User Support Forum

We purchased v. 11 and wanted to start it beginning Jan. 1, 2010. While doing the set-up, I inadvertently missed adding our 941 payroll taxes as liabilities. In the mean time I wrote a check to the IRS to pay them and I'm pretty sure that I assigned them to the wrong account when posting.

To add the liabilities should I:

credit unrestricted net assets for the amount of the check to the IRS
debit the individual liability accounts for specific amounts (ex. social security, medicare, federal tax)

If that is correct, then I think I need to reverse my current postings. It is posted as follows:

01-1110 General checking credit $1893.51
01-2215 Federal Withholding debit $1575.00
01-2217 Social Security debit $258.14
01-2219 Medicare debit $60.37

If I reverse this transaction should I then redo it as follows:

01-2215 Federal withholding credit $1575.00
01-2217 Social Security credit $258.14
01-2219 Medicare credit $60.37
01-5305 Payroll taxes debit $1893.51

If this is not correct, could you explain where I am incorrect?

Thank you so much!
Deanne

It appears that no one has answered your question. The first entry that you list where you credit the asset account and debit the tax liability accounts is correct when you send the check to the IRS.

When you set up the payroll, the taxes withheld from employees should be credited to your liability tax accounts, this shows the money that was withheld from pay but not sent to IRS yet. Apparently you didn't show the taxes withheld as a liability at the time the payroll checks were recorded. You may need to go back and correct the payroll transactions which should make the tax liability account correct for the amount of taxes withheld. Now for the employer paid part of FICA and Medicare you would debit an expense account for the employer part of taxes and credit the liability tax accounts.

Let me know if this doesn't answer your question.

Thank you so much for your reply...

I had to take over rather unexpectedly as church treasurer and when I set up the program in January I didn't realize that neither 3rd or 4th quarter 941 taxes hadn't been paid. So, I didn't enter them as liabilities and it sort of messed everything up...

Since I only had a month or so of info entered, I just restarted the accounting portion so I could begin correctly. I know this was probably not the best way to do it, but now that I have worked with the system for a while, I think it will go better this time around

Thanks again for your reply!
Deanne