Payroll Account

[FirstMOBC]

I am trying to understand why our payroll liability 2215 account have a balance. When we process the payroll I think the 5305 is being debited. Should the 2215 be debited when we process the electronic payment? I think I am thinking right but I don't think our secretary is coding the electronic payment correct.

[NeilZ]

I am trying to understand why our payroll liability 2215 account have a balance. When we process the payroll I think the 5305 is being debited. Should the 2215 be debited when we process the electronic payment? I think I am thinking right but I don't think our secretary is coding the electronic payment correct.

There's not enough detail about what each account is used for so everything I say is pure speculation.

I'm assuming that Expense account 5305 is the employer expense, health insurance perhaps? I'm also assuming that 2215 is a health insurance liability account that collects all the employer contributions towards your employee's health insurance premiums.

If that's indeed the case, then when you pay the health premium, you should be debiting the liability account. Now, there could be a small balance left if the amount collected and put in the liability account, was greater than the health insurance invoice. I've seen that happen, however, if its more than a small amount, say 2 months or more of premium payments, then I would say that the wrong account was debited. You can check this by looking at the Posted Transactions to verify this.

You can make sure that this doesn't happen by setting up the default accounts in the vendor's record to point to the proper accounts.

[FirstMOBC]

It’s just payroll taxes. 5305 is an expense for Federal withholding and 2215 is I think the payroll liability account. I need to see what account she is crediting. I believe she is crediting the 5305 expense instead of the liability. I will verify.

[FirstMOBC]

Thank you

[NeilZ]

It’s just payroll taxes. 5305 is an expense for Federal withholding and 2215 is I think the payroll liability account. I need to see what account she is crediting. I believe she is crediting the 5305 expense instead of the liability. I will verify.

Just to clarify then, Social Security & Medicare employer taxes are an employer expense, not Federal Tax Withholding. FITW are deductions from the employees salary for Income Tax, these deductions go to the Liability account as these are funds that do not belong to the church, which is required to pay out to the IRS.

Social Security & Medicare taxes withheld from the employee should go to the same liability account as does the employer taxes.

Having the IRS properly setup as a vendor to use the checking account and the liability account would take care of any future issues. The use of the Payroll module's Create Accounts Payable Entries for Deductions would also help keep things straight.

[FirstMOBC]

Here is how we are set up

First Mt Olive Baptist Church
Just want to make sure we are set up correctly,

01/11/2018 09:51 AM Payroll Item Descriptions Page: 1
Item Description Type Debit Account Credit Account

1 SP Salary Income 01-5061-001 SP Salary
2 SP-Housing Income 01-5062-002 SP Housing
3 Office Manager Income 01-5155-000 Office Manager
4 Custodian Income 01-5185-000 Custodian
5 Musicians Income 01-5195-000 Musician
900 Federal Withholding Tax Deduction 01-2215-000 Federal Withholding
920 Employee SSI Tax Deduction 01-2215-000 Federal Withholding
921 Employee Medicare Tax Deduction 01-2215-000 Federal Withholding
940 Employer SSI Employer Liability 01-5305-000 Payroll Taxes 01-2215-000 Federal Withholding
941 Employer Medicare Employer Liability 01-5305-000 Payroll Taxes 01-2215-000 Federal Withholding

[NeilZ]

Here is how we are set up

First Mt Olive Baptist Church
Just want to make sure we are set up correctly,

01/11/2018 09:51 AM Payroll Item Descriptions Page: 1
Item Description Type Debit Account Credit Account

1 SP Salary Income 01-5061-001 SP Salary
2 SP-Housing Income 01-5062-002 SP Housing
3 Office Manager Income 01-5155-000 Office Manager
4 Custodian Income 01-5185-000 Custodian
5 Musicians Income 01-5195-000 Musician
900 Federal Withholding Tax Deduction 01-2215-000 Federal Withholding
920 Employee SSI Tax Deduction 01-2215-000 Federal Withholding
921 Employee Medicare Tax Deduction 01-2215-000 Federal Withholding
940 Employer SSI Employer Liability 01-5305-000 Payroll Taxes 01-2215-000 Federal Withholding
941 Employer Medicare Employer Liability 01-5305-000 Payroll Taxes 01-2215-000 Federal Withholding

That's the minimum setup needed if you don't have state or local taxes, health insurance and/or pension/403b to worry about.

[FirstMOBC]

Ok thank you for your help.