Adjust Payroll Liabilities in QuickBooks in 4 Easy Ways

Imagine that your business finances are running very smoothly. To make sure it stays the same, in my experience, I would recommend you understand how to adjust payroll liability in QuickBooks, as payroll liabilities are one of the most important aspects of sound finance.

Just like a certified QuickBooks professional can bring the best out of anything related to it, you can also master the art of adjusting payroll liabilities in QuickBooks.

With the help of this article, around 90% of users learned about how to adjust payroll liabilities. This helped them achieve business and financial harmony and avoid any conflict.

In this blog, we will talk about some important steps to adjust payroll liabilities in QuickBooks so that you can ensure that your business stays on the path to victory.

What Do You Mean by Payroll Liabilities?

The term liability simply refers to something that has not been paid or is due. Similarly, payroll liability is a form of debt that you do not pay. This is the amount you owe your employees but have not yet paid.

This can also encompass the sum of payroll taxes that have been deducted from the employee’s salary. This also includes the amount recorded on the paycheck using a payroll item in the payroll liabilities.

What is the Purpose of Adjusting Payroll Liability?

Adjustments for payroll liability in QuickBooks can be used for multiple purposes; it actually depends on you. Before going to the payroll liability adjustment section, you should know why you are doing this.

If you directly jump on the solution, then you might end up losing all your important data. I would suggest that before proceeding with the solutions, you should know everything about the payroll liability adjustment.

Some of the main reasons for adjusting payroll liabilities in QuickBooks are mentioned below:

• In case you accidentally set up an inaccurate tax tracking type for the contributions of health insurance companies.
• Adjusting payroll liability will help you edit the employees’ additions, deductions, YTD wages, etc. when any of your employees stop getting paychecks.
• It is used when you want to edit any part of a company contribution item, like a 401(k) company match or even a health savings account.

Different Ways to Adjust Payroll Liability in QuickBooks 

There can be many reasons why any business wants to edit its payroll liabilities. One of the main reasons that I have experienced is that the user might have set up the wrong tax tracking type.

If you also want to adjust payroll liability in QuickBooks, then follow the steps mentioned below:

Step 1: Search for Payroll Discrepancies

There are some steps provided that you need to follow, one by one. Do not skip any of the steps to avoid any kind of damage to your company file.

In this step, you need to run the ‘Payroll checkup’. By doing this, you will be able to save on your payroll liabilities in QuickBooks, as it will detect your problem.

• To begin with, you need to scan your payroll data so that it can check your present setup. If there is any missing information or error, we will quickly resolve it.
• After that, you need to analyze payroll item setup, wage, employee records, and tax amounts.
• At the same time, search for tax amount discrepancies in flat tax rates. This tool will surely assist you in repairing the error.
• In the end, check whether your payroll checkup is completed or not.
• Now, run a payroll summary report to locate the items that you have been looking for. [Do not forget to write the amount of the payroll item.

Step 2: Adjust Payroll Liability in this step

If you want to edit the date or amount in your payroll liabilities, then follow this step, but only after following the above step.

• Initially, you need to open the Employees menu. After that, from the sub-menu, click on payroll taxes and liabilities.
• Now, select ‘Adjust Payroll Liabilities’, and from there, go to the date field.
• In the date field, you need to write the date for the person concerned [for adjustment].
• Further, click on the section on date and type the chosen date.

Note: You need to make the employee and company adjustments individually.

For Employee and Company Adjustment: 

• You need to click on employee adjustment if you are adjusting the company-paid time. 
• If you have reported on the W-2 form of the employee, then this will upgrade every piece of information.
• Now, if you wish to delete the balance from the payroll liability balance report, then for that, click on the company adjustment.
• After that, click on the employees’ section.
• Further, in the fields of tax and liabilities, you need to meet all the requirements. 
• Here, you need to click on the item name you wish to adjust.
• Now, you need to enter the amount of adjustment.

Note: Be careful, choose a positive number for the increment of the amount and a negative for reducing the amount.

Also, use wage base only if needed, this step is used only when users deny the tax amount on a paycheck. When you want to create a wage base adjustment, use only income subject to tax and nothing else.

• After that, for the future, enter all the data using the Memo field.
• Moving on, press enter and then tap on Accounts affected, and then click on OK.
• In the Accounts affected option, do not edit the balances for the liability and expenses account. 
• Adjustments will make a few of the changes in the payroll report [for the year-to-date amount].
• Now, after the transaction adjustment, click on the Affect Liability and Expenses accounts.
• Lastly, enter OK.

Note: If you wish, you can repeat the same process for all your employees.

Step 3: Ensure your liabilities have been upgraded or not

If you want to check whether your liabilities have been upgraded or not and whether everything is working appropriately, Run a payroll summary report. Follow the steps mentioned below:

• Firstly, go to the menu bar, and then from there, click on the reports. 
• Now, some options will appear on the screen, Select the Employees and Payroll option.
• After that, from the sub-menu, click on the payroll summary option. 
• Here, you need to select a date range. 

Step 4: Rectify the Payroll Liability check

The step mentioned below is not necessary to follow as it is optional. If you still want to proceed, then move forward by following the instructions.

• First of all, make sure that you are doing this before paying the liabilities. 
• After that, go to the menu bar situated at the top. From there, click on the banking option.
• Now, choose the use register option.
• Further, choose only the register that you use for payroll, and then click OK.
• Here, click on the liability check, and after that, tap on the edit liability check option.
• You need to now click on the payroll liabilities.
• Moving on, see what changes are made after the upgrade process. 
• After you are done with all the steps, tap on the save and close option and press enter.

To sum up!

At the end of our blog, I would like to say that, with the right knowledge and tools, you can keep your finances accurate. That is why you should follow each step mentioned above so that you know how to adjust payroll liabilities in QuickBooks and, with that, gain peace of mind. 

However, if you are still not able to adjust payroll liabilities in QuickBooks, you can think of our certified experts as a last resort. And feel free to call us at our toll-free number, 1(805) 419-9019 and get immediate assistance 24/7. 

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