Friday, February 26, 2016

Doing Payroll

When you first start your business, you may be the proud owner of every job title in your company: receptionist, sales rep, technician, bookkeeper, janitor, and CEO. But if your company is like most, you’ll eventually hire people to help you with all those tasks. Unless you run an all-volunteer operation, sooner or later, your employees are going to want to get paid. When that time comes, you face the daunting task of dealing with payroll, which is the name for all the financial
records you have to keep for employees’ salaries, wages, benefits, bonuses, withholdings, and deductions. If you decide to process payroll in QuickBooks, you need to sign up for one of the payroll services that Intuit offers. To keep expenses low, you can choose a bare-bones service that provides only
updated tax tables. At the other end of the spectrum, you can opt for Intuit’s full-service payroll. Or you can compromise somewhere in the middle.

After you choose a payroll service, your next task is to set up everything QuickBooks needs to calculate payroll amounts. You can walk through each step on your own or use an interview feature built into QuickBooks. (If you opt for Intuit’s full-service payroll [page 421], they do some of this setup for you.) Either way, the Payroll Setup interview keeps track of what you’ve done and what you still have to do.

Another option is to outsource the headaches of payroll to a payroll-service company other than Intuit. If you go that route, then you simply use values from the payroll-service company’s reports to create a couple of transactions in QuickBooks for each payroll—to allocate salaries and wages, payroll taxes, and any other payroll expenses to the accounts in your chart of accounts. This chapter explains how to record these payroll transactions.

If you run a sole proprietorship, partnership, or a small Subchapter S corporation, you can withdraw money from the company as compensation without fussing over payroll. But to take advantage of retirement savings options like a Simplified Employee Pension (SEP), you have to deal with special rules regarding eligible compensation. For sole proprietors and partners, all you have to do to determine your eligibility for a SEP is calculate your compensation, which is based on company net profits. However, a Subchapter S corporation has to pay you an actual salary for you to be eligible for a SEP plan. In this chapter, you’ll learn how to record do-it-yourself payroll transactions, and how to pay yourself without payroll.

No comments:

Post a Comment