State tax liabilities are similar to federal taxes in that you pay your state circular flow of money payroll tax using the state-specific depositing schedule. All businesses that invest in payroll software or a professional employer organization (PEO) have liabilities in payroll service costs. Another way to track your liabilities is to use payroll accounting. Payroll accounting gives you a clear record of your liabilities, including wages and taxes. It also shows you whether you’ve paid your liabilities or not. Finally, besides wages and withholdings, you should also consider the costs of managing or running payroll.

Paying your liabilities

Plus, use Joist to accept client payments and create professional invoices in just a few clicks. It’s essential to keep your payroll organized and up to date. Doing so will ensure your business runs smoothly and can handle financial growing pains as they arise. Payroll liabilities are present the 14 best ways to raise money for your startup or small business in every payroll you run. However, most companies pay their payroll responsibilities quickly.

Benefits Withholdings

Payroll tax withholdings are another integral payroll obligation. All employers must file payroll taxes and contribute these taxes for every worker they hire. Payroll liabilities are commonplace in day-to-day business. Whether you’re paying employees, using a payroll service or facing IRS penalties, it’s easy to get overwhelmed by the complexities of running payroll. Employees generally work during a pay period (e.g., biweekly) and receive wages for their work during that period after it’s over. For example, employees who worked from November 4 – 15 may receive wages for their work on November 22.

It automatically processes payroll and pays your taxes and workers’ comp premiums. This is the accounting way of tracking what you owe versus what you’ve paid. Differentiating between paid and unpaid costs helps you understand how much cash you need on hand to pay for expenses. In contrast, payroll expenses refer to the payroll-related costs you’ve already paid. To put it another way, your liabilities are the payroll costs you still owe; after you’ve paid them, they become expenses.

1. Employees depend on the money they receive to pay bills and purchase food and gas.
2. Depending on when a company processes payroll and the pay date, it’s usually only a matter of days or weeks before payments are due.
3. However, you’re required to withhold taxes on employee pay.
4. For example, if the fixed plan charges $150 for up to 25 employees and you only have nine employees, a PEPM plan could be significantly cheaper.
5. As an employer, you must know which payroll liabilities you’re responsible for.
6. Here are some of the most common liabilities you need to keep in mind.

The best payroll software for managing payroll liabilities

These relationships do not dictate our advice how is inherent risk assessed by an auditor and recommendations. Our editorial team independently evaluates and recommends products and services based on their research and expertise. Finally, update your records to show that the paid amounts are now payroll expenses rather than liabilities. Use payroll software to generate a payroll-liability balance report each time you process payroll.

Paid time off (PTO)

To do this, compare your payroll register with the amount you pay the staff member by cash, check, direct deposit or a direct deposit alternative. In this comprehensive guide, we’ll break down the different types of payroll liabilities. We’ll also give tips to help you stay on top of your finances.

Payroll software like QuickBooks Payroll can help streamline your process and seamlessly track liabilities and expenses. Note some variables may change your payroll calculations from one pay period to the next. There can also be changes in payroll expenses and liabilities.