How to Adjust Payroll Liabilities in QuickBooks Desktop & Online?

How to Adjust Payroll Liabilities in QuickBooks Desktop & Online?

There can be instances when companies or employers want to make changes in the Year-to-Date (YTD) date or Quarter-to-Date (QTD) of the employee. This includes employee additions, deductions, and company contributions. If your payroll liabilities are not correct, you should fix them immediately. However, one has to keep the right information regarding the payroll liabilities adjustment. In this comprehensive guide, we will talk in detail about how to adjust payroll liabilities in QuickBooks Desktop and QuickBooks Online.

What Do You Need to Perform QuickBooks Adjust Payroll Liabilities?

Liability adjustment can be used for numerous reasons. Before you go for payroll liability adjustment in QuickBooks Online and Desktop, one should know why you have to adjust the liabilities. Below are the following reasons to adjust the payroll liabilities for:

  • To fix the setup of Health Insurance Company Contribution with the incorrect tax tracking type.
  • Liability adjustment can also be used for deductions, additions, or YTD wages for the employee who won’t be receiving more paychecks.
  • To correct the amount for the company contributions items, for example, Health Savings Account or 401(k) Company match.

How to Adjust Payroll Liabilities in QuickBooks Desktop?

To adjust the payroll liabilities, you will have to perform a number of steps. First, start by finding the discrepancies in payroll. Once you do that, continue adjusting the payroll liabilities. Users should make sure that after adjusting the payroll liabilities, it is important to verify the changes. If required, you can correct the payroll liability check as well. To know more in details, learn here how to adjust a payroll liability in QuickBooks Desktop:

Step 1: Spot the Payroll Discrepancies

The first step is to find the payroll discrepancies. For this, you can use the Payroll Checkup tool. Once you get the information you require, you can make the liability adjustments. For your help, we are explaining the procedure here.

  • To get started, use the “Payroll Checkup” tool. By using this tool, you can find the issues that are affecting your liabilities. Not only this, but this tool will also give suggestions to fix the problem. Read the following steps to know how this tool helps:
    • The tool will scan the payroll data to verify the current setup so that you can find the discrepancies and missing information.
    • It will review the employee records, wage, payroll item setup, and tax amounts.
    • The Payroll Checkup tool also identifies the tax amount discrepancies on the flat-rate tax.
  • Then, you can run the “Payroll Summary” report for a quarter that you want to adjust. Make sure you note down the amount on payroll items that require adjusting.

Step 2: Adjust the Payroll Liabilities

Now that you have spotted the differences, it will be easier for you to adjust the payroll liabilities.

  • In “QuickBooks”, click on the “Employees” menu.
  • Then, click on the “Payroll Taxes and Liabilities” option.
  • After this, choose the “Adjust Payroll Liabilities” option.
Adjust the Payroll Liabilities
  • Here, you are supposed to fill in the required fields. You can use the following tips to enter the information in the fields:
    • Make sure you use the exact date that has been used in the last paycheck of an affected year.
    • If you are working on your current quarter then you should use today’s date.
    • Please note that the “Effective Date” is used in order to calculate amounts on Payroll Liability Balances Report or 940 and 941 forms.
  • This should be noted that the adjustments can be for your employee as well as the company. In the following discussion, you will information for both:
    • If the adjustment for an employee and the items that you adjust is a company-paid item then you should click on the “Employee Adjustment”. It also updates the YTD details on the employee of the W-2 form.
    • If you want to remove the balance from your “Payroll Liability Balances Report” then you click on the “Company Adjustment”.
  • After this, start selecting the employee from the list.
  • Then, enter the details for the “Taxes and Liabilities”.
    • Item Name: Add the item name you wish to adjust.
    • Amount: Add the amount for the adjustment. Make sure you enter the positive number if you want to increase the amount. A negative amount can also be added to decrease the amount.
    • Wage Base: This option will be rarely required even if you override the tax amount on your paycheck.
    • Income Subject to Tax: This option should be used only when you make a wage base adjustment.
    • Memo: In this field, you can enter the note for the adjustment (just for reference).
  • Now, you can choose the “Accounts Affected” and hit the “OK” button. Also, make sure of the following:
    • Choose the “Do not affect accounts” option. This will not change the balance for the expense and liability accounts. The adjustment will change the YTD amounts only on the payroll reports.
    • Also, click on the “Affect liability & expense accounts” to add the adjusting the transaction in expense and liability accounts.
  • You can follow the same steps for other employees if required.
  • Once done, click the “OK” button.

Step 3: Verify if the Liabilities are Updated

After you have performed the steps for QuickBooks Desktop adjust payroll liabilities, you should check if the liabilities are successfully updated. To do so, you can run the payroll summary report. This will help you to find out if everything is fine. Check out the following steps to run the payroll summary report in QuickBooks Desktop.

  • Click on the “Reports” menu.
  • Then, select the “Employees and Payroll”.
  • Click on the “Payroll Summary”.
  • After this, adjust the date range.
  • Now, you can click on the “Run Report”.

Step 4: Correct the Payroll Liability Check

If you have paid the liability, you might need to make changes to the liability check in QuickBooks Desktop. Here are the steps for correcting the payroll liability check:

  • Click on the “Banking” menu.
  • Then, choose the “Use Register” option.
  • After this, click on the register you use for the payroll and press the “OK” button.
  • Now, click right on the “Liability Check”.
  • Click on the “Edit Liability Check”.
  • Move to the “Payroll Liabilities” section and make the required changes to match the details.
  • Once done, click on the “Save & Close” button.
  • Press the “Yes” option to complete the steps.

Now you have learned how to adjust payroll liabilities in QuickBooks 2018 and other versions. Make sure you enter the details correctly while adjusting the payroll liabilities.

How Do I Adjust Payroll Liabilities in QuickBooks Online?

Companies may need to edit the payroll liabilities for multiple reasons. If you are using QuickBooks Online and want to adjust the payroll liabilities, the following steps can be followed. All you have to do is run the Payroll Summary and adjust the amount or date in payroll liabilities.

Step 1: Run the Payroll Summary Report

First of all, you will have to create the Payroll Summary Report so that you can find out what has been paid out. Thereafter, you can make changes to the amount and date to make the liability corrections. Here are the steps to run the Payroll Summary report in QuickBooks Online:

  • Select the “Reports” menu.
  • Then, search for the “Payroll” section.
  • Now, click on the “Payroll Summary”.
  • At this point, you can adjust the date range using the drop-down menu.
  • After this, you can choose the employee.
  • Click on the “Run Report”.

Step 2: Adjust the Payroll Liabilities

  • Click on the “Employees” option.
  • Then, select the “Payroll Liabilities” menu.
  • Click on the “Adjust Payroll Liabilities” option.
  • Move to the “Date” field and enter the date for which you are making the adjustment.
  • Here, click on the “Effective Date” section and add the desired date.
  • Choose “Employee” for the “Adjustment is for” field.
  • By clicking on the drop-down, you can select the employee name.
  • Then, moving on to the “Item Name” section.
  • Select the relevant payroll item from the “Taxes and Liabilities” option.
  • After that, click on the “Taxes and Liabilities” section, Here, you will find the “Item Name” column.
  • Here, you can select the relevant payroll items.
  • Now, make the entry of the amount for adjustment.
  • Now, you can choose the “Accounts Affected” and hit the “OK” button. Also, make sure of the following:
    • Choose the “Do not affect accounts” option. This will not change the balance for the expense and liability accounts. The adjustment will change the YTD amounts only on the payroll reports.
    • Also, click on the “Affect liability & expense accounts” to add the adjusting the transaction in expense and liability accounts.
  • You can follow the same steps for other employees if required.
  • Once done, click the “OK” button.

After following these steps, you can successfully make the liability adjustment in QuickBooks Online.

Conclusive Lines

If you want to adjust the Year-to-Date data of your employees, you can do that in your account. In this guide, we have shared the easiest steps to how to adjust payroll liabilities in QuickBooks Desktop/Online.

Do you want to update the historical payroll data or reconcile accountable receivables? If so, read these guides before taking any action:

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