New Payroll Journal Accounting - How do I treat double counting the payroll liabilities?

quickbikequickbike Member Posts: 4

Hello,

Wave just updated, and now my payroll journal is doubling the payroll liabilities.

Scenario:
Run Payroll
Creates Journal Entries
One of the Journal Entries is a Payroll Liability Credit (Total net pay owing to employees) Let's say $5000
Additional Payroll Liability is created 'Payroll period ending' Withdrawing from 'Cash on Hand' for $5000
Connected bank account then also brings in a Withdrawal of $5000

My only way of balancing this out, is to make the bank account withdrawal a transfer to 'Cash on Hand' to clear the balance.

Is anyone else having to do this now? If so, how are you accounting for this?

Thanks again!

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Comments

  • ErikFErikF Member Posts: 1

    I'm having the same problem. Did you ever get an answer to this?

  • quickbikequickbike Member Posts: 4
    Hi,

    I didn't get a response, but I basically kept my solution above. It works, I'm just not sure if that's the best way to do it.
  • Labob246Labob246 Member Posts: 5

    Having the same problem as well. I am just deleting the connected bank account withdrawal and keeping the wave payroll withdrawal.

    edited February 4, 2019
  • KMRobertsKMRoberts Member Posts: 2

    I did a chat with Wave on this same issue and they didn't seem to understand what I was saying. They said they would look into it and email me back. That was over three days ago and I haven't heard back from them.

  • ZoeCZoeC Administrator Posts: 389 admin

    Hey @quickbike, @ErikF, @Labob246, @KMRoberts, I am really sorry for the delay in response time!

    In order for Payroll journal transactions to be handled properly by Wave, the correct funding account has to be selected in Account Mapping. Settings > Account Mapping

    Payroll journal transactions will then be bookkept in two steps:

    1. The creation of a journal transaction, and an expense transaction in the Transactions page, You’ll notice here that, instead of being recorded to a bank account, Total net pay owing to employees is recorded to Payroll Liabilities. So, when a payroll is approved, the liability account is credited (increased) by, the amount that you owe the employees. This is the accounting equivalent of saying “I approved payroll, so now I owe my employees the wages from that payroll.”

    2. Wave will also create a withdrawal transaction in the Transactions page whose account is set to the funding account from Account Mapping, and whose category is set to Payroll Liabilities. The date of this transaction will match the withdrawal date for your Direct Deposit. Where the journal transaction credited Payroll Liabilities, this transaction debits it by the amount of the withdrawal. This is the accounting equivalent of saying “Ok, now I’ve actually paid my employees.”

      If you have a bank account connected, it will pull in the same withdrawal transaction, so you will have to either merge the two withdrawal transactions, or delete the bank-imported transaction, as Wave will have already accounted for it.

    @quickbike it sounds as though your funding account may be mapped to cash on hand, you will need to update this in Settings > Funding Account and add your bank account instead. You can then categorize the withdrawal transactions from your bank as Payroll liabilities and merge with the withdrawal transactions generated by Wave(step 2 above). I would also advise deleting the existing cash on hand transactions. I hope this helps!

    @KMRoberts if the issue you were having on live chat is a bit different or you still need some help, please let me know and I would be happy to dig a bit deeper!

  • SpokaneFiberCleanSpokaneFiberClean Member Posts: 4

    I am coming from QuickBooks and I have always paid my employees from the business' checking account and then transferred an approximate amount to a savings account to be used when I need to pay my payroll taxes. It seems different for Wave. Is that accurate? If that is the case, is my "funding account" the same for paying employees as well as tax liabilities? Since I have all of my customer payments going to my main checking, should that be my payroll funding account?

    I've attached snipits of the account mapping and where to change the funding account. Are these two related? The snip of my funding account is actually the number of my tax savings acct, but the account mapping shows my main checking. Does that need to be fixed?

    I'm sorry if this is confusing. I just have a lot of questions and don't know which question I should ask first.

    Thanks!

  • Ryan_WRyan_W Administrator Posts: 462 admin

    Hey @SpokaneFiberClean don't worry; you're all good! The funding account is the specific account that we process 1) direct deposit payroll for your employees, but also 2) since you're in a tax service state, it's the same one we debit for remitting tax payments to the government. Both of these will come from your designated funding account.

    For what it's worth I also pulled up your account on our end, and can confirm you've set up your payroll account properly with regards to tax payments and direct deposit. Hope that gives you some peace of mind!

  • SpokaneFiberCleanSpokaneFiberClean Member Posts: 4

    Thank you!

  • jardnjardn Member Posts: 3

    I am having the same issue - I am getting duplicates of the "payroll period ending" along with the "wave bus/ent" which is coming from the checking account that is used to do payroll. The account mapping is correct... this has resulted in liabilities being wrong along with expected balance for my checking account.

    Is there someone that can help fix this?

    ... rereading the notes previously there was a comment outlining
    "If you have a bank account connected, it will pull in the same withdrawal transaction, so you will have to either merge the two withdrawal transactions, or delete the bank-imported transaction, as Wave will have already accounted for it."

    Is there a reason this isn't automated? So the fix is manually deleting the bank account transaction... or are they supposed to auto-merge?

    edited November 16, 2019
  • MikegMikeg Member Posts: 534 ✭✭✭

    @jardn,
    The fix is to delete the bank withdrawal. Since importing is purely a mechanical function, Wave does not read the transaction as a payroll check.

  • jardnjardn Member Posts: 3

    Thanks.
    I decided instead to merge the two transactions and see what happens - so that I can track things down the road later when comparing / reconciling to statements rather than simply deleting the transaction. Seems to work.

    J

  • MikegMikeg Member Posts: 534 ✭✭✭

    There are different ways to go about it. I actually have the journal entry point to accrued payroll payable (liability) and delete the Wave created disbursement. The actual withdrawal goes against accrued payroll.
    Best of luck!

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