USA Adjusting Various Health Liabilities to Expense Accounts


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This is my first post so please bear with me :) I work for a cash-basis company and we use a payroll company (Gusto) to process payroll versus doing it through Quickbooks. Gusto does integrate with QB which is nice, however, they require very specific account mappings in order to port information over. My biggest hurdle at this point is the health expenses. We contribute 50% and also have one employee who has a dependent, so his health expenses are deducted from her paycheck. Her dependent's medical/dental portions have been put into liability accounts but technically we shouldn't have any liabilities since we are a cash-basis company, but this is the way it must be set up for the payroll company's account mappings. I don't think it's correct to adjust these dependent liabilities into an expense account since they really aren't an expense to the company but on the same token I don't really know where to adjust them to. I contacted the payroll company about the best way to address this issue and they advised either deleting the transactions (???) or setting up a "dummy" liability account for the sake of the account mapping and then leaving a note that says these are dummy transactions. Neither of these solutions sit well with me. Does anyone have any better advice? Thank you so much for your time and help with this matter!
 
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Steve-LevelUp

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With any liability account, there should be an offsetting entry. EG, you can't book a liability without booking an expense. So, the mapping that is setting up the liability, where is the mapping putting the other entry for this account. If you can find where this is, then you can fix the issue. (by fixing it, you could just import into QB, and then book a reversing entry to remove the liability and offset the expense) There should never be a 'dummy' liability on the account as this liability account still follows double entry accounting rules.

I hope this helps.
 
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kirby

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Consider that since you do not ALWAYS settle transactions in cash, as in this case where you have a liability for a period of time, that you are actually a "modified" cash basis company. Then things will make more sense.
 

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