User Support Forum

It appears that when I am paying the quarterly taxes, and I credit the bank account 1110, and debit the payroll taxes expense account 5305, it only pays the bill. We discovered that when we run the income and expense statement, the tax liability amounts are still showing up. I went through and entered separate transactions for those liability accounts (i.e. federal,state, SSI, and Medicare) to "clear" them, but shouldn't it automatically come out of there when I pay that? I am guessing that I have something set up incorrectly, but have searched the manual and cannot wrap my head around a solution.
Might anyone here be able to help me?
Thanks so much...

Go to your Payroll/Setup/Maintain Item Descriptions

and see what accounts you have setup in your Fed W/H pay item. You should have a liability account and a checking account in there.
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What happens when you pay someone $1000 and $200 is withheld for Fed W/H is this:

1) Gross Pay = $1000, reduce checking by $1000

2) Fed W/H = $200, put $200 back into checking and create a liability

3) Pay quarterly withholding = take $200 out of checking and zero-out liability
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On step 3) if you are taking $200 out of checking and recording it as an expense, then something is not right. You should be reducing a liability account, not an increasing an expense account.

Thanks, John. I will try that.