User Support Forum

I'm not sure if my payroll liabilities are set up correctly on not,because I have a running total adding up on my balance sheet. I think the problem may be with the employer's portion of ss and mc. This is the way it is set up maybe someone can tell me if this is correct.
Payroll tax expense account =debit
liability= credit

That is correct for employer liabilities.

When you pay the check out monthly or quarterly, credit the bank and debit that liability.

Thanks for the reply, but I'm still confused. When I pay Irs here the action I take:
1110 (bank Acct) credit
2215-2219 (libilities) debit
5565 (payroll expense- employer portion)debit

Is this not correct?

If you have employer liability items set up in Payroll, you should see those recording the expense for you at the time of each Payroll check being generated. Employer Liability items should be set to:

Credit the payable liability
Debit the payroll tax expense

This dumps all payable money from the employee and employer into the liability accounts and records the expense at the time of writing the payroll check, so when paying out to the IRS, you only pull money from the liability, or you will double-expense the employer liability items.

Thanks, I think I understand what I'm doing wrong. My payroll is set up correctly, but when I pay IRS, I have been debiting the expense acct for the employers expenses not the libility acct. I didn't understand how the payroll worked. To correct my balance sheet, should I make a journal entry to debit the expense acct and credit the liability acct?

That's correct. For the corrections to properly update Fund Accounting reports, you may want to enter "monthly" adjustments to correct each month along the way, rather than one big lump-sum entry here in May. That part is up to you though.

Thanks you have been a big help!

I might be mistaken but I would think that you would want to credit the expense account and debit the liability account to correct the error. Doing the opposite of this, as you suggest, will only make things worse.

tborgal wrote:credit the expense account and debit the liability account to correct the error.

Right, sorry. To make the corrections, it would be this direction, not the opposite.