When a Payroll batch is committed through Premier Payroll module, the payroll service withdraws funds electronically to cover federal, state and local tax liability payments due, service fees and net pay.
Once the payroll batch is committed, the user sees 3 types of transactions in the NetSuite system. These are:
1. The Paycheck in the Payroll Batch
2. The Payroll Liability Check which records the payment for the tax liabilities taken-up in the paycheck
3. The compound funding Journal Entry which posts a debit to the payroll float and a credit to the bank account. The payroll service fees are recorded in the same journal entry. The total amount comprises of:
a. net pay for direct deposits and service-printed checks,
b. federal, state and local taxes,
c. payroll service fees
When paycheck is reversed, the general ledger impacts of both the paycheck and payroll liability check are reversed. The refund from Premier Payroll Service triggers a correcting journal entry for the original funded amount if the reversal is processed before the daily cut-off of 2:00 pm Pacific time and within the 2-day lead time.
For reversals done on a different date or outside the daily window, the user is recommended to create a manual journal entry to credit the liability accounts associated to the payroll tax items and debit the bank account when the employer receives the tax refund. Refund can either come from Premier Payroll service (if the paycheck reversed is within the quarter) or directly from the agency (if the paycheck reversed is from previous quarters where the taxes have already been paid).
To view the 3 interrelated transactions of a single payroll batch:
1. Navigate to Transactions > Employees > View Payroll Status
2. At the bottom part of the screen, filter the screen by batch number by selecting from the dropdown list next to Batch Number
3. Click the link under Type column to view the paycheck, payroll liability check, funding journal
To view the funded amount, payroll user may opt to filter the View Payroll Status screen by selecting Funding - ACH from the dropdown list next to Type. This can be found at the bottom part of the screen.
a. If paycheck is reversed within the same day cycle it was committed (2:00pm of the previous business day to 1:59pm of the current day), the screen displays a positive funding amount for the original payroll batch and a negative funding for the reversed paycheck.
b. If paycheck is reversed after 2:00 pm Pacific, the screen displays one positive funding amount.
Please click here for illustration.
1. Payroll reversals cannot debit employee accounts. If an employee is overpaid, the employer can make arrangements with the employee to collect the overpayment.
2. To request for stop payment, contact NetSuite Customer Support.
3. If tax deposits are still with the Premier Payroll Service, the refund is applied to the next payroll within the quarter. This appears as Payer to Payee Direct Transaction type on View Payroll status.
4. If the tax deposits are still with the Premier Payroll Service but no other payroll transactions are processed within the same quarter, the refund reflects on the Quarterly Tax reconciliation
5. If taxes have been remitted to the agencies, the payroll user receives the refund directly from the agency.
For additional references, please see following topics:
1. Setting Up Employees for Direct Deposit2. Committing Payroll Batches
3. Committing Payroll reversals4. Creating a Payroll Reversal
5. Reconcile Payroll Transactions Funding Account against Actual Funding per Bank Statement
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