Voiding Checks in Accounting Software

Learn why voiding checks is important within your accounting software, and also the general process for voiding them.
A check should be voided if you still have it in hand, and the amount is incorrect, it was issued to the wrong vendor or bank, or the invoice should not have been paid. Once a check has been voided, a record of that transaction remains in the system. If you have already sent out the check, you should only void the check if they never received it, and you need to send a new one.
The void check function is used to cancel an existing payment transaction. If the check had been used to pay an invoice, then voiding that check will also reverse the payment for that invoice, returning it to an unpaid status. Once the open invoice has been restored, it will again display on the open invoices and vendor aging reports. If the original check was entered without applying it to open invoices, then the void process will also void the expense portion of the check.
If a check number had not previously been recorded, due to the check being destroyed before ever entering the system, you will have a gap in sequence numbers. If your business likes to account for all check numbers, it is good practice to record and void that check in your accounting software. That way you will not question the missing check number later on, as it will be accounted for within the system.

Quicken & Other Budget/Accounting Software/Voiding a check with issues

QUESTION: Hi!  I have several of our payroll checks that are a few months old that haven't been cashed.  We didn't cash them.  I understand from a previous question and answer on the website that I can't just void the checks.  I understand how to void them correctly.  However, I have another issue. I use a payroll service.  We make the checks payable and offset payroll taxes into a payroll liability account.  When we receive the EFT debit to our checking account, I post the entry from the payroll service company against the payroll liability account.  This is a wash.  If I void the check and those deposits to the payroll liability account, the payroll liability account will not wash. How do I fix this?

ANSWER: Hi Tammy,
You cannot just void a payroll check, it will either need to be reissued or the money will need to be sent to your states unclaimed money agency. Either way, you need to keep that check recorded because the date of the original check is when your company incurred the payroll tax liability.
If you are going to reissue the check, make a journal entry debiting the checking account and crediting your wage account. Then write a new check to the employee using the wage account as the expense (net effect on wage expense is zero) Be sure to put in the memo line the date and number of the check that you are replacing.
If you no longer have contact with the employee and need to send the money to the state, I would set up a liability account called Checks Not Cashed. The journal entry would then be a debit would still be to the checking account but the debit would be to Checks Not Cashed. When you write the check to the state, you would enter the account Checks Not Cashed in the expense line.
This keeps your company in compliance with the Unclaimed money legislation.
I hope this helps.
Karin