tax liability on balance sheet

[jcjenkins]

we use an outside payroll vendor. do the balance sheet tax liability entries flow directly from the payroll module? since the outside vendor deducts the amount from our bank account, it is no longer a liability, it is paid. how do I offset the tax liability entries?

[NeilZ]

we use an outside payroll vendor. do the balance sheet tax liability entries flow directly from the payroll module? since the outside vendor deducts the amount from our bank account, it is no longer a liability, it is paid. how do I offset the tax liability entries?

It depends on how you have your payroll setup? If you make the entries in payroll, and 'cut' temporary checks, then post those transactions to Funds Accounting, then yes, the tax liabilities (withholding, employer contributions, etc) would be posted to the liability accounts.

When the vendor deducts that amount to pay taxes, you should reflect the credit to the checking account, but debiting the tax liability account.