Reconciling the Payroll Tax Liability Accounts

The payroll taxes that are due on the quarterly reports can be grouped into two basic categories: taxes that are withheld from the employee's check and taxes that are paid by the employer (burden). With each payroll batch, AccuBuild automatically accumulates the taxes in pre-defined general ledger accounts in the Ledger System.  Please refer to the section titled Setting Up the Payroll Properties in this manual for more information on these default accounts.

The amounts in these accounts are offset by the transactions that record the deposit of the taxes to the state or federal government.  The balance of these accounts should be reviewed at least once a month to verify that the balance is a true representation of monies still owed to the state or federal government.  Likewise, the quarterly payroll tax returns should be reconciled against these same account balances. If minute discrepancies exist in these amounts, they may be adjusted with a general journal entry, or they can be adjusted with multiple entries on the accounts payable check that is used to pay the quarterly tax amounts.

Hint: If large adjustments need to be made (not simple rounding errors), then print the Detail Report by Job report and the Detail Report by Department report. Print both reports using the Summary option. The Transaction Date range should include the first and last days of the payroll quarter. These reports will break out the accrued portion of the payroll taxes by job and general ledger account, respectively. The adjustments can then be pro-rated among several jobs and accounts numbers if desired.