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Balance Sheet - Payroll Liabilities

Alison Hart

I have had this problem before but cannot remember how to fix it.

My balance sheet has bought up some old figures and not sure why. I did change a Payroll item code but changed it back when this happened. I have tried to fix it but now I am in a muddle.

The indented line 2100 - Payroll Liability $-2308.86 and 21050 Super Payable 2308.86 should not be showing. The 21001 @ 21002 lines are correct.

Help why have they popped up again.

Thank you

Accepted answers

Acctd4

You’re definitely on the right track wanting to clean this up 👍 — It’ll make things much easier going forward.

1. Payroll Expenses via Payroll Items (no journals)
Yes — you are absolutely correct.
Payroll Items should be set up to post directly to the correct expense accounts so there’s no need to journal amounts afterwards.

Using journals for this has been adding complexity & increases the risk of things going out of sync.

2. Liabilities (Super, PAYG, etc.)
Great move consolidating Super to 1 account 👍👌🏻 There's no need to break this down in Payroll Items &/or Accounts - RAH already has specific built-in reports that show all/any combination of payroll amounts per employee, for you 😊

Just make sure:

Each Payroll Item links to the correct liability account
You use Payroll Liability Payments to clear them (instead of journals)

That way RAH keeps everything aligned automatically.

3. FB Deductions item (why it’s showing every pay)
This is only appearing because it’s been added as a default Payroll Item in the employee record - You can safely remove it from there — this will not affect any prior transactions.

For FBT purposes:

It should only be added once, on the last pay before 31 March
The amount MUST come from your Tax Agent (as it’s grossed-up using specific formulas)

If set up correctly:

It does NOT need an offsetting deduction
It does NOT affect net pay or other components
It’s purely for reporting (Reportable Fringe Benefits)

Important distinction - This is NOT the same as a regular Salary Sacrifice Payroll Item though! :

Salary Sacrifice = Used on every pay, affects PAYG/STP

FBT/RFB item = Annual entry only, for reporting purposes

Bottom line (best setup going forward):

Payroll Items → Post directly to correct Expense Accounts
Use Liability Payments (not journals)
Keep one account per liability type
Only apply the grossed-up FBT item once annually, not every pay

You’re very close — this clean-up will make a big difference going forward 😊

All comments

Acctd4

Hi @Alison Hart

This is due to how your Payroll Items are linked to your Accounts.

Anytime an account shows with "-other", it means that those particular figures shown there, have been entered under (or an Item/Payroll Item has been linked to) a main header account, instead of one of the ones under it!

Because of this, the system doesn't know which subaccount it should be, so it creates a generic "other" subaccount to reflect those particular entries.

It looks like you've inadvertently got TWO separate accounts there for Super liabilities (21001 & 21050) so I'm thinking you may have started separating them but unintentionally created another separate, stand-alone account too. Then, transactions have either been posted directly - or linked to - a combination of all 3:

NOTE: PAYG Tax & Super should always be under separate accounts as they are different, trackable liabilities! Nothing should be linked - or posted - to parent (header) accounts as their purpose is just for grouping.

If you double-click on that -2,308.86 amount, you'll see which entries/Payroll Items this relates to & can then correctly reallocate the entry (or link the associated Payroll Item) to either the PAYG or Super subaccount instead 😊

Alison Hart

Hi Shaz,

I did as you advised above but now I have this

I printed the transactions for 21050 and can see the what makes up the 2308.86 but not sure how to fix it.

I did do some journals in prior months to zero out the 21050 & Sub accounts and it was all fine until now. Maybe the journals are a problem now also.

Transaction Detail 21050.pdf

Acctd4

Hi @Alison Hart

Yikes 😬 Are you not using the Payroll features within Hosted ? It looks like you’re entering GJs (instead of Liability Payments) … & they’re also being posted to multiple accounts 😳

For simplicity & accuracy, you should have ONE account per liability type.

It’s simple enough to merge/streamline though, so don’t panic. Happy to assist with tidying this up if you need, just shoot me an email direct 😁

Acctd4

Hi @Alison Hart

Yikes 😬 Are you not using the Payroll features within Hosted ?

It looks like you’re entering GJs (instead of Liability Payments) … & they’re also being posted to multiple accounts 😳

Having ONE account per liability helps with simplicity & accuracy.

It’s simple enough to merge/streamline though, so don’t panic. Happy to assist with tidying this up if you need, just shoot me an email direct 😁

Alison Hart

Hi Shaz,

Yeah its a bit messy. The system was setup before my time and I have just followed along. We don't use the Liability Payments and process a journal instead. It has always worked. I shouldn't have started fiddling with things until I had zero balances.

Yesterday I did do a backup and it was before I started trying to change things so I am thinking of restoring the backup and at the end of this month changing the Super accounts.

My original plan was to pay April Super to the ATO clearing house and start the Pay Day Super as of the first payroll in May with a clean slate.

Your thoughts??

Acctd4

Personally, I'm not a fan of overusing GJs - Don't get me wrong, they have their purpose - & in some cases, are necessary - but I mainly use them for EOFY movements/depreciation only.

The system isn't designed to be utilised via GJs (as every transaction creates the double-entry journal for you, in the background) Instead, it relies on tax codes & Payroll Items for managing liabilities effectively, in order for the system to recognise these movements, in reporting.

For instance, you would be unable to use the Payroll Liability Balances reports as the system has been accruing the liabilities under the relevant Payroll Items but in your file, these have never been cleared, so these reports won't reflect that they've actually ever been "paid" 😬 :

The tax (GST) reports are also entirely driven by tax codes so posting a GJ without a tax code &/or to your Tax Payable account won't be reflected on those reports either.

Therefore, if any of these reports are being used for determining BAS, they're likely showing incorrect figures 😬

GJs are not always clear as to what has actually occurred, in the same way as a "payment" entry so many people also don't understand what they represent.

Using Liability Payments means the system does both parts - It reduces the accumulation under the applicable Payroll Item AND also reduces the relevant liability account at the same time.

Users will often confuse the purpose of Items, Payroll Items & Accounts & just duplicate these lists, which is problematic for a number of reasons …. It increases the likelihood of duplications & errors (as there are too many possibilities for where to "post things" as per your case), Lists & Reports are unnecessarily long, & the data file size is increased, so stability & performance can be negatively impacted.

Items should be where your breakdowns are for goods/services etc
Payroll Items should be a breakdown also, BUT still be generic enough to be used for any employee as required
Accounts are the "categories" that they all link to.

Items & Payroll Items are used to enter transactions whereas Accounts are just the category, where the totals end up.

😊

Alison Hart

We only started using Reckon Payroll in 2019 and I didn't set it up. It was done manually before that.

The liabilities & GST reports do still balance to the balance sheet.

The Payroll Items go to Payroll Expenses then we journal them to the correct account each pay.

I am thinking it would be best to have them go directly to the correct Expense account then there is no need for the journal, is that correct?

As of April I have changed the Super Liability to one account number.

One thing I don't understand, is on the Payroll Items for FB Deductions it needs a liability account. We don't even use that item but for some reason its there and is on the pay slip. I do an end of year adjustment as of 31st March for the FB Gross Up. Can I delete that item? and only use the FB Addition item?

I have been doing everything the same for so many years and its now time to make it easier and clean it up.

Pay Slip.png

Payroll Liabilities.png

Balance Sheet.png

Payroll Items.png

Acctd4

You’re definitely on the right track wanting to clean this up 👍 — It’ll make things much easier going forward.

Using journals for this has been adding complexity & increases the risk of things going out of sync.

Just make sure:

Each Payroll Item links to the correct liability account
You use Payroll Liability Payments to clear them (instead of journals)

That way RAH keeps everything aligned automatically.

3. FB Deductions item (why it’s showing every pay)
This is only appearing because it’s been added as a default Payroll Item in the employee record - You can safely remove it from there — this will not affect any prior transactions.

For FBT purposes:

It should only be added once, on the last pay before 31 March
The amount MUST come from your Tax Agent (as it’s grossed-up using specific formulas)

If set up correctly:

It does NOT need an offsetting deduction
It does NOT affect net pay or other components
It’s purely for reporting (Reportable Fringe Benefits)

Important distinction - This is NOT the same as a regular Salary Sacrifice Payroll Item though! :

Salary Sacrifice = Used on every pay, affects PAYG/STP

FBT/RFB item = Annual entry only, for reporting purposes

Bottom line (best setup going forward):

Payroll Items → Post directly to correct Expense Accounts
Use Liability Payments (not journals)
Keep one account per liability type
Only apply the grossed-up FBT item once annually, not every pay

You’re very close — this clean-up will make a big difference going forward 😊

Alison Hart

Thanks so much for you help with all of this Shaz.

Alison Hart

Hi Shaz,

I am making the changes to payroll items and have a query.

The Items for Salary & Super have 4 different Expense accounts that they are allocated against. This is due to employees wages allocated to different projects. Should I create a different Item for each project and allocate accordingly?

Also, when making items or Chart of Accounts numbers inactive can they be deleted also?

Thanks

Acctd4

Are you not using Classes for tracking Projects ? 🤔

Yes, delete any unused List elements (eg name, account, item etc)

NOTE: If it's ever been used on a transaction, you'll be unable to delete it (& it will tell you that when you try anyway, so just make those ones Inactive) but delete what you can 😊

Alison Hart

We use classes to track our Tax Deductible & Non Deductible Receipts.

Alison Hart

All our projects & workers have their own income and expense account sections in the chart of accounts.

Acctd4

Hmm … but if you're using the accounts for project breakdowns, what are you using in the Customer:Job section ? 🤔🤔🤔

If not Classes, they're normally set up as Customer:Jobs (so that the projects can be fully job-costed for expenses, also)

Alison Hart

We don't use the Customer Job section at all.

Probably should clarify that we are a Company registered with the ACNC as a charity and have PBI & DGR status so accounts are done a bit differently.

We also us a Donor date base for our donations that we export & import into reckon.

Alison Hart

Can I just setup different Payroll items for each and add them to the workers Pay setup?

I cannot see any other way to do it. Maybe that is why we have been posting to Payroll Expenses then journaling to the appropriate accounts for all these years.

Acctd4

https://community.reckon.com/discussion/comment/20663318#Comment_20663318

😩

Yeah, I realised you were an NFP 😊 In Hosted, you have access to all the industry-specific edition reports.

The setup configuration should be based on profit-tracking preference, so NFPs usually use it this way:

Customer:Jobs = Donors/Grantors (In order to track detailed breakdowns on income sources, as all the Customer reports relate to these)

Classes = Projects/Funding sources

Items = Donation types/Grant income categories

This setup prevents this need to then split EVERYTHING:

https://community.reckon.com/discussion/comment/20663315#Comment_20663315

Yikes 😬

Alison Hart

Yeah 😕🙃 its all a bit upside down.

This was all setup many years ago before I started in this role.

That's why I am thinking the only way around it is to set up a Payroll item per employee for Super & Salary but the super still going to one super account liability. There are only 5 employees so not to intense.

Acctd4

OK, but it certainly wouldn't be my recommendation

( … & just so you know … agreeing to that, also pains my Reckon heart ! 😖😢🤣)

Alison Hart

Thank you.

I totally accept that it wouldn't be a normal recommendation and understand how frustrating these questions must be for you as a Reckon partner.

We have talked about re hashing the whole system, but that gives me much anxiety 😅 If I had more time on my hands I certainly would be up for it.

I really appreciate your help with this.

Have a lovely evening !!!!

Acctd4

No worries @Alison Hart, you too 😊

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