CenterPoint® Payroll - Payroll Liabilities vs. Current Liabilities

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Note: This topic applies to the full version of CenterPoint Payroll and does not apply to Basic Payroll.

Payroll creates liabilities for taxes and deductions (insurance, etc.) to be paid by the employer. CenterPoint allows you to set up payroll liabilities in two different account categories: “Payroll Liabilities” or “Other Current Liabilities”. The two categories are assigned to the accounts under Setup > Accounts > Accounts.  Once an account is assigned to one of these categories it cannot be changed, instead a new account would have to be set up.

CenterPoint handles “Payroll Liabilities” differently than “Other Current Liabilities”.  When a pay run is posted, accounts for taxes and deductions in the "Payroll Liabilities" account category create an accounts payable under the vendors they were tied to during their setup and accounts in the "Other Current Liabilities" account category do not create an accounts payable but still update the liability balance. Reports (such as the Deductions & Benefits Liability and the Tax Liability reports) can be printed to see the balance due amounts.

If you are using CenterPoint Payroll with another CenterPoint product (integrated), the CenterPoint Payroll program needs additional general ledger accounts in specific account categories entered into the chart of accounts. The additional accounts and the account category they must be in are listed in Table 1 below. The account names listed below are suggestions. Account numbers and abbreviations are optional. The account categories are specific.

Table 1 – Additional Payroll Accounts

Account Number Account Name Account Category

100000

Checking

Cash
130000 Payroll Advance Payroll Advances
200000 Payroll Liabilities Payroll Liabilities
307000 Retained Earnings Retained Earnings

The Payroll Liabilities account listed in Table 1 (under Account Name) can be used to post all payroll liabilities. We recommend expanding the chart of accounts to include a separate payroll liability account for each vendor because CenterPoint Payroll automatically creates open invoices for payroll liabilities by vendor (this is not required). You can assign a vendor to a payroll liability account in Setup > Accounts > Accounts > Detail tab> Detail tab. In the Vendor Liability is Paid To box, select a vendor. To create a new vendor, in the Vendor Liability is Paid To box, right-click, select New, enter the vendor information, and then click Save. Table 2 lists an example of additional payroll liability accounts.

Generating payroll creates liabilities for taxes that are deducted from the employee paychecks and the employer's portion of those taxes, but may also create additional liabilities for benefits that are calculated during that payroll. ALL payroll liabilities need to be created under the account type of Liabilities and the account category of Payroll Liabilities (whether they are taxes or not).

Table 2 – Example Additional Payroll Liability Accounts

Account Number Account Name Account Category

210000

Federal Taxes Payable

Payroll Liabilities
220000 State Taxes Payable Payroll Liabilities
222000 Work Comp Payable Payroll Liabilities
240000 Child Support Payroll Liabilities
Note: If you want your Cash Income Statement to include any payments of taxes, the account category that should be assigned to those payroll liabilities is Payroll Liabilities. The Payroll Liabilities account category generates an invoice to pay the payable from Processes > Pay Invoices Due. If you want your Cash Income Statement to include any payments of deductions or benefits, assign the deduction/benefit to an account in the Payroll Liabilities account category.

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