Year-to-Date Adjustments

Year-to-Date (YTD) adjustments XE "Accrual Period" must be made, before starting to pay, unless this is a completely new company. On a year-end transition, it may be necessary only to record carry-over liabilities. This is a less typical case, and is discussed below.

Earnings, deductions, and company contributions must be at hand, with totals of each for every employee. Click Activities|Payroll|Set Up YTD Amounts.

Employee YTD gets to the Employee YTD Adjustments box, and more decisions. Will the QuickBooks company contain only the records after the start date, or the records for the entire year? Starting at the bottom of this box, we can deal with entries for the entire year. The first decision is which employee to select. Then click Edit.

Clicking on one employee brings up the YTD Adjustment dialog box for that employee.

What is to be done with the payroll adjustments? Do they directly affect things like W-2’s and YTD figures on the pay check stubs. Should they affect your books of account? On the employee box click Accounts Affected, but note that this selection is made separately for each employee.

Accounts not affected: if prior financial history is not being picked up in the QuickBooks company file, this entry will set up employee data only. These numbers, plus amounts recorded in checks in QuickBooks, will appear in the government forms. These numbers will not be in any QuickBooks accounts.

Bank and other accounts affected: (third option) if the QuickBooks company is to contain all the financial records of the current calendar year and current fiscal year, choose this. The result will be as if a check (or a check for each quarter) was written, summarizing all pay checks. (This will leave liabilities on the books. We will deal with them later.)

Not bank account: This choice may be selected if you some accounts are not correct. This might be the case if you had converted from Quicken, but had not followed the Quicken manual. While the Prior Payments window is displayed, pressing the function key F1 will open a good Help window. Scroll down to When to use this option.

With the correct selection marked, click OK, and return to the employee YTD adjust box.

Salary and Hourly Wages will receive all earnings information for the period. These will all be added to the W-2. Prior tax-deferred earnings, such as 401 (k) plans will probably result in a need to adjust the W-2, at the end of the transition year.

Hours can be entered for each hourly payroll item, and will add to hours worked while QuickBooks is in use.

Additions and deductions will be entered in the table below. Each works as if the same item were included in a pay check. Note that only positive numbers are entered. Adding or subtracting is controlled by the type of payroll item. A column displaying the wage basis of each item can be added by clicking Show Wage Bases.

Liabilities require correct handling of two possible situations. The examples show an August start (better august than humble.) The employer was obliged to make payments, for the first two quarters. For a January 1 transition, December liabilities would be carried into the next year.

When all of the employee YTD adjustments have been entered, Step 1 in the Set Up YTD Amounts box is complete.

Step 2: Prior Payments (button in the Set Up YTD Amounts box) allows you to enter those payments.

What goes here? When the YTD adjustments were entered for each employee, the deduction and company contribution items were recorded as liabilities, such as federal withholding, FICA, or 401 (k) contributions. This space is to enter payments actually made on those liabilities. “Accounts Affected” would be the same as those set in the employee adjustments.

Step 3: Liability Carryover (button in the Set Up YTD Amounts box.) A January 1 transition to QuickBooks is very clean, except that liabilities from the prior year may not have been paid. These may be entered in this box.

Liabilities entered here will be in Payroll Liabilities, identified as payroll items. They should be paid with Activities|Payroll|Pay Liabilities. Entry here is not imperative. These could be entered in another liability account, at the expense of cluttering the chart of accounts.

With YTD liability payments entered, payroll is set up, and you are ready to pay employees.