Payroll liabilities
Payroll liabilities are the amounts a payroll run creates that you owe to others: net wages, withheld and employer taxes, deductions, and contributions.
A liability exists once payroll is calculated, and it stays open until the amount is paid and reconciled. Along the way it moves through states: calculated, funded, deposited, reported, and reconciled. The payroll register shows what is owed, but it does not prove that a deposit was made. Calculated and deposit liability are related but not always identical. So you separate withholding, employer tax, amount due, amount funded, and amount deposited. Any unresolved difference is a reconciliation item.
What counts as a payroll liability?
Payroll produces several kinds of obligations from one run. Each has its own payee, deadline, and payment method, so a single total hides what is due when. Employer taxes generally do not reduce an employee’s net payNet pay. Net pay is the amount an employee receives by paycheck or direct deposit after every tax and deduction is subtracted from gross pay.Click to open the term, but they are still owed because wages were paid. Third-party remittances send withheld or matched amounts to payees who are neither the employee nor a tax agency. Deposit deadlines follow your deposit schedule for each tax, and late deposits can bring penalties and interest.
| LIABILITY | OWED TO |
|---|---|
| Net wages | Employees |
| Employee withholding: federal income tax, Social Security, Medicare | Tax agencies |
| Employer taxes: employer share of FICA, FUTA | Tax agencies, as your own cost on top of wages |
| Deductions: garnishments, benefits, retirement plans | The payees they were withheld for |
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.