In this article, we are going to address some of the reasons due to which your company’s Balance Sheet report are showing incorrect figures for payroll liabilities in QuickBooks Desktop. Let’s discuss these common reasons in detail which can happen in any of the payroll versions along with that we’ll show you method of how to fix Payroll Liability and Balance Sheet Report as well.
Manual Desktop Payroll
How to determine the source of payroll liability balances
- If you are willing to see the details of the payroll liability within the balance sheet then you can do it by double-clicking on the amount to see the transaction by the side of the Payroll Liability Item Report. Along with this, you can also review the paycheck or liability adjustment associated with the balance only with a double-click on the amount. The balance amounts that you see are the payroll liability amounts that are associated with the paycheck.
- If you want to view any outstanding balances that need to be paid or deposited then you can do this by running a payroll liability balance report. To do this, from the top menu bar click on the Reports> Employees and Payroll> Payroll Liability Balance.
- In the Payroll Liability Balance Report, if you see the negative amounts (or credits) then it means that either you may have a credit/refund that is not recorded yet or using the “Make Deposit” you have mistakenly recorded the deposit out of the payroll module.
Follow the instructions mentioned below in order to zero out the negative balances that are showing due to the deposit you made using the “Make Deposit” option.
- Open the QuickBooks Desktop software and then go to the Make Deposit window and find the deposit you made. Then copy all the details and delete it.
- After that, with the help of Deposit Refund of Liabilities, you need to recreate the deposit with the same deposit date. You can do this by a payroll liability refund check. (NOTE: In the report, if you see the positive amount (unpaid liability) then you need to pay them either using the Pay Scheduled Liability or Custom Liability Payment.)
- It is important to select the Company’s adjustment option when you are adjusting the payroll liabilities to zero out the balance otherwise it might affect the employee’s year-to-year payroll data.
NOTE: Balances could also be incorrect due to the wrong amount entered in the deposit Refund or the Liability Check. For example: Let us assume that you are seeing a difference of $100 in your Liability Balance Report as the overpaid amount which is appearing as negative (-$100), the could happen if your payroll liability for $401(k) was $1,000.00 but instead of that, you entered $1,100.00 in the liability check. Therefore, it is recommended that you first verify the most recent/past payments made with your receipts outside of QuickBooks Desktop before making any kind of changes in the Payroll Liability within QuickBooks.
Important Points to remember
- It is strongly advised not to make any liability adjustment in the Payroll Liability Balance Report it shows zero amount just to make corrections in the Balance Sheet. If you did the same then it will negatively impact the payroll data as well as payroll taxes that Intuit uses to file and pay on your behalf.
- You have to contact the Intuit QuickBooks assistance in case there is a problem that is caused due to the missing and incorrect amount number in QuickBooks Desktop Payroll.
If you see a positive balance for taxes paid on your behalf by Intuit then it means you may have a missing or voided liability check from Assisted Payroll
Follow the instructions mentioned below in order to find and fix missing Assisted Payroll liability checks.
- If you are an Assisted Payroll customer then you will be able to run a QuickReport for QuickBooks Desktop Payroll Service.
- For this, Select the Vendors option from the top menu bar and then click on the Vendor Center and then right-click on the QuickBooks Desktop Payroll Service & select the QuickReport option.
- When the QuickReport is open, you need to review it check whether all the liability checks are recorded or not.
- If you notice any missing or voided liability check then you need to contact the Intuit QuickBooks Support to recreate them.
In the Balance Sheet, If you payroll liability balances are overstated that it means that you have created Journal Entries for liabilities that are paid by the Intuit
Remember that the Payroll Liability report does not affect by the Journal entries but the Balance Sheet Surely does.
It is recommended to consult with your accountant first if you planning to delete any incorrect Journal Entry.
Manual and Assisted Payroll
If you have posted the payroll item to the wrong account in the Chart of Accounts
It is necessary to post Payroll Liability to the Liability account only in your Chart of Accounts.
Follow the instructions mentioned below in order to set up and edit the payroll item as per your requirements.
- Select the Reports option from the top menu bar and then select the Employees and Payroll> Payroll Item Listing
- Next, you have to verify the accounts for each payroll item, you need to check every item in the Expense and Liability Account.
- If you found something wrong in the account, you can open and edit the payroll item by double-clicking on the account name from the report.
- Select Next and edit the account.
- Once you finish making the changes, click on Next and then Finish and Finish again.
- After that, three options will appear you have to choose one if you have previously used an Expense item. (I) Update all existing transactions to use this new account, (II) Update Transaction Started on [choose a date from calendar] (III) Don’t Update Transaction.
- To verify whether the issue is resolved or not you need to open a new Balance Sheet Reports.
If you have paid or created a liability check after voiding a paycheck then it may cause negative balances in the Balance Sheet
After paying the liabilities linked with a paycheck if you have voided that paycheck then on your payroll liabilities account negative balances will appear for the payroll items and taxes that were reported on that check.
If you already sent a direct deposit paycheck first and later you decided to void that DD paycheck then you will amount the same as the amount of the DD paycheck in the Direct Deposit Liability Account. To fix it, you need to zero out the Direct Deposit Liability Account Balance.
It is important to fix them because these account balances are visible on your financial reports.
Payroll liabilities deducted from paycheck (such as 401(k), 403(b), and garnishments) but not paid to vendors using either Custom Liability Payments or Scheduled Liabilities.
Follow the instructions mentioned below carefully to correct the payment of the liability.
- In order to check whether the balance exists in this report or not you need to run a Payroll Liability Balances Report
- To do this, go to Reports> Employees and Payroll> and >Payroll Liability Balances.
- To see original payment, you may need to open either Write Checks or Bill Payment. You can delete this after you copy the details of the payment.
- You need to again create a liability check correctly but this time you either need to use Custom Liability Payment and Pay Scheduled Liabilities.
In order to find and make corrections to this follow the instructions mentioned below.
- Go to the Employees> Payroll Tax and Liabilities and then select the Adjust Payroll Liabilities option.
- Then, you need to find the adjustment that is affecting the report, click on the Previous Adjustment button to see the past adjustments if you can’t find it on this page.
- Once you find the adjustment, click on the Account Affected button.
- After that, select the Affect liability and expense accounts option and then select OK.
- Click on OK again, by doing so a window to save the transaction will pop-up. Once the transaction is saved another window will pop-up with the message asking you to choose an Asset, Expense, or Liability Account for the employee’s liability.
- At last, select OK.
You may be facing this issue due to the damaged company files
You should also check for the QuickBooks Desktop company files data damage if your Payroll Liability Balance Report is showing zero but this does not match with your balance sheet. If the data damage happens in the mapping of accounts then it can cause an error in the flowing of data from one transaction or report to another. In order to fix any type of data damage, you need to run the verify data/rebuild data Tool.
The Bottom Line
We hope you found this article informative and now you can find the incorrect amount in the Payroll Liability Report and Balance Sheet Report and fix them. Before doing so, it is important to consult an expert. You can have assistance from our Intuit Certified QuickBooks ProAdvisor by calling us at our 24/7 toll-free customer support number +1-855-441-4417.