In reviewing the way payroll is set up in QuickBooks I often find an error than can be easily corrected, a payroll item such as Federal Unemployment is set up to record FUTA expense in the wrong general ledger account. Here is the fix…
It’s just too easy to make. You just edit the payroll item, select the correct expense account, save your change, and QuickBooks automatically changes previous payroll entries to the general ledger so they are pointed to the new account. However, mass changes like this can be a problem if you make a mistake so plan what you want to do, back up before you do it, do it, and then check to make sure you got the results you expected.
Here is an example of the steps to follow. You have found that federal unemployment tax has been pointed to the “Salaries and Bonuses” account in error as shown in the transaction report below.
Select the payroll item from the payroll items list to edit.
Follow the wizard until you get to the screen displaying the expense account selection and change the account from “Salaries and Bonuses” to “Employer Paid Payroll Taxes”. When you save your change to this payroll item QuickBooks automatically changes all payroll accounting entries posted to the new account.
Next, run another report from the custom transaction detail journal for the new “Employer Paid Payroll Taxes” account, select “Payroll Items” to display, and total by “Payroll Item Detail” to get the following report with which to verify your changes.
Robert Guild is certified QuickBooks ProAdvisor in Austin, TX who conducts CPE courses for CPAs and individual training and group classes to QuickBooks users. His company at www.QBCoach.biz, maintains a sixteen-station QuickBooks lab, providing hands-on training. You can contact him directly at rguild@QBCoach.biz or follow him on twitter at QBPro