Liability Adjustment

[Josiane]

Hello again:

Thank you for the reply!

I do not use the Payroll function of QuickBooks. When I cut the employees ‘paycheck I list each liability as negative and the gross payment is entered as positive. Doing so I get the correct Net amount and I can track the liabilities in Liability accounts.

Right now I have a 12 cents difference on the Medicare tax.
I went back on my books and I found out that this is happening because when I pay the Federal I simply multiply the total gross income ($8,440) by 1.45%. The result is $122.38. But when I cut the employees’ paycheck I multiply $30.60 (Mcare tax on a pay period) by 4 (weeks). The result is $122.40. So every month I have a 0.02 difference.

I am not an accountant but I think I have to make an adjustment in QuickBooks. Can you help me out?

By the way, if all the payroll liabilities were already paid but I have <$16.00> balance on the SDI tax. Does this mean that I overpaid the tax?
I am asking because when I went back on my books I simply could not find any mistake. Apparently everything is being paid according to the law.
Can I adjust this as well?

Thanks again.
Bye,
Josi

[Joe Williams]

Create a new expense account named "Payroll Rounding" and then journal the liabilities difference to it.
If the liability balance is positive, it is 'under paid'. This is usually caused by the rounding of individual payroll liabilities vs the total * rate.