Payroll Liabilities
Starting Balances > Other Liabilities
Payroll Liabilities Starting Balances
Payroll liabilities are amounts owed by an employer to employees, government agencies, insurance carriers and other entities as a result of processing payroll. These expenses must be paid by a specified date.
Examples for USA users
- Income taxes
Employers are generally required to withhold federal income tax from their employees’ pay. Many states and local jurisdictions also charge income tax. - Federal Insurance Contribution Act (FICA) taxes
FICA taxes, or Social Security and Medicare taxes, are a shared payroll liability. Employers pay their portion of the taxes and withhold an equal amount from their employees’ wages. In certain circumstances, employers also must withhold Additional Medicare Tax, but do not have to match it. - UnemplEntering Starting Balancesoyment taxes
Employers pay federal and state unemployment taxes. They do not withhold federal unemployment tax from employee wages, and in most cases, they do not withhold state unemployment tax either. Employers should check if their state requires employees to contribute to state unemployment, disability and family leave insurance programs via payroll deductions. - Employer-sponsored benefits
Depending on the benefit plan, employers deduct insurance premiums from employee wages on either a pretax or post-tax basis. They may also pay a portion of the premiums themselves, and if they offer retirement savings plans, they may match all or part of the employee contributions. - Workers’ compensation
Whether a business has many employees or just one, it generally has to carry workers’ compensation insurance. Employers pay the premiums annually or, in some cases, every payroll period via a pay-as-you-go plan.
Starting Balances
Starting Balances are entered using a Journal Entry.