Fix Payroll Mistakes in QuickBooks Desktop

User Query: I am new to QuickBooks and I made a mistake on a payroll check and that I need to correct.

Fixing some payroll errors in QuickBooks desktop comes down to either deleting transactions or posting a reversing journal entry. Both the solutions are elegant, but deleting the transaction isn’t always an option. On the other hand, posting a reversing journal entry can lead to errors in the accounting data. In this article, we’ll tell you how to fix payroll mistakes in QuickBooks Desktop.

Check Written to Pay Payroll Tax Liabilities

If your client has written a check to pay payroll tax liabilities, then you will have to fix this error. In QuickBooks, there is a separate feature which must be used to pay payroll tax liabilities. Writing and recording a check for the same will lead to errors later down the line. The following method will only work if your client has an active subscription of either Intuit Online Payroll or QuickBooks Payroll.

The payroll menu provides access to features and tools related to payroll. All entries related to payrolls must be performed through the features in the payroll menu. So, instead of creating checks to pay payroll tax liabilities, the client must use the payroll menu to create the check; otherwise, they’ll get the following error:

Problem: It appears you’re about to pay your payroll liabilities.

Solution: To ensure that your payroll tax forms and reports are calculated correctly in QuickBooks, you should use the Pay Payroll Liabilities feature to create checks for payroll tax payments, health insurance premiums, and other payroll liabilities.

Users can rely on the Find Incorrectly Paid Payroll Liabilities tool to search for all the payroll liabilities for which the client had written checks.  Once you’ve narrowed in on all the incorrectly recorded transactions, you need to follow the steps provided below:

  1. Delete the Check which was used to pay the payroll tax liability.
  2. Go to Employees, and select Payroll Taxes and Liabilities.
  3. Choose Pay Scheduled Liabilities.

Don’t edit the transaction if the check was cleared during a bank reconciliation. However, if there was an error in the check, then you can delete and change the information. Also, don’t rely on journal entries to fix the issue, as it can lead to mysterious errors.

Read More: How to set up direct deposit in QuickBooks Payroll?

To pay unpaid dues with the Pay Scheduled Liabilities feature, follow the steps provided below:

  1. Ensure that the listed dues haven’t been paid using a check.
  2. Click on one of the unpaid dues, and select View/Pay.
  3. In the Liability Payment – Checking window, change amount of check to zero.
  4. In the additional lines, enter a negative value to offset and balance the amounts.
  5. In the Memo, enter the check number which was used to pay the liability. This can be a good foundation for a solid audit trial.

If you’ve already reconciled the accounts, then making changes to the transactions isn’t recommended. Further, if you need to make any changes, you’ll have to get to the bottom of payroll transactions created manually. However, to figure out the payroll transactions, you’ll have to remove the non-payroll transactions first from the report. For this, you can rely on Employees > Employee Center > Transactions > Non-Payroll transactions. Enter a time period to filter out the transactions.

Reversing Journal Entry

Although it is recommended against, you can create a journal entry to offset the overpaid amount or reverse a payroll entry. To do so, follow the steps provided below:

  1. From the Accountant menu, select Make General Journal Entries.
  2. Fill in the Entry No. and Input the Date for the transaction.
  3. Select a checking account.
  4. Enter the amount for the check or bill in the Credit column and match it to the checking account.
  5. Enter the same amount in the Debit Column and match to the Payroll account.
  6. Enter the Employee’s name and click on Save and Close.

You’ve successfully reversed the journal entry. But in the future, it will be better if you and your clients rely on the Pay Payroll Liabilities features available through the payroll menu.

Account Mapping Error

In QuickBooks, users have the ability to create new items and accounts. Transactions are usually associated with an item as well as an account. However, it is very important to associate an item with the appropriate account; otherwise, you’ll receive an error while creating reports in QuickBooks.

To view incorrectly mapped payroll items, follow the steps provided below:

  1. Click on Reports from the main menu.
  2. Click on Lists.
  3. Choose Payroll Item Listing Report.

In this report, you can view all the payroll items along with additional information about the same. This information includes the following:

  • Tax Items
  • Earnings
  • Account
  • Deductions
  • Current Tax Table Limits

Read More: Pay methods for employees in QuickBooks payroll

Ensure that all the payroll items are mapped to the correct account. To change the associated account, you can double click on an item. Don’t forget to apply and save changes made during this process.

To know more, you can get in touch with our experts at our QuickBooks payroll team LIVE CHAT.

Frequently Asked Questions

  1. Should I make changes to accounts in QuickBooks?

    If payroll transactions are the cause of imbalance in the General Ledger accounts, then making changes to the accounts will help you resolve such errors. You’re most likely to encounter this error if the payroll tax liability was paid via a check rather than the Pay Scheduled Liabilities feature.
    Read More: How to activate QuickBooks payroll services?

  2. I’ve written a check to pay payroll tax liabilities and have already reconciled the check. What should I do?

    Edit or delete the check only if the amount on the check is wrong. Otherwise, don’t make any edits to the accounts.
    Read More: How to reactivate QuickBooks account for payroll?

  3. Which is a better option to enter payroll transaction: bills or checks?

    Neither should be the preferred option to enter payroll related transactions in QuickBooks. First of all, if you need to work with payroll transactions in QuickBooks, then get a subscription of either Intuit Online payroll or QuickBooks payroll. Subsequently, enter all the transactions related to payroll through the payroll menu.

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