941 payment

[jnsilva]

We have been making payments for the entire amount out of an expense account and now I know that we should be paying from the liability account. I will be voiding all the accounts that are opened and rewriting the checks. Can you explain or show me how to entered the check to make payment? I know that the employees portion come from the liability account. Where does the employer portion come from? I have an expense account set up for the employer portion, but not sure how the cr and db should go. Thanks for your help.

[JohnDMeyers]

I'll go through this from start to finish. You may already have most of this done correctly.

When you set up a Pay Item in the Payroll module, Payroll / Setup / Maintain Item Descriptions / ADD / Employer Liability, there are row headings that say: "liability account" and "expense account".

These row headings are generally accurate. Therefore, you should enter a liability account and expense account. When the payroll check is cut, both the expense account and liability account are increased.
CR 01-2132-000 liability $50
DB 01-5132-000 expense $50

To pay off the liability, you cut a check from Accounts Payable to your bank, or whoever handles the employer liability portion (in Accounts Payable)
CR 01-1110-000 checking $50
DB 01-2132-000 liability $50

The liability account will be "zeroed-out" for this one payroll item, and the expense was already recorded when the payroll check was first cut.

[jnsilva]

Thanks John, I didn't realize that both accounts would increase and was trying to figure how to make the payment.
Blessing, Jackie

[JohnDMeyers]

Here's my non-accounting way to think of what increases with Debits and Credits.

There are Debit and Credit "types" of accounts
Asset - type Debit
Expense - type Debit

Income - type Credit
Liability - type Credit
Equity - type Credit

Then, there are the verbs "to Debit" and "to Credit"

When you Debit (verb) a Debit (type) account, it increases.
When you Credit (verb) a Credit (type) account, it increases.

When your verb and type don't match, the amount decreases.

My best guess as to why there are Debit and Credit types of accounts is to avoid the use of minus signs all over the place. Instead, you have opposite "meanings" of positive numbers.