Introduction

The purpose of this process is to ensure payroll checks needing to be voided are done correctly and prior to the calculation of taxes and the transfer of tax payment invoices to A/P.

Results of Voiding a P/R Check

The impact of voiding a payroll check depends on what has been reported on Fed tax reports and whether or not you are still in the same accounting year. It is very important, as you will see from the information below, to be sure payroll is correct before issuing checks.

Because the Payroll System has its own bank account and keeps its transactions separate from clients' general accounts, creating a payroll check involves a large number of accounting entries. Voiding a payroll check means the system must reverse all the entries posted when creating the check in the first place. It is critical the sequence of events detailed on the checklist is observed.

The following steps are taken by the system when a payroll check is voided:

• All wages associated with the VOID check are reversed. Wages will need to be reentered as the old wages are deleted.
• A negative check item is created in the 'PAYCHECK' file.
• Negative tax records are created in the 'PAYTAX' file, for both the Employer and the Employee.
• The Payroll Bank Account has a negative check posted to it.
• All postings for the General Ledger are reversed.
• Employee earnings totals (including taxes) are adjusted.
• A credit memo is created in Accounts Receivable for the client's books whose payroll is adjusted.
• A credit memo from A/P to P/R is created from the client whose payroll is adjusted.

Voiding a P/R Check in Current Month

If during the current payroll process an error was discovered in preparation of a payroll check, the system is designed to allow the Operator to quickly void the check, reversing all the accounting entries, including the funds transfer between the client bank account and the Payroll Bank Account.

At this point, depending on whether you need a new check or not, you may be able to continue in the payroll process without further interruption. However, if the check must be replaced with another, you will need to run a payroll for the single item, following the checklist to the point where you voided the original check, then proceed with the payroll process.

Void P/R Check in Current Month AFTER Tax Invoices Created

If the Operator has discovered the need to void a payroll check after the tax invoices were calculated, then the check should be voided, a new check issued if necessary, then the Tax Invoice Program rerun.

Void a P/R Check for a Prior Month or Quarter

In this instance, because the Fed tax reports have been done, after the system corrections have been made, correcting reports will have to be submitted to the IRS.

Void a P/R Check for a Prior Year

Warning: you cannot adjust a prior year's payroll item in the current year! You must void the payroll check and make associated adjustments through the A/P System. The steps to be taken are detailed below:

• Create an invoice item in A/P using the Special Vendor# (usually 9999), with the same name as the employee on the check to be voided. The client will be the Payroll Account. Select 'Prepaid' as the item type, and enter a negative (-) amount equal to the net amount paid on the check to be voided. Post to the G/L account for Accounts Payable.
• Create an invoice item in A/P using Vendor Number for the Client/Employer. The client will be the Payroll Account. The amount will be the gross amount of the voided check plus employer taxes. Use the G/L account for Accounts Payable.
• Create an invoice item in A/P using the Vendor Number for the IRS account. The client will be the Payroll Account. Select 'Credit Memo' as the item type and use the G/L account for Accounts Payable.
• Create an invoice item in A/P using the Vendor Number for the State. The client will be the Payroll Account. Select 'Credit Memo' as the item type and use the G/L account for Accounts Payable.

Do a Journal Entry to post the deposit of the reimbursement to the Client/ Employer. Debit Cash for the total amount of the deposit, the credit should be broken down between Salaries, Payroll Tax Expense and Workmans Comp Expense.