Balance Sheet Report Question Re: Current Liability Item

Posted by Laura on December 31, 2007, 6:09 pm

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I don't know how to change the payroll checks since I don't have any QB
payroll clients at the moment.

An alternative would be for you to just change the reimbursement checks to
line up with the payroll transactions for those 5 checks. It really does not
matter what account is used as long as both pieces of the transaction point
to the same account.

> Laura,

> I think I follow what you're saying. Is there a way for me to change the

> five checks written in 2007 so that the HSA employer contribution and the

> reimbursement check is posted to the same account? Right now, the

> checkbook register shows that the reimbursement check to the employee is

> set up as a Payroll Liability. I've changed the Payroll Item for the HSA

> Employer contribution for future checks in 2008 so that the Liability

> Account (company-paid) is no longer saying Payroll Liabilities but will

> now be the same as what's listed for the Expense Account, which is "Health

> Savings Account." Does that sound like the right way to set it up. And,

> how do I change the five checks that were written in 2007 so that they can

> be the "Health Savings Account" rather than the Payroll Liabilities

> account?

> Thanks for your input on this!

> Jason

>> It sounds like one of pieces is going to the wrong account. I suspect it

>> is the payroll setup that is at fault. Run a detailed transaction report

>> that displays the payroll check and the payments to reimburse the

>> employee. You need to be able to see what accounts are being impacted

>> with these transactions. The way it should work is the HSA employer

>> contribution should be posted to the HSA account and then the

>> reimbursement checks get posted to the same account.

>>> Thank you, Laura, for your response. I appreciate your efforts to try

>>> and help me sort this out. I've also wondered if the problem is that the

>>> amount is not posting to the liability account correctly.

>>>

>>> Here's more information. Maybe this will be helpful for you to let me

>>> know how you think I can proceed on this:

>>>

>>> When I double-click on the Balance Sheet item and call up the

>>> Transactions by Account record, I see that this liability amount is from

>>> five payments that were made to the staff member with the Health Savings

>>> Account during the year. His paycheck is done through Direct Deposit

>>> each month.

>>>

>>> When I look at the Review Paycheck screen for each of these checks,

>>> there is an item listed in "Company Summary" called "HSA Employer

>>> Contribution". Other items listed in this Review Paycheck section

>>> include other company costs such as Social Security Company, Medicare

>>> Company, etc.

>>>

>>> When I look at the CheckBook Register, I see that a separate check is

>>> written out for the staff member for the Health Savings Account payment

>>> to him. Under Number/Type, it says LIAB CHK and the account is listed as

>>> Payroll Liabilities.

>>>

>>> I really appreciate your input on this. I hope this new info is clear so

>>> you can help me troubleshoot this.

>>>

>>> Jason

>>>

>>>>

>>>>>I am the Director of a small nonprofit. We use QuickBooks 2007

>>>>>NonProfit edition. I have an item showing up on our annual Balance

>>>>>Sheet Report for 2007 for the first time that I think ought not be

>>>>>there. Under Liabilities & Equity, it now says:

>>>>>

>>>>> Liabilities

>>>>>

>>>>> Current Liabilities

>>>>>

>>>>> Other Current Liabilities

>>>>>

>>>>> Health Savings Account (6,450)

>>>>>

>>>>> In 2007, we did set up a Employer-paid Health Savings Account for one

>>>>> of our staff who has a high deductible health insurance plan. Our

>>>>> organization did contribute $6,450 (the maximum amount allowed) in

>>>>> 2007. However, I'm not sure why it's still showing up as a current

>>>>> liability in the Balance Sheet Report.

>>>>>

>>>>> We set up this Employer Paid Health Savings Account in QB as a Company

>>>>> Contribution Payroll Item, and on the Tax Tracking Type screen of the

>>>>> payroll item wizard, we choose Health Savings Acct, as per the Help

>>>>> instructions in QB. When we take a look at the Payroll Item List, we

>>>>> see it listed as HAS Employer Contribution; when we edit that item, we

>>>>> see that the Liability Account (company-paid) drop down item chosen is

>>>>> Payroll Liabilities and the Expense Account is listed as Health

>>>>> Savings Account. QB tells us that the Liability Account and the

>>>>> Expense Account can be changed at any time.

>>>>>

>>>>> We'd like to be able to eliminate this $6,450 from our Balance Sheet

>>>>> Report for 2007 as a Current Liability, since it has been paid to the

>>>>> staff member during 2007. Can folks help us figure out how to do that?

>>>>>

>>>>> Thanks very much.

>>>>>

>>>>> Jason

>>>>

>>>> You say that this "has been paid to the staff member during 2007".

>>>> Check the account used when you paid the staff member. It should have

>>>> posted to the Liability account and reduced it to zero by year end.

>>>

Posted by Jason Saffer on January 2, 2008, 9:59 am

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Laura,

I'd like to double-check whether I am correctly entering in payroll data
when I write a paycheck for the staff member who has the Health Savings
Account which the employer contributes to. I'm thinking that this may be
what is causing the basic problem of having an amount still show up in our
Balance Sheet as a Current Liability. Can you take a look at how I do this
and tell me if this is a wrong way to do it?

In the Review Paycheck window, I enter in the employee's gross salary in the
"Earnings" section of the window. QB automatically configures withholding
taxes, etc. and that all shows up in the "Employee Summary (adjusted)"
section of the window. I then manually enter the amount of the Employer paid
Health Savings Account in the "Other Payroll Items" section of the window,
next to an item that I added in there called "HSA Employer Contribution"
(this is the Payroll Item previously prepared in QB). When I put an amount
on this line in the Other Payroll Item section, I also see that QB
automatically also fills it in in the "Company Summary " section, on the HSA
Employer Contribution line.

After creating a paycheck in this way, the paycheck shows up in the check
register. Then, I go to the Pay Scheduled Liabilities screen, I click on
Related Payment Activities, then then click on Create Custom Liability
Payments. That brings up a list of Payroll Items that are due to be paid. I
check off the HSA Employer Contribution item and then click on Create. That
creates an item in the checkbook register, a check to be paid to the
employee. The check in the check register shows as a LIAB CHK type (in the
number/type column) and a "Payroll Liabilities" in the account column.

Please let me know if this procedure makes sense, or if there's a different
procedure I should use. Thanks very much for your help on this. This issue
is driving me nuts. I really have to be able to disappear this amount from
the Other Current Liabilities section of the Balance Sheet, because it also
makes our end of year checkbook register balance in the Assets section look
lower than it actually is.

Jason

>I don't know how to change the payroll checks since I don't have any QB

>payroll clients at the moment.

> An alternative would be for you to just change the reimbursement checks to

> line up with the payroll transactions for those 5 checks. It really does

> not matter what account is used as long as both pieces of the transaction

> point to the same account.

>> Laura,

>> I think I follow what you're saying. Is there a way for me to change the

>> five checks written in 2007 so that the HSA employer contribution and the

>> reimbursement check is posted to the same account? Right now, the

>> checkbook register shows that the reimbursement check to the employee is

>> set up as a Payroll Liability. I've changed the Payroll Item for the HSA

>> Employer contribution for future checks in 2008 so that the Liability

>> Account (company-paid) is no longer saying Payroll Liabilities but will

>> now be the same as what's listed for the Expense Account, which is

>> "Health Savings Account." Does that sound like the right way to set it

>> up. And, how do I change the five checks that were written in 2007 so

>> that they can be the "Health Savings Account" rather than the Payroll

>> Liabilities account?

>> Thanks for your input on this!

>> Jason

>>> It sounds like one of pieces is going to the wrong account. I suspect it

>>> is the payroll setup that is at fault. Run a detailed transaction report

>>> that displays the payroll check and the payments to reimburse the

>>> employee. You need to be able to see what accounts are being impacted

>>> with these transactions. The way it should work is the HSA employer

>>> contribution should be posted to the HSA account and then the

>>> reimbursement checks get posted to the same account.

>>>

>>>> Thank you, Laura, for your response. I appreciate your efforts to try

>>>> and help me sort this out. I've also wondered if the problem is that

>>>> the amount is not posting to the liability account correctly.

>>>>

>>>> Here's more information. Maybe this will be helpful for you to let me

>>>> know how you think I can proceed on this:

>>>>

>>>> When I double-click on the Balance Sheet item and call up the

>>>> Transactions by Account record, I see that this liability amount is

>>>> from five payments that were made to the staff member with the Health

>>>> Savings Account during the year. His paycheck is done through Direct

>>>> Deposit each month.

>>>>

>>>> When I look at the Review Paycheck screen for each of these checks,

>>>> there is an item listed in "Company Summary" called "HSA Employer

>>>> Contribution". Other items listed in this Review Paycheck section

>>>> include other company costs such as Social Security Company, Medicare

>>>> Company, etc.

>>>>

>>>> When I look at the CheckBook Register, I see that a separate check is

>>>> written out for the staff member for the Health Savings Account payment

>>>> to him. Under Number/Type, it says LIAB CHK and the account is listed

>>>> as Payroll Liabilities.

>>>>

>>>> I really appreciate your input on this. I hope this new info is clear

>>>> so you can help me troubleshoot this.

>>>>

>>>> Jason

>>>>

>>>>>

>>>>>>I am the Director of a small nonprofit. We use QuickBooks 2007

>>>>>>NonProfit edition. I have an item showing up on our annual Balance

>>>>>>Sheet Report for 2007 for the first time that I think ought not be

>>>>>>there. Under Liabilities & Equity, it now says:

>>>>>>

>>>>>> Liabilities

>>>>>>

>>>>>> Current Liabilities

>>>>>>

>>>>>> Other Current Liabilities

>>>>>>

>>>>>> Health Savings Account (6,450)

>>>>>>

>>>>>> In 2007, we did set up a Employer-paid Health Savings Account for one

>>>>>> of our staff who has a high deductible health insurance plan. Our

>>>>>> organization did contribute $6,450 (the maximum amount allowed) in

>>>>>> 2007. However, I'm not sure why it's still showing up as a current

>>>>>> liability in the Balance Sheet Report.

>>>>>>

>>>>>> We set up this Employer Paid Health Savings Account in QB as a

>>>>>> Company Contribution Payroll Item, and on the Tax Tracking Type

>>>>>> screen of the payroll item wizard, we choose Health Savings Acct, as

>>>>>> per the Help instructions in QB. When we take a look at the Payroll

>>>>>> Item List, we see it listed as HAS Employer Contribution; when we

>>>>>> edit that item, we see that the Liability Account (company-paid) drop

>>>>>> down item chosen is Payroll Liabilities and the Expense Account is

>>>>>> listed as Health Savings Account. QB tells us that the Liability

>>>>>> Account and the Expense Account can be changed at any time.

>>>>>>

>>>>>> We'd like to be able to eliminate this $6,450 from our Balance Sheet

>>>>>> Report for 2007 as a Current Liability, since it has been paid to the

>>>>>> staff member during 2007. Can folks help us figure out how to do

>>>>>> that?

>>>>>>

>>>>>> Thanks very much.

>>>>>>

>>>>>> Jason

>>>>>

>>>>> You say that this "has been paid to the staff member during 2007".

>>>>> Check the account used when you paid the staff member. It should have

>>>>> posted to the Liability account and reduced it to zero by year end.

>>>>

>>>

Posted by Laura on January 2, 2008, 8:37 pm

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> Laura,

> I'd like to double-check whether I am correctly entering in payroll data

> when I write a paycheck for the staff member who has the Health Savings

> Account which the employer contributes to. I'm thinking that this may be

> what is causing the basic problem of having an amount still show up in our

> Balance Sheet as a Current Liability. Can you take a look at how I do this

> and tell me if this is a wrong way to do it?

> In the Review Paycheck window, I enter in the employee's gross salary in

> the "Earnings" section of the window. QB automatically configures

> withholding taxes, etc. and that all shows up in the "Employee Summary

> (adjusted)" section of the window. I then manually enter the amount of the

> Employer paid Health Savings Account in the "Other Payroll Items" section

> of the window, next to an item that I added in there called "HSA Employer

> Contribution" (this is the Payroll Item previously prepared in QB). When I

> put an amount on this line in the Other Payroll Item section, I also see

> that QB automatically also fills it in in the "Company Summary " section,

> on the HSA Employer Contribution line.

> After creating a paycheck in this way, the paycheck shows up in the check

> register. Then, I go to the Pay Scheduled Liabilities screen, I click on

> Related Payment Activities, then then click on Create Custom Liability

> Payments. That brings up a list of Payroll Items that are due to be paid.

> I check off the HSA Employer Contribution item and then click on Create.

> That creates an item in the checkbook register, a check to be paid to the

> employee. The check in the check register shows as a LIAB CHK type (in the

> number/type column) and a "Payroll Liabilities" in the account column.

> Please let me know if this procedure makes sense, or if there's a

> different procedure I should use. Thanks very much for your help on this.

> This issue is driving me nuts. I really have to be able to disappear this

> amount from the Other Current Liabilities section of the Balance Sheet,

> because it also makes our end of year checkbook register balance in the

> Assets section look lower than it actually is.

> Jason

Your methodology sounds correct. I would suggest you check the payroll setup
specifically the HSA Payroll Item by looking at it from the Payroll item
List screen. Double click on the HSA payroll item and click on Next. Verify
that the account specified is Payroll Liablity. That is the account that the
Pay liabilities "assumes" the checks should be posted to.

I would also run a detail transaction report for the payroll liability
account. Do you see both the payroll contribution and the corresponding
payments? You may have to dump the data to excel and sort the detail to see
if things are lining up. The key is that you need to locate both sets of
transactions (payroll check vs liabilty check) to identify the problem. You
might do a test payroll check & payment in a future date and then run the
detail transaction report on that date.

Posted by Jason Saffer on January 4, 2008, 1:42 am

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Type Date Memo Original Amount Paid
Amount

Paycheck 5/31/07 Direct Deposit (2,668.00) (2,668.00)
Paycheck 5/31/07 Direct Deposit 2,668.00 2,668.00
Liability 5/31/07 (2,668.00)
(2,668.00)

This is what the Transaction report for May said about our Payroll
Liabilities.

It's now clear that the original problem came when we set up the Payroll
Item for the Health Savings Account. We correctly assigned the
company-expense Health Savings Account payroll item to a liability account
(Payroll Liabilities) - but we also incorrectly assigned it to an expense
account (called Health Savings Account) that was actually an Other Current
Liability account, not an Expense Account. We have corrected this for 2008
by editing the Payroll Item and assigning it to an expense account that is
actually an expense account. We've run a test payroll and it now seems to
work fine. We've also done a Payroll Liability adjustment for 2007 to get
rid of that Other Current Liability entry that kept showing up on our
Balance Sheet Report.

What was the biggest bummer for us was that all year long, when we looked at
each month's Year to Date Income and Expenses Report, it didn't reflect this
growing expense, so that by year's end, this report did not indicate that we
had actually spent $6450 more than we thought we had. It's only when we did
the Payroll Liabilities adjustment that this amount showed up as an expense
in the Year to date Income and Expenses Report.

Laura, your help has been *invaluable* in helping us understand what was
going on. We really appreciate your taking the time to lend a helping hand!
Thanks much!

...Jason

>> Laura,

>> I'd like to double-check whether I am correctly entering in payroll data

>> when I write a paycheck for the staff member who has the Health Savings

>> Account which the employer contributes to. I'm thinking that this may be

>> what is causing the basic problem of having an amount still show up in

>> our Balance Sheet as a Current Liability. Can you take a look at how I do

>> this and tell me if this is a wrong way to do it?

>> In the Review Paycheck window, I enter in the employee's gross salary in

>> the "Earnings" section of the window. QB automatically configures

>> withholding taxes, etc. and that all shows up in the "Employee Summary

>> (adjusted)" section of the window. I then manually enter the amount of

>> the Employer paid Health Savings Account in the "Other Payroll Items"

>> section of the window, next to an item that I added in there called "HSA

>> Employer Contribution" (this is the Payroll Item previously prepared in

>> QB). When I put an amount on this line in the Other Payroll Item section,

>> I also see that QB automatically also fills it in in the "Company Summary

>> " section, on the HSA Employer Contribution line.

>> After creating a paycheck in this way, the paycheck shows up in the check

>> register. Then, I go to the Pay Scheduled Liabilities screen, I click on

>> Related Payment Activities, then then click on Create Custom Liability

>> Payments. That brings up a list of Payroll Items that are due to be paid.

>> I check off the HSA Employer Contribution item and then click on Create.

>> That creates an item in the checkbook register, a check to be paid to the

>> employee. The check in the check register shows as a LIAB CHK type (in

>> the number/type column) and a "Payroll Liabilities" in the account

>> column.

>> Please let me know if this procedure makes sense, or if there's a

>> different procedure I should use. Thanks very much for your help on this.

>> This issue is driving me nuts. I really have to be able to disappear this

>> amount from the Other Current Liabilities section of the Balance Sheet,

>> because it also makes our end of year checkbook register balance in the

>> Assets section look lower than it actually is.

>> Jason

> Your methodology sounds correct. I would suggest you check the payroll

> setup specifically the HSA Payroll Item by looking at it from the Payroll

> item List screen. Double click on the HSA payroll item and click on Next.

> Verify that the account specified is Payroll Liablity. That is the account

> that the Pay liabilities "assumes" the checks should be posted to.

> I would also run a detail transaction report for the payroll liability

> account. Do you see both the payroll contribution and the corresponding

> payments? You may have to dump the data to excel and sort the detail to

> see if things are lining up. The key is that you need to locate both sets

> of transactions (payroll check vs liabilty check) to identify the problem.

> You might do a test payroll check & payment in a future date and then run

> the detail transaction report on that date.