A reader writes in to say, “I forgot to change the rate of my state unemployment tax, I have now fixed the rate in the payroll item, and it seems to be computing correctly for each new paycheck, but I am not sure how to fix the prior computed amounts?”
Adjusting state unemployment tax, or any payroll liability follows the same steps. When you locate discrepancies regarding your Payroll liabilities, you can record an adjustment using the Liability Adjustment feature in QuickBooks payroll. Adjustments can be made that affect both liability and expense accounts, or which do not affect accounts. These adjustments can also be made for employee specific liabilities, or company liabilities.
Once you have computed the value and type of adjustment, you can enter the amount and indicate whether it is an employee or company liability, you can also choose to adjust, or not adjust the account balance(s). If you choose to update your payroll liability account, QuickBooks will adjust the proper liability account(s) and prompt you to enter an account to offset the entry.
To make specific adjustments follow these steps:
- Open the Adjust Payroll Liabilities window from the Payroll Taxes and Liabilities sub-menu found under the Employees Menu
- Enter the Date, this is the actual date of the transaction, but this date need not correspond to the Effective Date of the Adjustment selected in #3 below.
- Select the Effective Date of the Adjustment. (Consider the ramifications of making changes for any effective date in a period where prior employment tax reports have already been prepared.)
- If the adjustment affects a single employee related liability, select the employee from the drop down in the employee field.
- If the adjustment does not affect an employee, but only a company paid liability, select the company (radial button) option.
- Select the correct payroll liability item within the Payroll Item column of the Taxes and Liabilities section of the Adjust Payroll Liabilities window.
- Enter the amount of the adjustment. A negative (-) amount will decrease the amount of any payroll liability, and a positive (+) amount will increase the amount of any payroll liability.
- If desired, enter a notation in the Memo column to describe the reason for the adjustment.
- Click the Accounts Affected button, then select the appropriate option; o not affect accounts, or Affect liability and expense accounts (If you select this option QuickBooks will prompt you to enter the appropriate account to offset the entry against the affected payroll liability account).
- Click OK to save your entries.