Payroll Liability Payment

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Hi there.  I am hoping you can give me a solution, and whether this is possible.  The bookkeeper before myself paid the Super Clearing House as a Bill Payment - rather than a Liability Cheque.  Therefore it has gone through as an expense to Superannuation Payable, rather than a Liability payment to the payroll liability.   So when I produce reports the figures are all wrong - stating we still have outstanding liability amounts for certain periods.  Do I need to delete each entry and apply as a liability payment, or is there an easier process??  Thank you.  
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Posted 6 years ago

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Hi there.  It is against the liability account.   But doing it as a 'bill payment' rather than a 'liability payment' means the costs are not allocated to a specific period, therefore my reports are stating there are still liability amounts outstanding.  
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Kathy Mackinlay

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You are able to adjust the payroll liability balance in payroll and choose to affect the GL accounts or not.  I had a similar situation and it took a bit of fiddling.  I kept referring to the payroll liability report and the general ledger account for the liability.  Hope this helps.

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Thank you for  the responses.   I think I will do as you say Kathy and play around with adjusting the payroll liability balances, to reflect the payments and what specific periods they were paying.  
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Graham Boast, Accredited Partner

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Hi HiT

This is my take on paying Payroll Liabilities; never, ever use the Pay Liabilities function!

My reason for this is twofold: it gives users a false sense of security, and it makes people think they have to set up 50 Payroll Items for the 53 employees superfunds they administer.

Here's how I manage without it:

  • Calculate the super you intend to pay for the month/quarter;
  • Generate a bill (enter bills) for each payment.  The bill should be dated at the end of the month/quarter and allocated to the Super Payable (Liability) Account;
  •  When you select the liability account on the bill you will get the following message - ignore it by hitting cancel. It will then allow you to proceed!
  • Check that the liability account has a zero balance. It should have.
  • Reconcile the Super Payable Account.  You are reconciling to a Zero balance.
  • Pat yourself on the back - you have saved yourself heaps of time looking for error at the end of the year.
This process also works for PAYG Payable, Child Support, Court Orders, etc.

If the account hasn't been reconciled since the year dot, you may need to work look at the June 2013 payments made in July, and enter a journal entry to suspense to get the 30th June 2013 balance correct.  You can then reconcile to 30th June to this balance and move forward from there.

My clients who reconcile their payroll liability accounts don't have end of financial year errors because the system is self-checking, but I have found simple errors from competent and experienced bookkeepers that are time-consuming to track down at a time of year when time is at a premium.

Graham Boast
Reckon Accredited Consultant

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Hi Graham, thanks for the above advice - I was struggling with allocating a prepayment to the PAYG liability cheque so your advice was most helpful.  My only issue that I am grappling with is that the payroll liability balances report still shows the amount as outstanding - is that right?  The payg liability account is reconciled to a zero balance and I patted myself on the back so I have followed all your steps :).  Appreciate your feedback in due course.