In this tutorial, Linda Artesani of Artesani Bookkeeping explains a recurring issue in QuickBooks Online (QBO) payroll where paychecks are recorded against the wrong bank account. She contrasts the enhanced payroll version with the full‑service version, noting that the latter automates tax and liability payments and is generally safer. The problem arises when payroll settings are misconfigured—either in enhanced or full‑service mode—causing payroll checks to be drawn from a payroll‑specific bank account but posted in QBO to an operating account. QuickBooks support cannot reassign these already‑generated checks, so Artesani demonstrates a manual workaround: creating a transfer transaction that moves the amount from the operating account back to the payroll account, effectively offsetting the incorrect entry for reconciliation. She emphasizes the critical need for regular bank‑feed reconciliation to catch such errors early, shares a case where delayed detection caused months of messy corrective entries, and recommends using full‑service payroll and ensuring correct bank account linkage during setup. The video concludes with a call for viewer feedback and a promise to update the post if QuickBooks ever adds a fix.
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Hi there, Linda Artesani, Artesani Bookkeeping. This particular issue in QuickBooks Online I wanted to bring to your attention because I know I've had 2 customers with this particular issue and I just saw it come up on one of my colleagues on Facebook that he wanted to know how to fix this. If you use QuickBooks Online payroll, you have to be very diligent, especially with the enhanced version to make sure your settings are set up properly. Start payroll, you would log into Workers. This is a QBO-A type of company file, so most people won't have all this up here. Come into Workers, and then you'd get started with payroll. So here is the payroll services that are part of QuickBooks Online that are built into the system. You've got the enhanced version. It's not the version I generally recommend. It isn't a bad version. I mean, they do email you to tell you to pay your liabilities and they email you to tell you to, you know, produce your tax returns. And the program generally does it itself. But for the safety's sake and not missing a tax deadline, I try to recommend to all my clients, and they all have Switched to the full service for the price and the peace of mind. It's one less thing you have to worry about. All you have to do is produce the paychecks. You don't have to really worry about where, you know, when is the tax return due, when is a payment, liability payment due. It's all done for you, and then it's just housed inside the program so you can actually access your tax forms in the program itself. Is that my customers when they set up payroll, and I don't know if this is going to show because they don't have payroll here, In this file. But for payroll settings, this is where you would go. And it's in here where you can set up all the settings. This is my business, so I've got my, my settings set up with full service, but you can set up your settings to be in here. And this is where your account would come in. So you go to Accounting Preferences, click that on, and then you can find that your bank account is here. So the problem that people are having is they don't set this up with the enhanced version exactly right, and sometimes it can even be the full service. I actually had it happen with full service that they did not set it up. This particular customer had— it was an HOA and she had a million accounts. She had several checking accounts. I don't know where they got their information. I wasn't involved in the setup where they got the information for the bank account, but they actually put the checks, the payroll checks, In the payroll system coming out of the wrong account. The account that she set it up for was the correct account, the account they linked in the banking. So the problem was when the bank account processed the paychecks according to QuickBooks, and I'll show you, they came into their checking account, the checks were here, the paychecks were here, but they weren't out of the operating— out of the payroll account. So I called QuickBooks Online payroll and I said, how can you fix this? I need you to log in on the backend and take these paychecks that you populated out of the wrong account and put them in the right account. Well, guess what? They don't have the ability to do that. I can't even understand why a program would be built. I know it's payroll and there's a lot of rules and there's a lot of fixed issues around it, but they, they can't fix it. So what happened is the bank feed pulled in, the checks came out of the payroll account, the QuickBooks showed the checks coming out of the operating account. Those could not be moved, they were fixed. So how am I going to get those checks to clear out of operating, because they didn't happen in the operating, and show them in the payroll account? So all I did was I created a transfer. So I'm just going to copy this amount here. I'm going to come over to the plus sign, show the transfer. I'm hoping this gets fixed someday too, by the way, because it really doesn't make sense that they can't fix it. I get, you know, I'm not a programmer, so I'm sure there's a reason behind it. I'm sure it's a payroll reason, right? So I want to show the money coming out of the payroll account because they're not showing up in payroll even though that's the account that the checks physically cleared At the bank level, and I want to show it going back into the operating account so that I can clear the transaction that's in there that doesn't belong. And then I can make a note now and say, why did I have these transfers? You know, why was payroll in the wrong account? So now I've got a positive and a minus. They're going to negate each other when I reconcile. I just need to clear both of these off. This check is never going to clear because it got pulled out of payroll account where it was supposed to. That's the account that they linked to payroll. But the payroll company didn't set the settings up right and put them in the wrong account. So if you're in full-service payroll or enhanced payroll, you can come over here and correct the account that it's coming out of. I only have one account, so I can't do that there. But if you had several accounts, you could do it there. Just it just makes sense to make sure that your payroll paychecks are coming out. I had a second client this happened with. They didn't reconcile their checking, which I just want to really encourage people, please, please, please reconcile. So important that that error would be found right away, right? It would be located and discovered right away that there was an issue. Well, this client had it happen last year around June, and it went all the way through till he hired me in a separate engagement for accounts receivable, and Somehow going through his records, I gave him a price for cleanup when I saw our accounts receivable and I noticed it. And we had to go back and do entries for June, July, August, right through December to fix it. It made a pretty big ugly mess. So I immediately changed the bank account for them so it corrected itself somewhere in February this year, but it was a pretty big mess to fix. And it's the mess in the file and there's nothing you can do to fix it other than that's the only way I can come up with because the checks are fixed once they're produced. If they're produced and the people have been paid, you can't fix it. If you have it happen initially and the paychecks haven't gone to direct deposit, you can always delete the checks and then change the setting and redo a payroll. But if you're like this company where it was like so many checks, you really can't fix it. So I hope that's helpful. I know that was kind of a A long story, but it's important because you can't change it and I can save you a call to support at least in this, this case. And if it ever does change that they are able to fix that, I will update this blog post. But I just wanted to put that out there. Thank you so much for watching. I hope this was helpful. If you have any further topics you'd like me to do a blog post on, please feel free to hop on my Facebook page and share. Bye now.
