6 Steps to Reconciling Payroll Liabilities in QuickBooks

Let's face it: payroll processing can a be stressful, time-consuming, and costly investment. At the same time, it's difficult to avoid it due to its importance, as an effective payroll management strategy will achieve many aims: navigating the tax system, monitoring business expenses, avoiding penalties and fines, and keeping accurate records.

One area that businesses need to pay attention to is payroll reconciliation, which consists of comparing your payroll register with the amount you plan to pay out to your workers to verify matching numbers. This should be a frequent process, but what steps should you take? Read on to learn how to reconcile payroll liabilities in QuickBooks.

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1. Make a List of All Your Payroll Liability Accounts

For the first step in this process, it's essential to produce a list of payroll liabilities—these are payroll expenses that companies still owe. These can include several aspects, such as employee compensation and benefits, health insurance, taxes, and withholdings. It's crucial to remember that any funds that aren't regularly removed from your payroll accounts could suggest there might be a problem, be it transactions booked to the wrong accounts or late bill payments.

2. Create Transaction Labels

One reconciling measure to employ is to create transaction labels so that offices can separate employee and employer payroll liability transactions. By incorporating QuickBooks into your payroll infrastructure, you can take advantage of the option to assign transaction labels. This feature can identify employee and employer funds separately, resulting in quick and efficient data organization.

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3. Download a Payroll Liability Reconciliation Spreadsheet

Should you download a payroll liability reconciliation spreadsheet? Simply put—yes. This document monitors your account activities, supports making copies for every payroll liability account, and creates them at the end of every period based on how regularly you complete reconciliations. Payroll experts suggest monthly reconciliation is suitable. In addition, it's highly recommended to insert the liability account name at the top of the spreadsheet, as well as the beginning and ending balance, and leave space for any reconciling items.

4. Print Reports from QuickBooks

To start the Print Reports feature from QuickBooks, you'll need to garner reports from the general ledger and payroll software.

Now, there are a couple of factors you need to be aware of. First, if you're reconciling liabilities every month, you'll need to select a monthly transaction report for every payroll liability that shows beginning and ending balances. The second is that you may need to put together multiple reports from your payroll software, such as a payroll deduction report, payroll register report, and payroll tax report.

5. Review Payroll Liability Transactions

For exceptional payroll management, departments need to review every payroll liability transaction and reconcile outstanding items. This is completed after using Print Reports, as you download transactions from QuickBooks into an Excel spreadsheet.

Here are the five steps for exporting transactions from QuickBooks to Excel:

• Click on the "Gear" icon
• Select "Export Data" under "Tools"
• Pick the date range on the "Reports" tab
• Add or remove items from the "Reports" and "Lists" tabs
• Hit "Export to Excel"

Lastly, be sure to figure out the transactions that account for the final balance of each payroll liability account.

6. Fix Payroll Liability Reconciling Items

Although remedying payroll liability by reconciling items can be difficult, it's a critical component of payroll management. As a result, you should check transaction amounts that need to be listed on the payroll liability amounts by doing the following:

• Examine benefit premiums: Check any relevant invoices to determine who you were charged for and how much.
• Examine payroll deductions: This consists of reviewing if they match what you were charged and what was paid out.

In the end, you might need to reverse a transaction when particular circumstances arise. This might include errors on an invoice your benefits provider billed you, regular employer-matched retirement or benefits funds for terminated employees, voided checks, or expensed amounts to the business that employees were ultimately responsible for.

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Easily Reconcile Payroll Liabilities in QuickBooks

Every organization needs to complete payroll reconciliations every month to ensure an effective payroll management strategy. This is essential to ensure no employees are overpaid or underpaid, payroll processing errors are reduced, and other key pieces of tax information are properly stored.

Although it can seem daunting, this doesn't need to be a trying chore since QuickBooks can make the process of reconciling payroll liabilities accurate and easy. Using QuickBooks for this purpose will result in fast identification of reconciling items.

» Want to easily reconcile payroll liabilities? Make sure to read our review on QuickBooks software and see how it can help you along the way.