Payroll: the agencies you pay, paying liabilities, and deductions like child support

Set up the agencies you pay

Every agency or plan you send payroll money to is an ordinary vendor. Add each one under Lists → Vendors → + New Vendor, for example:

• United States Treasury (or "IRS / EFTPS") for federal withholding, Social Security and Medicare (Form 941) and FUTA (Form 940).
• Your state tax department for state income tax withheld, and your state workforce or unemployment agency for SUTA.
• Your retirement plan provider, health insurer, workers' comp insurer, and the state child support disbursement unit or court named on any withholding order.
• In Canada: Receiver General for Canada for the CRA remittance (income tax, CPP and EI), plus Revenu Québec or a provincial health-tax ministry if they apply to you.

US companies can then link each liability to its vendor once: Payroll → Pay Liabilities → Deposit schedules… has a payee column next to each liability, along with how often it is deposited (monthly, semiweekly or next-day for the 941, quarterly for FUTA, and your state's schedule). After that, the payee fills in by itself whenever you pay. If you skip this step, AcboBooks picks a vendor whose name looks right (Treasury, IRS, Receiver General and so on), and you can change it on each payment.

Pay payroll liabilities

Each paycheck you create with Payroll → Run Payroll adds what it withheld and what you owe as the employer to the Payroll Liabilities account. Payroll → Pay Liabilities lists what each agency is owed as of a date, the period it covers and its due date. Overdue amounts are shown in red.

1. Pay the agency the usual way: EFTPS or your state's site in the US, or CRA My Business Account in Canada.
2. In AcboBooks, click Pay… on that row. Choose the bank account it came from, the date, the payee (vendor) and the amount, and type the confirmation number in Ref.
3. Save. AcboBooks takes the amount out of the bank and off Payroll Liabilities, and the row shows it as paid. Recent payments are listed underneath, where Void puts an amount back as owed if you made a mistake.

Pay liabilities from this screen rather than with Write Checks or Pay Bills. That way the payment is tied to the liability and its period, so the Payroll Liabilities report, the 941 and 940 deposit lines, and the due dates all stay right. A plain check would reduce the bank balance but leave the liability showing as owed.

Check date or pay period?

Payroll in AcboBooks goes by the check date (the paycheck's Date field), as the IRS and CRA require. The paycheck posts on that date. The quarter it falls on decides which Form 941 it belongs to and when its deposit is due, and the year it falls in decides which W-2 or T4 it is on. The Pay period from / to dates are for reference: they print on the pay stub and pick up timesheet hours, but they don't move anything to a different quarter or year. For example, a December 22–31 pay period paid on January 5 is January wages, on the first quarter's 941 and next year's W-2.

The due dates on Pay Liabilities are worked out from the oldest unpaid paycheck's date and the deposit schedule you chose. Your schedule depends on your own lookback period, so check it against the IRS or CRA notice they sent you.

Deductions, child support and garnishments

Deductions are set up once on the employee and then taken from every paycheck:

1. Payroll → Employees, click Edit on the employee.
2. Under Recurring deductions (in Canada, Other deductions), click + Add deduction.
3. Give it a name (for example "Child support, case 12345"), choose the type Garnishment (child support, levy, court order), and enter either an amount per paycheck or a percentage of gross pay, as the order says.
4. Save. Each paycheck now takes it from net pay and shows it as its own line on the pay stub.

The other types are pre-tax retirement (401(k), 403(b), SIMPLE), pre-tax health (Section 125, HSA) and after-tax deductions (Roth, union dues and so on). Each type is taxed correctly: for example, pre-tax retirement lowers income-tax wages but not Social Security or Medicare wages.

Withheld deductions add up in the Employee deductions withheld row of Pay Liabilities. When you send the money to the child support unit, court or plan, click Pay… on that row and choose that vendor as the payee.

Follow the order itself for the amount, any limits and the payment deadlines. If you aren't sure, ask the agency that issued it or your accountant.

Correct a liability

For rounding, a credit the agency gave you, or tax withheld by mistake, click Adjust… on the row in Pay Liabilities. Choose whether to raise or lower what is owed, enter the amount and date, and pick the account to post the difference to. To change a paycheck itself, open it from Run Payroll or void it and create it again. The liability follows the paycheck.

If you start using AcboBooks for payroll part-way through the year, enter each employee's totals so far under Pay Liabilities → Year-to-date set-up…. This keeps the wage limits, quarterly forms and W-2s or T4s right without posting those wages to your books twice. More: the Academy's US payroll and Canadian payroll lessons.