Liabilites and the Balance Sheet-Please Help!

[whstpech]

Hello,
I have a few of questions.
(1) Looking at the balance sheet under the liabilities column, should there be a running total here? If no, how do I move them?

For example, here is my liabilities section:

Payroll Deductions
Taxes Payable
Federal Withholding 53.95
Social Security 114.82
State Taxes Payable 85.03
Subtotal 253.80

Other Deductions
Life Insurance Withheld -200.00
Health Insurance " -100.00
Subtotal Other Deductions -300.00

Subtotal Payroll Deductions -46.20

(2) This is the only place I see these deductions should they show as an expense?

Thanks for your help
Melissa
PCP, 10.4 v

[JohnDMeyers]

You may have your Other Deductions setup incorrectly. Either that, or you have over paid them. I say that because you should show a positive liability amount, or zero. A negative number indicates an overpayment, or an incorrect setup.

This thread discusses how to set up payroll deductions:
http://powerchurch.com/forum/viewtopic. ... ing#p16225

The two accounts that are effected by payroll deductions are the bank account (asset) and the liability accounts that you have listed.

Expense accounts are for things like Salaries, Retirement, and in general, expenses that your church sets the amount (as opposed to taxes and FICA).

Taxes, Medicare, FICA, will only show up as a liability until they are paid, in which case the liability will be reduced to zero.

[whstpech]

Thanks, I've found part of my error with my tax deductions, however, I'm still running a positive for my insurance deductions. These amounts just keep increasing. I'm not understanding why they are showing as a positive. (This is the setup: DB: 01-2270-000 Insurance CR: 01-1110-000 Checking Account ) Basically, once I've posted all to fund accounting, I don't know what to do with the insurance deductions (as for what to credit and debit)??? Everything else seems to be balancing.... I hope this makes sense..

[JohnDMeyers]

If that setup is your tax deduction, you have it backwards. You want to DB checking and CR liability in the payroll item.

When you write the check to pay your quarterly taxes, you CR checking and DB liability (which "zeros out" the payroll item above).

Here is the example:

You pay someone $1000 gross. They get $750 net, and $250 goes to taxes.

In payroll, you set up an income item for $1000
CR checking $1000
DB expense account payroll $1000

Notice the above item takes $1000 out of checking. You now put BACK INTO CHECKING $250, so you can pay it out again to the tax collector. (You are taking $250 of the employee's $1000 gross pay and putting back into checking).

To do this, in payroll, you create a deduction item for Federal Taxes
DB checking $250 (puts $250 back into checking)
CR liability $250 (a positive liability amount, which indicates you owe money to someone)

To pay your quarterly taxes:
CR checking $250
DB liability $250

The liability amount is $0.00 after paying the taxes. The previous two transactions "cancel out".

I think the thing that is confusing are the words "income" and "deduction" when used in payroll.

It's not the church's income, it's the employee's income. (it's the church's EXPENSE)

It's not the church's deduction, it's the employee's deduction. (The employee is the one who is paying the tax, not the church).