Accounting for S-Corp taxes

Posted by Andrew DeFaria on August 24, 2007, 2:15 am

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Let me start off with this - I really don't want to incur the costs and
learning overhead of Quickbooks. Yet I am now incorporated an paying
myself a paycheck. As such I don't see how to properly account for both
the corporation's payment of say Social Security and my personal payment
of Social Security through my paycheck.

For example, keeping the numbers real simple, as a corporation money
comes into your corporate business account. You then generate a paycheck
to pay yourself. Let's say I'm gonna pay myself $1000 and $100 of it
will go to Social Security as a deduction. Assuming that Social Security
is the only tax we need to worry about (again, just to make the numbers
simple) this whole business of paying me a paycheck will cost the
corporation actually $1100. There'll be a check sent to me for $900 -
$1000 gross minus the $100 Social Security deduction, and then the
corporation will pay the other 1/2 of the Social Security ($100).

But how is this to be represented in Quicken? I mean most of you aren't
corporations but do receive paychecks. Using the Paycheck wizard you
dutifully record that you received $1000 for a paycheck and $100 of it
was deducted. You categorize that as Social Security which is affiliated
with the tax line item for /W2, Social Security, self/. This then
properly flows throughout Quicken and can be exported into Turbotax
later on.

But what about the $100 that the corporation paid for Social Security
for you? How is that categorized? Surely that shouldn't be using the
same category as that would double all of your social security payments
incorrectly. How do you configure this?

Looking in Quicken Home & Business 2006's help I see it tells me to
select Business: Quicken Services: Manage Payroll. Well first off there
is no Manage Payroll selection to select! Wonderful job there Intuit.
There is a "Pay your employees" selection which bring up
http://payroll.intuit.com/ which is... tada! Quickbooks! :-(

So any other corporate owners out there who have managed to solve this
problem?
--
ClearSCM, Inc.
Andrew DeFaria, President <http://clearscm.com>
Why do you press harder on the buttons of a remote control when you know
the batteries are dead?

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Let me start off with this - I really don't want to incur the costs and
learning overhead of Quickbooks. Yet I am now incorporated an paying
myself a paycheck. As such I don't see how to properly account for both
the corporation's payment of say Social Security and my personal
payment of Social Security through my paycheck. 
 
For example, keeping the numbers real simple, as a corporation money
comes into your corporate business account. You then generate a
paycheck to pay yourself. Let's say I'm gonna pay myself $1000 and $100
of it will go to Social Security as a deduction. Assuming that Social
Security is the only tax we need to worry about (again, just to make
the numbers simple) this whole business of paying me a paycheck will
cost the corporation actually $1100. There'll be a check sent to me for
$900 - $1000 gross minus the $100 Social Security deduction, and then
the corporation will pay the other 1/2 of the Social Security ($100). 
 
But how is this to be represented in Quicken? I mean most of you aren't
corporations but do receive paychecks. Using the Paycheck wizard you
dutifully record that you received $1000 for a paycheck and $100 of it
was deducted. You categorize that as Social Security which is
affiliated with the tax line item for W2, Social Security, self.
This then properly flows throughout Quicken and can be exported into
Turbotax later on. 
 
But what about the $100 that the corporation paid for Social Security
for you? How is that categorized? Surely that shouldn't be using the
same category as that would double all of your social security payments
incorrectly. How do you configure this? 
 
Looking in Quicken Home & Business 2006's help I see it tells me to
select Business: Quicken Services: Manage Payroll. Well first off there
is no Manage Payroll selection to select! Wonderful job there Intuit.
There is a "Pay your employees" selection which bring up
<a class="moz-txt-link-freetext"
href="http://payroll.intuit.com/">http://payroll.intuit.com/</a> which is...
tada! Quickbooks! :-( 
 
So any other corporate owners out there who have managed to solve this
problem? 
<div class="moz-signature">-- 
<a href="http://clearscm.com">ClearSCM, Inc. 
Andrew DeFaria, President</a> 
Why do you press harder on the buttons of
a remote control when you know the batteries are dead?
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Posted by Laura on August 24, 2007, 9:43 am

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> Let me start off with this - I really don't want to incur the costs and

> learning overhead of Quickbooks. Yet I am now incorporated an paying

> myself a paycheck. As such I don't see how to properly account for both

> the corporation's payment of say Social Security and my personal payment

> of Social Security through my paycheck.

> For example, keeping the numbers real simple, as a corporation money

> comes into your corporate business account. You then generate a paycheck

> to pay yourself. Let's say I'm gonna pay myself $1000 and $100 of it

> will go to Social Security as a deduction. Assuming that Social Security

> is the only tax we need to worry about (again, just to make the numbers

> simple) this whole business of paying me a paycheck will cost the

> corporation actually $1100. There'll be a check sent to me for $900 -

> $1000 gross minus the $100 Social Security deduction, and then the

> corporation will pay the other 1/2 of the Social Security ($100).

> But how is this to be represented in Quicken? I mean most of you aren't

> corporations but do receive paychecks. Using the Paycheck wizard you

> dutifully record that you received $1000 for a paycheck and $100 of it

> was deducted. You categorize that as Social Security which is affiliated

> with the tax line item for /W2, Social Security, self/. This then

> properly flows throughout Quicken and can be exported into Turbotax

> later on.

> But what about the $100 that the corporation paid for Social Security

> for you? How is that categorized? Surely that shouldn't be using the

> same category as that would double all of your social security payments

> incorrectly. How do you configure this?

> Looking in Quicken Home & Business 2006's help I see it tells me to

> select Business: Quicken Services: Manage Payroll. Well first off there

> is no Manage Payroll selection to select! Wonderful job there Intuit.

> There is a "Pay your employees" selection which bring up

> http://payroll.intuit.com/ which is... tada! Quickbooks! :-(

> So any other corporate owners out there who have managed to solve this

> problem?

Here's how I would manually book it in QuickBooks. Hopefully you can map the
categories to your Quicken setup without too much difficulty:

Your paycheck:
Payroll Gross (expense) $1000 (db)
Payroll Taxes Payable (payable) $100 (cr)
Cash $900 (cr)

EmployER taxes:
Payroll Tax Expense (expense) $100 (db)
Payroll Taxes Payable (payable) $100 (cr)

When you pay the taxes due each quarter:
Payroll Taxes Payable (payable) $200 (db)
cash $200 (cr)

I only have Q basic and I am not sure how to record step 2. Hopefully H&B
allows journal entry type of transactions to allow you to book transactions
that don't touch a bank account.

Posted by Andrew DeFaria on August 24, 2007, 11:21 am

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Laura wrote:

> Here's how I would manually book it in QuickBooks. Hopefully you can

> map the categories to your Quicken setup without too much difficulty:

> Your paycheck:

> Payroll Gross (expense) $1000 (db)

> Payroll Taxes Payable (payable) $100 (cr)

> Cash $900 (cr)

Huh? What is "Payroll Taxes Payable (payable)" supposed to mean? Is it a
category? If so what is it's tax line item? That's the heart of my
question to begin with. I assume the above would be a split transaction
that I would enter into my personal checking account, right?

> EmployER taxes:

> Payroll Tax Expense (expense) $100 (db)

> Payroll Taxes Payable (payable) $100 (cr)

Ditto "Payroll Tax Expense (expense)". Also, where would this
"transaction" happen? My business checking account?

> When you pay the taxes due each quarter:

> Payroll Taxes Payable (payable) $200 (db)

> cash $200 (cr)

Actually *I* don't pay my taxes and I don't pay each quarter anymore
either. Or at least that's what I'm being told to do. You see I have
Wells Fargo doing my payroll. Thus *they* pay my taxes on my
corporation's behalf. I'm just trying to properly account for what they
are doing with my money. And taxes aren't paid each quarter either (at
least I don't think they are) rather they are being paid for each month
when WF cuts me a paycheck.

> I only have Q basic and I am not sure how to record step 2. Hopefully

> H&B allows journal entry type of transactions to allow you to book

> transactions that don't touch a bank account.

AFAICT it doesn't. You can enter split transactions that have such
offsetting categories so that the amounts can be properly categorized.
But that's not really my issue. My issue is how to categorize shared
taxes (e.g. SS) so that everything flows properly at tax time. In a non
corporate environment the employee just receives a check, enters a
paycheck transaction - which is just the gross amount followed by a
series of negative (i.e. deductions) amounts for the various taxes.
These deductions must be properly categorized to categories that have
associated with them a "tax line item". This tax line item (e.g. (W2,
SS) tells Quicken what this is WRT a tax item thus making Quicken's Tax
center know how much you got paid and how much taxes you have paid. I
want that to continue to work correctly. The category/tax line item is
also used when information is exported to other tax programs like
TurboTax. I want that to work properly too. So I don't think I want both
$100 categorized to the *same* category/tax line item because that would
double the reported SS taxes paid and set everything off, no?
--
Andrew DeFaria <http://defaria.com>
The only difference between a grave and a rut is the depth.

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Laura wrote: 
<blockquote
cite="mid:EfBzi.51614$ax1.34994@bgtnsc05-news.ops.worldnet.att.net"
type="cite">Here's how I would manually book it in QuickBooks.
Hopefully you can map the categories to your Quicken setup without too
much difficulty:
 
 
Your paycheck:
 
Payroll Gross
(expense)              
$1000 (db)
 
     Payroll Taxes Payable  (payable)   
$100 (cr)
 
    
Cash                                                
$900 (cr)
 
</blockquote>
Huh? What is "Payroll Taxes Payable (payable)" supposed to mean? Is it
a category? If so what is it's tax line item? That's the heart of my
question to begin with. I assume the above would be a split transaction
that I would enter into my personal checking account, right? 
<blockquote
cite="mid:EfBzi.51614$ax1.34994@bgtnsc05-news.ops.worldnet.att.net"
type="cite">EmployER taxes:
 
Payroll Tax Expense (expense)    $100 (db)
 
     Payroll Taxes Payable  (payable) $100 (cr)
 
</blockquote>
Ditto "Payroll Tax Expense (expense)". Also, where would this
"transaction" happen? My business checking account? 
<blockquote
cite="mid:EfBzi.51614$ax1.34994@bgtnsc05-news.ops.worldnet.att.net"
type="cite">When you pay the taxes due each quarter:
 
Payroll Taxes Payable  (payable)  $200 (db)
 
    
cash                                             
$200 (cr)
 
</blockquote>
Actually I don't pay my taxes and I don't pay each quarter
anymore either. Or at least that's what I'm being told to do. You see I
have Wells Fargo doing my payroll. Thus they pay my taxes on my
corporation's behalf. I'm just trying to properly account for what they
are doing with my money. And taxes aren't paid each quarter either (at
least I don't think they are) rather they are being paid for each month
when WF cuts me a paycheck. 
<blockquote
cite="mid:EfBzi.51614$ax1.34994@bgtnsc05-news.ops.worldnet.att.net"
type="cite">I only have Q basic and I am not sure how to record step
2. Hopefully H&B allows journal entry type of transactions to allow
you to book transactions that don't touch a bank account. 
</blockquote>
AFAICT it doesn't. You can enter split transactions that have such
offsetting categories so that the amounts can be properly categorized.
But that's not really my issue. My issue is how to categorize shared
taxes (e.g. SS) so that everything flows properly at tax time. In a non
corporate environment the employee just receives a check, enters a
paycheck transaction - which is just the gross amount followed by a
series of negative (i.e. deductions) amounts for the various taxes.
These deductions must be properly categorized to categories that have
associated with them a "tax line item". This tax line item (e.g. (W2,
SS) tells Quicken what this is WRT a tax item thus making Quicken's Tax
center know how much you got paid and how much taxes you have paid. I
want that to continue to work correctly. The category/tax line item is
also used when information is exported to other tax programs like
TurboTax. I want that to work properly too. So I don't think I want
both $100 categorized to the same category/tax line item
because that would double the reported SS taxes paid and set everything
off, no? 
<div class="moz-signature">-- 
<a href="http://defaria.com">Andrew DeFaria</a> 
The only difference between a grave and a
rut is the depth.
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Posted by Charlie K on August 24, 2007, 11:49 am

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> Laura wrote:

> > Here's how I would manually book it in QuickBooks. Hopefully you can

> > map the categories to your Quicken setup without too much difficulty:

> > Your paycheck:

> > Payroll Gross (expense) $1000 (db)

> > Payroll Taxes Payable (payable) $100 (cr)

> > Cash $900 (cr)

> Huh? What is "Payroll Taxes Payable (payable)" supposed to mean? Is it a

> category? If so what is it's tax line item? That's the heart of my

> question to begin with. I assume the above would be a split transaction

> that I would enter into my personal checking account, right?> EmployER taxes:

> > Payroll Tax Expense (expense) $100 (db)

> > Payroll Taxes Payable (payable) $100 (cr)

> Ditto "Payroll Tax Expense (expense)". Also, where would this

> "transaction" happen? My business checking account?> When you pay the taxes

due each quarter:

> > Payroll Taxes Payable (payable) $200 (db)

> > cash $200 (cr)

> Actually *I* don't pay my taxes and I don't pay each quarter anymore

> either. Or at least that's what I'm being told to do. You see I have

> Wells Fargo doing my payroll. Thus *they* pay my taxes on my

> corporation's behalf. I'm just trying to properly account for what they

> are doing with my money. And taxes aren't paid each quarter either (at

> least I don't think they are) rather they are being paid for each month

> when WF cuts me a paycheck.> I only have Q basic and I am not sure how to

record step 2. Hopefully

> > H&B allows journal entry type of transactions to allow you to book

> > transactions that don't touch a bank account.

> AFAICT it doesn't. You can enter split transactions that have such

> offsetting categories so that the amounts can be properly categorized.

> But that's not really my issue. My issue is how to categorize shared

> taxes (e.g. SS) so that everything flows properly at tax time. In a non

> corporate environment the employee just receives a check, enters a

> paycheck transaction - which is just the gross amount followed by a

> series of negative (i.e. deductions) amounts for the various taxes.

> These deductions must be properly categorized to categories that have

> associated with them a "tax line item". This tax line item (e.g. (W2,

> SS) tells Quicken what this is WRT a tax item thus making Quicken's Tax

> center know how much you got paid and how much taxes you have paid. I

> want that to continue to work correctly. The category/tax line item is

> also used when information is exported to other tax programs like

> TurboTax. I want that to work properly too. So I don't think I want both

> $100 categorized to the *same* category/tax line item because that would

> double the reported SS taxes paid and set everything off, no?

> --

> Andrew DeFaria <http://defaria.com>

> The only difference between a grave and a rut is the depth.

You have an S-Corp. It's expenses do not "flow" to a line item on a
1040. You file a separate return for the S-Corp depending on how you
have elected to be taxed.

Posted by Andrew DeFaria on August 25, 2007, 1:03 am

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Charlie K wrote:

> You have an S-Corp. It's expenses do not "flow" to a line item on a

> 1040. You file a separate return for the S-Corp depending on how you

> have elected to be taxed.

Thanks but I never said they "flow to a line item on a 1040" - go back
and check.I merely asked what category do I use (and, what tax line item
should it be associated with, if any). You'll note, that there are many
tax line items in Quicken and yes some of them are for a 1040 - many are
not.
--
Andrew DeFaria <http://defaria.com>
I took an IQ test and the results were negative.

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Charlie K wrote:
<blockquote
cite="mid:1187970564.984455.215090@z24g2000prh.googlegroups.com"
type="cite">You have an S-Corp. It's expenses do not "flow" to a line
item on a 1040. You file a separate return for the S-Corp depending on
how you have elected to be taxed. 
</blockquote>
Thanks but I never said they "flow to a line item on a 1040" - go back
and check.I merely asked what category do I use (and, what tax line
item should it be associated with, if any). You'll note, that there are
many tax line items in Quicken and yes some of them are for a 1040 -
many are not. 
-- 
<a moz-do-not-send="true" href="http://defaria.com">Andrew DeFaria</a> 
I took an IQ test and the results were
negative.
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