how to zero out liabilities in quickbooks

What are Payroll Liabilities?

Payroll liabilities are withholdings and deductions that are taken from your employees’ gross salary. These deductions are the amounts that are owed to a third party.

When you have unpaid wages or withhold amounts from payroll, you create payroll liabilities. The sum which is tracked on the paychecks by using the payroll item is also added to payroll liabilities.

Fix Payroll Mistakes in QuickBooks Desktop

How to Reconcile Payroll Liabilities in QuickBooks & How to fix Errors?

When you try to reconcile payroll liabilities in the QuickBooks application, you might experience some technical issues.

Here are the reasons behind to reconcile payroll liabilities in QuickBooks:

  • When an employee has received more than the original payroll sum.
  • An error message pops up like “The file cannot be installed” or “It seems that you are going to pay your Payroll Liabilities.”
  • Your particular bank account might look perfect, but in reality, it is not if the version of the QuickBooks application you are using is out of date.

Why zero out the payroll liabilities in QuickBooks?

All the payroll liabilities associated with the amount need to be zero out, as they should be paid.

If the net compensation paid to the employee reconciles with the net balance in the payroll, and wages payable must be zero out instead.

How to Zero out payroll liabilities in your QuickBooks?

  1. First, you have to go to the payroll center, then put a checkmark against payroll liability for which payment was already made through cash/check.
  2. Then click on the pay/view tab, which will open a liability check-up.
  3. In this, click on “expense” and go to the account dropdown menu. Then choose the expense account you select while recording the payment.
  4. Now, Enter the amount field, enter the negative value amount equal to the liability value.
  5. Then click on recalculate, which will make the payroll liabilities amount zero and then save and close to finish up.

How to run the Payroll Liability Balances report?

Check out the below-mentioned steps:

  1. First, Go to Employees.
  2. Then select Employees & Payroll. And then choose Payroll Liability Balances.
  3. If there are credits, continue to the steps on how to enter a payroll liability refund check.
  4. If there are no credits, then create a manual bank deposit. And post it to Payroll Expense.

How to enter a payroll liability refund check?

  1. First, Go to the Employees menu, then select Payroll Taxes and Liabilities. Then select Deposit Refund Liabilities.
  1. Now select the name of the merchant who submitted this refund check.
  1. Now, In the Refund Date field, enter the deposit date.
  1. Then in the For Period Beginning field, enter the first day of the pay period that the refund affects.
  1. Now pick between the 3 options how you want QuickBooks to handle the deposit.
  1. Then in the Taxes and Liabilities section, select the payroll item/s affected by the refund.
  1. Then in the corresponding Amount column, enter the positive amount.
  1. Now click on Ok.

Frequently Asked Questions:

Most common questions related to how to zero out liabilities in QuickBooks?

Question: How can I reverse payroll checks in QuickBooks?

Answer: Request a direct deposit reversal. However, it should be allowed as per the Intuit guidelines.

Question: How can I clear a payroll liability amount in a payroll bank?

Answer: First, you must go to the Banking menu, then choose Use Register. Then select your payroll bank register.

Now “Right-click” on the Liability Check you created for the old payroll item, then click on Edit Liability Check. Now, go to the Payroll Liabilities tab.

Next, replace the old payroll item with the new one. Now Save & Close.

Question: What could happen if I zero out retained earnings in QuickBooks?

Answer: When you zero out Retained Earnings in QuickBooks, it gives easy access to previous accounting period data, including transaction details.

Question: Can I delete payroll liabilities from my QuickBooks?

Answer: Yes, you can delete payroll liabilities from your QuickBooks. First, you have to click on the payroll center and select the ‘Pay liabilities’ tab from the drop down menu. Now, click on Adjust Payroll liabilities, and click on the ‘Previous’ button until you get your liabilities deleted.

Question: Can I remove paid liabilities in my QuickBooks?

Answer: Yes, you can. First, you must go to the Pay liabilities tab and click on transactions from the payment history screen.

Now, press “delete” from the top of the screen and click OK delete the payment.

Question: Can I clear out the payroll liability sum in the payroll center?

Answer: Yes, you can. You need to click on Employees. Then, employee and payroll and select payroll liability balance from the drop down menu. Now enter a refund check or manual bank deposit.

Question: Why are the payroll liabilities showing a negative amount?

Answer: This might be due to the tax over payment due to the incorrect tax rate. It is one of the most basic reasons for a negative amount in payroll liabilities.

Question: What to do when QuickBooks payroll liabilities not showing up?

Answer: The reason why your liabilities do not appear on your statement is as follows:

Before we get started, let’s make sure your QuickBooks and payroll tax tables are up to date.

You can then change the account following the steps below. 

  1. Select Payroll Item List from the List menu. 
  2. Right-click the item in question. 
  3. Payroll item can be edited by selecting it. 
  4. Next, select a liability account.
  5. Keep tapping Next until the process is complete.    

Additionally, ensure that the Liability Account account is active. 

  1. View the Chart of Accounts by going to List > Chart of Accounts
  2. Include Inactive should be selected from the list. 

The liabilities will not be shown for Paid Through dates that are in the future. Here’s how to check:

  1. Payroll Center can be found under Employees.
  2. Click on Transactions.
  3. You can choose Liability Checks.
  4. Click DATE and select This Calendar Year from the drop-down menu.
  5. Make sure that the payment has been received.
  6. Open the line with the liability check by double-clicking.  

Should none of these solutions work, you might want to consider verifying and rebuilding the file. This makes the program to self-identify and resolve the most commonly known data issues within a company file.

Question: How to remove old liability accounts in QuickBooks?

Answer: A Journal Entry can be used to zero out Other Current Liabilities.