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Question:

I need to adjust the amounts that are showing due for my Payroll Liability amounts. How do I reconcile the amount shown on the Pay Payroll Liabilities form with what is actually owed?

Solution:

Before making a Payroll Liability Adjustment, it is first recommended that you speak with your qualified accounting professional to determine whether the adjustment needs to affect your Payroll Liability amounts and/or Payroll Liability Chart of Account balances.  You will need to explain to them the reason for making this adjustment for them to adequately inform you of what will need to be done.

Payroll Item Adjustment Only

If you need to only affect the amounts that are shown as due on the Pay Payroll Liabilities form, you will need to do the following:
  1. Open the Pay Payroll Liabilities form (Employees | Pay Payroll Liabilities).
  2. Verify the amounts that are displayed are the correct amounts.  If not, you will need to determine which Payroll Item balances need to be adjusted.  Please make note of the amounts that are displayed and the amount that needs to be adjusted.
  3. Open the Payroll Liability Adjustment form (Employees | Adjust Payroll Liabilities).
  4. Right click within the form window and select the option for New Payroll Liability Adjustment.
  5. Enter the Effective Date that you wish for the Liability Adjustment to become effective.  This is the date that will determine when the adjustment will reflect in the Payroll Liability amounts due.
  6. Determine if the adjustment is a Company wide adjustment or an adjustment that is for a particular Employee.
  7. Select the Payroll Item that is to be adjusted.  If you have more than one Payroll Item to adjust, you can enter them all on the same adjustment providing the entire adjustment is for the Company and/or the same Employee and the Effective Date for each adjustment is the same.
  8. Enter the amount of the adjustment.  If you are needing to raise the amount that is reported on the Pay Payroll Liabilities form, enter your amount in the Increase column.  If you are needing to reduce the amount that is reported on the Payroll Liabilities form, enter your amount in the Decrease column.
  9. Enter a memo that explains the reason for the Liability Adjustment.  This will be an internal memo that you can reference in the future.
  10. Check the box in the lower left corner of the form to ‘Do Not Affect Accounts’. By checking this box, you are only adjusting the balance of the Payroll Items balance that is reported on the Pay Payroll Liabilities form.  You are not affecting the amounts that are reported on your financial reports for the Chart of Accounts that are associated with the Payroll Items themselves.

Optional:

If you do not have the preference enabled to not require vendor selection when selecting liability accounts, you will need to manually enter a Journal Entry to properly reflect your changes to the Payroll Item balances in the Vendor Balance that is associated with the Payroll Item.

  1. Open the Journal Entry form (Banking | Make Journal Entry).
  2. Select your main Payroll Liability account on the first line under the Account column (this account needs to be of type Other Current Liability or Long Term Liability).
  3. Enter the amount to increase (Credit) or decrease (Debit) the Vendor Balance.
  4. Select the Vendor Name in the Name column.  Select the same account on the second line.  Because there is no other Vendor to affect, you will need to select your Company Name as the Vendor in the Name column on the second line entry.
    NOTE: If you are adjusting the balance for more than one Vendor, you would repeat for each Vendor until all Vendor Balances have been adjusted. See screen shots below.

Payroll Item  & Chart of Account Adjustment 

If you need to affect accounts for the Payroll Liability Adjustment, follow steps #1 – 9.  You will then need to select an adjustment account to affect.  If you are unsure of which account, you will need to speak with your qualified accountant for clarity.  By selecting the adjustment account, you will not need to manually enter a Journal Entry to affect your Vendor balance.