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Posted by Andrew DeFaria on August 28, 2007, 12:05 am
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R. C. White wrote:
> Hi, Andrew.
>
> Well, I started drafting a response, but it got too long. (You know
> me!) So I decided to just shuck down to the cob:
>
> 1. In Andrew.QDF, just record receipt of your paycheck in the same
> way you would if you were working for Sears or the Village Shoe Store
> or any other employer.
>
> 2. In SCM.QDF, record payment of your salary as already stated, with
> one major correction (which probably was just a typo):
>
>> I'm assuming the proper way for me to encode this in Quicken Home &
>> Business is one transaction for Salary expense of $900.
> No, that Salary expense is $1,000, even though poor old Andrew gets a
> check for only $900.
No can do because WF issues me a transaction that says $900 - not $1000.
Remember I don't want extra work. It would be considerable extra work to
basically forgo all the virtues of online transaction download by having
to constantly delete transactions downloaded and re-work them. And
besides, even as you said, while typically the ER's portion of SS Tax
are not "impounded" into a liability account and then expensed out later
you imply that at some times and in some occasions they are. Why can't
this be one of them? Especially since the $200 transaction is also
downloaded and 1/2 of that is already destined for the liability
account. The additional expense will happen later on when the government
is paid their taxes, no? So, it seems to me that it works out correctly
anyway.
BTW I meeting with WF tomorrow to discuss Sup-IRAs and plan to ask them
more about this...
> Whether you use Quicken Basic or Quicken H&B or something in between
> (or QuickBooks), be sure to use a separate Quicken file (fileSET, of
> course) for the corporation, rather than try to include it in Andrew.QDF.
I fail to see why that's an necessity. I know, I know, you accountant
types insist on separation of personal and business accounts. But I
don't share your belief that that means that they cannot be housed in
one database (not a fileSET BTW - but a database) as long as they are
essentially kept separate (which I intend to do). Indeed the very
concept of Quicken _Home & Business_ blows your theory of "don't mix
business with pleasure" apart as by it's very design it keeps them in
the same database, yet maintains their separation.
> 3. Even though WF (Wells Fargo?) is handling the payroll for your
> corporation, it is still YOUR responsibility, and if anything goes
> wrong, the IRS will look to you and not WF to fix.
Understood.
> Amounts in WF's "impound" accounts are still your corporation's money
> and you can't consider the taxes paid until the forms are filed, the
> actual taxes computed, and the cash moved to the US Treasury.
Who ever said I was (considering the taxes paid)?
> I know you know all that, Andrew, but you need to be sure that the
> corporation's Quicken file reflects what you know.
Considering that the IRS is not gonna impound my Quicken database and
then spank my hand if I wasn't using the exact method they recommend
(which method exactly do they recommend... Answer: For Quicken or
Quicken Home & Business the don't recommend anything!), how I store it
in Quicken is pretty much irrelevant to them. It's just that I need to
be able to understand it myself and be able to give them the data that
they need when and if requested.
>> Thanks for all of the other discussion about corporations, taxes, forms,
>> how the corp is not me (BTW: I get that - got it a long time ago
>> actually).
> Well, that's what set me off in the first place. Your original
> comment was, " I am now incorporated an paying myself a paycheck."
> And then, a few lines later, "I mean most of you aren't corporations
> but do receive paychecks." If I had studied your original post more
> thoroughly I would have realized that you did clearly understand the
> distinction between your corporation and yourself, but the language
> just triggered my retired-but-still-alert reflex action to preserve
> that distinction.
IOW file it under "You know what I meant!".
> And, of course, I'm always aware that others are "reading over our
> shoulders" in newsgroups, so it's not enough that you, Andrew,
> understand. We must also be sure that those "lurkers" (and "lurking"
> is a GOOD thing in newsgroups!) also understand the distinction.
I am not longer in the business of teaching others how to use Quicken -
gave that up 6 years ago... If they wish to peep in fine. If they glean
some good information - great. If they get bad info - bummer. Caveat
Emptor!!! (And remember what you're paying for this).
If you wish to go on and on to help them - great! If you want to publish
it I could even help you by putting it in my web site. However please,
answer the question posed first *then* explain things to the over the
shoulder lurkers - or post a summary when the issues have been worked
out. I have no problem with you running on and on - hell I do it myself!
> Long ago I read that it is important that we write so that we can be
> understood, but it is even more important to be sure that we cannot
> possibly be misunderstood. I try, but I don't always succeed.
See above. Answer question first, then explain why...
> So I'm sure I went overboard a little, but not totally without
> justification.
If you do answer the question first then you at least offer me the
opportunity of jumping ship before you go overboard! :-)
--
Andrew DeFaria <http://defaria.com>
All that glitters has a high refractive index.
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R. C. White wrote:
Andrew.
<br>
<br>
Well, I started drafting a response, but it got too long. (You know
me!) So I decided to just shuck down to the cob:
<br>
<br>
1. In Andrew.QDF, just record receipt of your paycheck in the same way
you would if you were working for Sears or the Village Shoe Store or
any other employer.
<br>
<br>
2. In SCM.QDF, record payment of your salary as already stated, with
one major correction (which probably was just a typo):
<br>
<br>
<blockquote type="cite">I'm assuming the proper way for me to encode
this in Quicken Home &
Business is one transaction for Salary expense of $900.
<br>
</blockquote>
No, that Salary expense is $1,000, even though poor old Andrew gets a
check for only $900.
<br>
</blockquote>
No can do because WF issues me a transaction that says $900 - not
$1000. Remember I don't want extra work. It would be considerable extra
work to basically forgo all the virtues of online transaction download
by having to constantly delete transactions downloaded and re-work
them. And besides, even as you said, while typically the ER's portion
of SS Tax are not "impounded" into a liability account and then
expensed out later you imply that at some times and in some occasions
they are. Why can't this be one of them? Especially since the $200
transaction is also downloaded and 1/2 of that is already destined for
the liability account. The additional expense will happen later on when
the government is paid their taxes, no? So, it seems to me that it
works out correctly anyway.<br>
<br>
BTW I meeting with WF tomorrow to discuss Sup-IRAs and plan to ask them
more about this...<br>
you use Quicken Basic or Quicken H&B or something in between (or
QuickBooks), be sure to use a separate Quicken file (fileSET, of
course) for the corporation, rather than try to include it in
Andrew.QDF.
<br>
</blockquote>
I fail to see why that's an necessity. I know, I know, you accountant
types insist on separation of personal and business accounts. But I
don't share your belief that that means that they cannot be housed in
one database (not a fileSET BTW - but a database) as long as they are
essentially kept separate (which I intend to do). Indeed the very
concept of Quicken <u>Home & Business</u> blows your theory of
"don't mix business with pleasure" apart as by it's very design it
keeps them in the same database, yet maintains their separation.<br>
Even though WF (Wells Fargo?) is handling the payroll for your
corporation, it is still YOUR responsibility, and if anything goes
wrong, the IRS will look to you and not WF to fix. </blockquote>
Understood.<br>
in WF's "impound" accounts are still your corporation's money and you
can't consider the taxes paid until the forms are filed, the actual
taxes computed, and the cash moved to the US Treasury. <br>
</blockquote>
Who ever said I was (considering the taxes paid)?<br>
I know you know all that, Andrew, but you need to be sure that the
corporation's Quicken file reflects what you know.
<br>
</blockquote>
Considering that the IRS is not gonna impound my Quicken database and
then spank my hand if I wasn't using the exact method they recommend
(which method exactly do they recommend... Answer: For Quicken or
Quicken Home & Business the don't recommend anything!), how I store
it in Quicken is pretty much irrelevant to them. It's just that I need
to be able to understand it myself and be able to give them the data
that they need when and if requested.<br>
<blockquote type="cite">Thanks for all of the other discussion about
corporations, taxes, forms,
<br>
how the corp is not me (BTW: I get that - got it a long time ago
<br>
actually).
<br>
</blockquote>
Well, that's what set me off in the first place. Your original comment
was, " I am now incorporated an paying myself a paycheck." And then, a
few lines later, "I mean most of you aren't corporations but do receive
paychecks." If I had studied your original post more thoroughly I would
have realized that you did clearly understand the distinction between
your corporation and yourself, but the language just triggered my
retired-but-still-alert reflex action to preserve that distinction. <br>
</blockquote>
IOW file it under "You know what I meant!".<br>
And, of course, I'm always aware that others are "reading over our
shoulders" in newsgroups, so it's not enough that you, Andrew,
understand. We must also be sure that those "lurkers" (and "lurking"
is a GOOD thing in newsgroups!) also understand the distinction.
<br>
</blockquote>
I am not longer in the business of teaching others how to use Quicken -
gave that up 6 years ago... If they wish to peep in fine. If they glean
some good information - great. If they get bad info - bummer. Caveat
Emptor!!! (And remember what you're paying for this).<br>
<br>
If you wish to go on and on to help them - great! If you want to
publish it I could even help you by putting it in my web site. However
please, answer the question posed first <b>then</b> explain things to
the over the shoulder lurkers - or post a summary when the issues have
been worked out. I have no problem with you running on and on - hell I
do it myself!
ago I read that it is important that we write so that we can be
understood, but it is even more important to be sure that we cannot
possibly be misunderstood. I try, but I don't always succeed.
<br>
</blockquote>
See above. Answer question first, then explain why...<br>
I'm sure I went overboard a little, but not totally without
justification.
<br>
</blockquote>
If you do answer the question first then you at least offer me the
opportunity of jumping ship before you go overboard! <span
class="moz-smiley-s1"><span> :-) </span></span><br>
<div class="moz-signature">-- <br>
<a href="http://defaria.com">Andrew DeFaria</a><br>
<small><font color="#999999">All that glitters has a high refractive
index.</font></small>
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Posted by R. C. White on August 25, 2007, 11:49 pm
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Whoops! Cross-eyed bookkeeper at work. ;>(
> In RC.QDF, I would need to debit Cash $900, credit Salary Income
> (category) $1,000, and credit Social Security Tax Expense (category) $100.
Make that last entry DEBIT SS Tax Expense! Debits ($900 + $100) have to
equal credits ($1,000), of course.
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Vista Ultimate x64)
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Posted by R. C. White on August 24, 2007, 12:07 pm
Please log in for more thread options Hi, Andrew.
Now, where's that 2x4 that I need for cases like this...
WHAM!!!
Now that I have your attention (I hope)...It's time for a MINDSET
ADJUSTMENT!!
Andrew, YOU are NOT incorporated! You now OWN a corporation.
Even if you are the only shareholder, the entire board of directors, the
president, vice president, secretary-treasurer and coffee maker/server all
rolled into one, YOU are NOT the corporation!
And that means that the corporation's "books" are not your books - and vice
versa. We often discuss the wisdom of keeping books for a business within
an individual's Quicken file, using Classes or some other method to keep
track of business versus non-business expenses. That is an acceptable
arrangement only for a SOLE PROPRIETORSHIP business. Not for a corporation
that owns a business, even if there is only a single stockholder.
A corporation is a separate legal entity. Separate from owners of its
corporate stock. It deals at arms length (theoretically, at least) with its
employees, even if there is only one employee and that one is the sole
shareholder.
This is a giant subject, Andrew, and you don't want me to write a book about
it here. (You KNOW how wordy I can get!) Just remember that you MUST keep
your corporation and yourself separate in YOUR OWN MIND! Even if you say,
"I'm incorporated", don't ever THINK that.
Whether you use pen and ink or a computer to keep the corporate records,
they are entirely separate from Andrew's books - except that Andrew's books
should have an Asset Account holding his investment in the corporation. The
corporate books will have a Capital section (which Quicken does not provide)
showing, among other things, how many shares have been issued and what the
corporation received for those shares. In accountant-speak, the simplest
opening entry in the corporate books would debit Cash and credit Common
Stock.
Later, when the corporation pays any employee - even its President - it will
withhold payroll taxes. In your example: debit Salaries Expense $1,000;
credit Cash $900; credit FICA Taxes Withheld $100. Now, or at some time up
until the end of the calendar quarter, when tax reports and payments are
due, the corporation must make another entry: Debit Payroll Taxes Expense
$100; credit Payroll Taxes Payable $100 - this is for the employer's share
of social security on the salary paid, of course. When the report is filed
and the taxes are paid, the corporation books will debit FICA Taxes Withheld
$100; debit Payroll Taxes Payable $100; credit Cash $200.
Even in this simplified example, it is important to recognize the
distinction between FICA taxes WITHHELD from the employEE and taxes imposed
on the employER. Withheld taxes are a Trust Fund that the employer (the
corporation AND its responsible officers) are obligated to keep in trust for
the government. Taxes on the employer are just ordinary tax debts, like
utility bills and income tax on the corporation's own income. The IRS (and
courts) are far more aggressive in collecting trust funds than other taxes.
The corporation and its officers may not see the distinction, but the
government does.
Your subject line says "S-Corp", so I assume that you have elected (or will
elect) to have the corporation pay no income taxes on its corporate income,
by agreeing that you, personally, will include the corporation's income on
your own individual Form 1040, all as provided in Subchapter S of the
Internal Revenue Code. This does not change the fact that the corporation
exists, only the manner in which it is taxed. Creditors (including the IRS)
will still look to the corporation itself for payment of its debts, and it
will still be treated as a corporation for purposes other than taxes. So
you can't simply ignore the separate legal entity that you have had the
state create. It is, according to court cases that I read decades ago, a
"person" created by the state.
Even though I've been retired since the early 90s, Andrew, I've heard of a
number of changes brought about by the popularity of Sub-S corporations,
LLCs, limited partnerships and other exotic ownership organizations. My
understanding is way out of date, so be sure and check with your own CPA
and/or attorney, and be sure that they are current with the rules - which
may not be as I remember them.
We've just skimmed over this lightly, Andrew. Quickbooks will cost only a
few hundred dollars. Mishandling payroll tax trust funds can cost you
thousands of dollars - or even time in jail.
I've never used Quickbooks, or even Quicken H&B, so I'm not sure what
automatic features they have for keeping track of payroll taxes. But even
in Quicken Basic, it should be possible, with a little thoughtful use of
Liability Accounts, for a corporation to record the amounts withheld and the
amounts imposed on the employer. But, if it were my business, I would
certainly have a separate Quicken (or Quickbooks) file for the corporation,
whether or not I owned all the shares.
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Vista Ultimate x64)
> 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>
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Posted by Andrew DeFaria on August 25, 2007, 1:33 am
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R. C. White wrote:
> Hi, Andrew.
>
> Now, where's that 2x4 that I need for cases like this...
>
> WHAM!!!
>
> Now that I have your attention (I hope)...It's time for a MINDSET
> ADJUSTMENT!!
>
> Andrew, YOU are NOT incorporated! You now OWN a corporation.
>
> Even if you are the only shareholder, the entire board of directors,
> the president, vice president, secretary-treasurer and coffee
> maker/server all rolled into one, YOU are NOT the corporation!
I was tempted to say "Who cares?" and "You know what I mean" and "I just
want to know what to record this as in Quicken", but as I've read
further I see that Quicken might not be suited for the job...
> And that means that the corporation's "books" are not your books - and
> vice versa. We often discuss the wisdom of keeping books for a
> business within an individual's Quicken file, using Classes or some
> other method to keep track of business versus non-business expenses.
> That is an acceptable arrangement only for a SOLE PROPRIETORSHIP
> business. Not for a corporation that owns a business, even if there
> is only a single stockholder.
Sorry, I failed to see the sticker on Quicken Home & _Business_ that
stipulated that by "business" they only meant sole proprietorship. Will
you ever forgive me?
> A corporation is a separate legal entity. Separate from owners of its
> corporate stock. It deals at arms length (theoretically, at least)
> with its employees, even if there is only one employee and that one is
> the sole shareholder.
>
> This is a giant subject, Andrew, and you don't want me to write a book
> about it here. (You KNOW how wordy I can get!) Just remember that
> you MUST keep your corporation and yourself separate in YOUR OWN
> MIND! Even if you say, "I'm incorporated", don't ever THINK that.
>
> Whether you use pen and ink or a computer to keep the corporate
> records, they are entirely separate from Andrew's books - except that
> Andrew's books should have an Asset Account holding his investment in
> the corporation. The corporate books will have a Capital section
> (which Quicken does not provide) showing, among other things, how many
> shares have been issued and what the corporation received for those
> shares. In accountant-speak, the simplest opening entry in the
> corporate books would debit Cash and credit Common Stock.
>
> Later, when the corporation pays any employee - even its President -
> it will withhold payroll taxes. In your example: debit Salaries
> Expense $1,000; credit Cash $900; credit FICA Taxes Withheld $100.
> Now, or at some time up until the end of the calendar quarter, when
> tax reports and payments are due, the corporation must make another
> entry: Debit Payroll Taxes Expense $100; credit Payroll Taxes Payable
> $100 - this is for the employer's share of social security on the
> salary paid, of course. When the report is filed and the taxes are
> paid, the corporation books will debit FICA Taxes Withheld $100; debit
> Payroll Taxes Payable $100; credit Cash $200.
You're speaking Quickbooks here obviously. Since you say that Quicken,
even Home & Business, is not suitable for S-Corps are you then say I
must get Quickbooks? If so, should I move everything into Quickbooks or
just the Corporate stuff? Or should I just forget about tracking
anything of my corporation and just tell my accountant to handle it all?
> Even in this simplified example, it is important to recognize the
> distinction between FICA taxes WITHHELD from the employEE and taxes
> imposed on the employER. Withheld taxes are a Trust Fund that the
> employer (the corporation AND its responsible officers) are obligated
> to keep in trust for the government. Taxes on the employer are just
> ordinary tax debts, like utility bills and income tax on the
> corporation's own income. The IRS (and courts) are far more
> aggressive in collecting trust funds than other taxes. The corporation
> and its officers may not see the distinction, but the government does.
>
> Your subject line says "S-Corp", so I assume that you have elected (or
> will elect) to have the corporation pay no income taxes on its
> corporate income, by agreeing that you, personally, will include the
> corporation's income on your own individual Form 1040, all as provided
> in Subchapter S of the Internal Revenue Code.
Yes I have...
> This does not change the fact that the corporation exists, only the
> manner in which it is taxed. Creditors (including the IRS) will still
> look to the corporation itself for payment of its debts, and it will
> still be treated as a corporation for purposes other than taxes. So
> you can't simply ignore the separate legal entity that you have had
> the state create. It is, according to court cases that I read decades
> ago, a "person" created by the state.
>
> Even though I've been retired since the early 90s, Andrew, I've heard
> of a number of changes brought about by the popularity of Sub-S
> corporations, LLCs, limited partnerships and other exotic ownership
> organizations. My understanding is way out of date, so be sure and
> check with your own CPA and/or attorney, and be sure that they are
> current with the rules - which may not be as I remember them.
Well my CPA mentioned Quickbooks but I was hoping to do this within
Quicken Home & Business since 1) I have that already and 2) I really
kinda fear having to learn Quickbooks. As you say this is a huge topic
and I'm sure Quickbooks is oriented to cover a lot of aspects of this
huge topic thus the learning curve would be steep. Also the expense, and
getting another program, maintaining books in different programs, etc.
However if you think that getting Quickbooks would be the best way to go
then let me know.
Please remember, however, that while your profession is/was CPA and
these matters and Quickbooks may be familiar territory for you,
programming is my area of expertise and if you were asking me for which
programming language to get started with I would not be telling you
SmallTalk, Lisp, C++ or Perl rather perhaps Visual Basic.... However
maybe it is time for me to jump into the deeper end of the accounting
pool...
> We've just skimmed over this lightly, Andrew. Quickbooks will cost
> only a few hundred dollars.
*A few hundred dollars?!?* You do realize that my server for
http://defaria.com cost me a whopping $418.56. And that's all of the
hardware and software costs! I use Linux (free), Apache (free), MySQL
(free), Perl (free), Php (free), etc. Hell I don't even own MS Office
(though back in 2000 I picked up a copy in Ukraine for $5US). A few
hundred dollars is a *substantial investment in software for me*. In
fact, the only software I regularly buy is Quicken.
> Mishandling payroll tax trust funds can cost you thousands of dollars
> - or even time in jail.
I hear and understand you here. Still, AFAICT, Wells Fargo is doing my
payroll and thus keeping those tax trust funds in tact and legal. I
don't think I need to do anything about those except to keep a record of
what they did and, of course, pay them to do it.
> I've never used Quickbooks, or even Quicken H&B, so I'm not sure what
> automatic features they have for keeping track of payroll taxes. But
> even in Quicken Basic, it should be possible, with a little thoughtful
> use of Liability Accounts, for a corporation to record the amounts
> withheld and the amounts imposed on the employer. But, if it were my
> business, I would certainly have a separate Quicken (or Quickbooks)
> file for the corporation, whether or not I owned all the shares.
Well that was, after all, what I was asking about. That particular
series of steps and clear description of the process of how to do this
within Quicken H&B but so far nobody seems to want to share that
knowledge with me here. I was just hoping that somebody here might have
been in a similar situation and might have worked out a solution for
Quicken or Quicken H&B instead of dishing out hundreds of dollars for
Quickbooks then taking additional weeks, months, years to understand and
master it.
--
Andrew DeFaria <http://defaria.com>
When companies ship Styrofoam, what do they pack it in?
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R. C. White wrote:
Andrew.
<br>
<br>
Now, where's that 2x4 that I need for cases like this...
<br>
<br>
WHAM!!!
<br>
</blockquote>
Now that I have your attention (I hope)...It's time for a MINDSET
ADJUSTMENT!!
<br>
<br>
Andrew, YOU are NOT incorporated! You now OWN a corporation.
<br>
<br>
Even if you are the only shareholder, the entire board of directors,
the president, vice president, secretary-treasurer and coffee
maker/server all rolled into one, YOU are NOT the corporation!
<br>
</blockquote>
I was tempted to say "Who cares?" and "You know what I mean" and "I
just want to know what to record this as in Quicken", but as I've read
further I see that Quicken might not be suited for the job...<br>
that means that the corporation's "books" are not your books - and vice
versa. We often discuss the wisdom of keeping books for a business
within an individual's Quicken file, using Classes or some other method
to keep track of business versus non-business expenses. That is an
acceptable arrangement only for a SOLE PROPRIETORSHIP business. Not
for a corporation that owns a business, even if there is only a single
stockholder.
<br>
</blockquote>
Sorry, I failed to see the sticker on Quicken Home & <u>Business</u>
that stipulated that by "business" they only meant sole proprietorship.
Will you ever forgive me?<br>
corporation is a separate legal entity. Separate from owners of its
corporate stock. It deals at arms length (theoretically, at least)
with its employees, even if there is only one employee and that one is
the sole shareholder.
<br>
<br>
This is a giant subject, Andrew, and you don't want me to write a book
about it here. (You KNOW how wordy I can get!) Just remember that you
MUST keep your corporation and yourself separate in YOUR OWN MIND!
Even if you say, "I'm incorporated", don't ever THINK that.
<br>
<br>
Whether you use pen and ink or a computer to keep the corporate
records, they are entirely separate from Andrew's books - except that
Andrew's books should have an Asset Account holding his investment in
the corporation. The corporate books will have a Capital section
(which Quicken does not provide) showing, among other things, how many
shares have been issued and what the corporation received for those
shares. In accountant-speak, the simplest opening entry in the
corporate books would debit Cash and credit Common Stock.
<br>
<br>
Later, when the corporation pays any employee - even its President - it
will withhold payroll taxes. In your example: debit Salaries Expense
$1,000; credit Cash $900; credit FICA Taxes Withheld $100. Now, or at
some time up until the end of the calendar quarter, when tax reports
and payments are due, the corporation must make another entry: Debit
Payroll Taxes Expense $100; credit Payroll Taxes Payable $100 - this is
for the employer's share of social security on the salary paid, of
course. When the report is filed and the taxes are paid, the
corporation books will debit FICA Taxes Withheld $100; debit Payroll
Taxes Payable $100; credit Cash $200.
<br>
</blockquote>
You're speaking Quickbooks here obviously. Since you say that Quicken,
even Home & Business, is not suitable for S-Corps are you then say
I must get Quickbooks? If so, should I move everything into Quickbooks
or just the Corporate stuff? Or should I just forget about tracking
anything of my corporation and just tell my accountant to handle it all?<br>
in this simplified example, it is important to recognize the
distinction between FICA taxes WITHHELD from the employEE and taxes
imposed on the employER. Withheld taxes are a Trust Fund that the
employer (the corporation AND its responsible officers) are obligated
to keep in trust for the government. Taxes on the employer are just
ordinary tax debts, like utility bills and income tax on the
corporation's own income. The IRS (and courts) are far more aggressive
in collecting trust funds than other taxes. The corporation and its
officers may not see the distinction, but the government does.
<br>
<br>
Your subject line says "S-Corp", so I assume that you have elected (or
will elect) to have the corporation pay no income taxes on its
corporate income, by agreeing that you, personally, will include the
corporation's income on your own individual Form 1040, all as provided
in Subchapter S of the Internal Revenue Code.</blockquote>
Yes I have...<br>
does not change the fact that the corporation exists, only the manner
in which it is taxed. Creditors (including the IRS) will still look to
the corporation itself for payment of its debts, and it will still be
treated as a corporation for purposes other than taxes. So you can't
simply ignore the separate legal entity that you have had the state
create. It is, according to court cases that I read decades ago, a
"person" created by the state.
<br>
<br>
Even though I've been retired since the early 90s, Andrew, I've heard
of a number of changes brought about by the popularity of Sub-S
corporations, LLCs, limited partnerships and other exotic ownership
organizations. My understanding is way out of date, so be sure and
check with your own CPA and/or attorney, and be sure that they are
current with the rules - which may not be as I remember them.
<br>
</blockquote>
Well my CPA mentioned Quickbooks but I was hoping to do this within
Quicken Home & Business since 1) I have that already and 2) I
really kinda fear having to learn Quickbooks. As you say this is a huge
topic and I'm sure Quickbooks is oriented to cover a lot of aspects of
this huge topic thus the learning curve would be steep. Also the
expense, and getting another program, maintaining books in different
programs, etc. However if you think that getting Quickbooks would be
the best way to go then let me know. <br>
<br>
Please remember, however, that while your profession is/was CPA and
these matters and Quickbooks may be familiar territory for you,
programming is my area of expertise and if you were asking me for which
programming language to get started with I would not be telling you
SmallTalk, Lisp, C++ or Perl rather perhaps Visual Basic.... However
maybe it is time for me to jump into the deeper end of the accounting
pool...<br>
just skimmed over this lightly, Andrew. Quickbooks will cost only a
few hundred dollars.</blockquote>
<b>A few hundred dollars?!?</b> You do realize that my server for
<a class="moz-txt-link-freetext"
href="http://defaria.com">http://defaria.com</a> cost me a whopping $418.56. And
that's all of the
hardware and software costs! I use Linux (free), Apache (free), MySQL
(free), Perl (free), Php (free), etc. Hell I don't even own MS Office
(though back in 2000 I picked up a copy in Ukraine for $5US). A few
hundred dollars is a <b>substantial investment in software for me</b>.
In fact, the only software I regularly buy is Quicken.<br>
payroll tax trust funds can cost you thousands of dollars - or even
time in jail.
<br>
</blockquote>
I hear and understand you here. Still, AFAICT, Wells Fargo is doing my
payroll and thus keeping those tax trust funds in tact and legal. I
don't think I need to do anything about those except to keep a record
of what they did and, of course, pay them to do it.<br>
never used Quickbooks, or even Quicken H&B, so I'm not sure what
automatic features they have for keeping track of payroll taxes. But
even in Quicken Basic, it should be possible, with a little thoughtful
use of Liability Accounts, for a corporation to record the amounts
withheld and the amounts imposed on the employer. But, if it were my
business, I would certainly have a separate Quicken (or Quickbooks)
file for the corporation, whether or not I owned all the shares.
<br>
</blockquote>
Well that was, after all, what I was asking about. That particular
series of steps and clear description of the process of how to do this
within Quicken H&B but so far nobody seems to want to share that
knowledge with me here. I was just hoping that somebody here might have
been in a similar situation and might have worked out a solution for
Quicken or Quicken H&B instead of dishing out hundreds of dollars
for Quickbooks then taking additional weeks, months, years to
understand and master it.<br>
-- <br>
<a moz-do-not-send="true" href="http://defaria.com">Andrew DeFaria</a><br>
<small><font color="#999999">When companies ship Styrofoam, what do
they pack it in?</font></small>
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