How do you handle pass-through payroll funds for US GAAP? My company provides a HR service including payroll processing. It used a payroll company to calculate payroll for a customer. It invoices its customer for a service fee and the payroll funds. The payroll funds are then sent onto the payroll supplier who payout to the employee and govt tax. Should the payroll piece show on the P&Lor balance sheet 1. Invoice to customer Dr, Debtor Cr, Sales service fee Cr. Payroll deposit liability Receive cash from Customer Dr. Cash Cr. Debtor 1. Invoice from Payroll provider (vendor) Dr. Payroll liability. Or should it be asset account and then clear the payroll asset against liability? Dr. service fee cost of sale Cr. Creditor Thanks
