduled Liabilities window, not affect the general ledger accounts.


Additional Areas to Troubleshoot Payroll Errors

Importance of Payroll Item Account Mapping

Payroll items must certanly be assigned an account so payroll transactions may be properly recorded when you look at the general ledger. Errors within the set up of the payroll item mapping may be located through a Payroll Items Listing report. Select Reports > Lists > Payroll Item Listing report. This report shows the payroll earnings, deductions, and tax items as well as the current tax table limits and rates. Utilize this report to ensure the desired General Ledger account will be used. Double-click on any item to produce changes. Changes could be placed on all transactions, future and prior, only prior transactions from a romantic date forward or no prior transactions.


Reconciling Payroll Transactions when you look at the Bank Reconciliation Process

The Intuit payroll subscription will determine whether all federal and state payroll tax forms for filing are available within QuickBooks. In the event that you or the client is preparing the payroll, it is advisable to first complete the lender reconciliation to determine any payroll liability payments which have not cleared and handle them accordingly.

Locating Non-Payroll Transactions

Users sometimes override error message and record transactions that should appear on payroll reports. Identifying these before the payroll taxation statements are prepared and filed can save the full time to amend or correct these payroll returns in the future.

Through the Employees menu, choose Employee Center, then the Transactions tab. Using this area, select the Non-Payroll Transactions plus in the Date area, choose the time frame for which the payroll reports are being generated.

Shown in the example below is a non-payroll check issued to Gregg. Whilst the check might be recorded properly, this check are often recorded improperly. This review can make that determination.


Creating Payroll Liability Checks Directly in the Checkbook Register

To properly process payroll liability checks, select Employees > Employee Center > Payroll tab, then View/Pay Scheduled Liabilities. Payroll Liability checks should always be generated from this section. However, checks in many cases are created directly from the register or via Write Checks. The Pay Scheduled Liabilities section into the Payroll Center is then incorrect. Start to see the having the Red Out—Clearing out Past Due Liabilities section earlier for step by step instructions on how to correct these entries.

If the liabilities have to be adjusted while the bank account happens to be reconciled in QuickBooks, another way to improve the liability is through selecting Employees > Employee Center > Payroll tab and choose Related Payment Activities > Adjust Payroll Liabilities. The Liability Adjustment window appears and changes could be made either to or not to affect the General Ledger accounts according to how the checks to cover the liabilities were originally written.


NOTE: Choose Do not affect accounts in the event that General Ledger is correct overall and may not be affected. This case would arise if the client paid the proper amount of the payroll liability and used the most suitable General Ledger coding on the checks written to your taxing authorities, but simply would not write the checks correctly utilizing the Pay Scheduled Liabilities area of QuickBooks.

Within the example shown above, we have been choosing to impact the Liability and Expense Accounts. The next dialog box appears. The general ledger is likely to be update with the adjustment.

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