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  #1  
Old 01-01-2018, 10:03 PM
dunnmfg dunnmfg is offline
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How do I do a simple IRA check/entry in QB??

Hello-

I have been using QB for about 10 years now and feel pretty confident working in it. I am self employed sheet metal guy with just one employee. Last year I started a simple IRA and my CPA helped me do that part through QB. So my question is how to I write myself a check in order to contribute $5500 in my IRA? Also...my company can match that up to 3% of my gross wages correct?

I just need some guidance on how to input this into QB and how to get the money out to take to Edward Jones.

Thank you!
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  #2  
Old 01-02-2018, 06:08 AM
Rustler Rustler is offline
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Assuming you are taxed as a sole proprietor or partnership, write the check and use equity drawing as the expense for the check

I have no idea about company match, sorry, but the same expense (equity drawing) would apply
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  #3  
Old 01-02-2018, 06:29 PM
Lorin Browning Lorin Browning is offline
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I agree with Rustler, except that I would like a little more information and also to issue a caution.

Assuming you are self-employed, how do you report taxable income? Is it on Schedule C? If not on Schedule C, where is it reported?

Do you even have an employer for you to qualify for that employer making a 3% contribution to your IRA?

I am curious as to what your CPA suggested you do to track your IRA through QuickBooks. An IRA for a self-employed person normally does not go through a sole proprietor's business records. It reduces your taxable income but not your self-employment income.

Of course, you may be incorporated which is a different situation with a differing set of rules regarding IRAs for employers.

Which do you file? Schedule C or some version of form 1120? More information could be helpful.

One caution about how you possibly may misinterpret Rustler's answer: A withdrawal from the equity section of the Balance sheet (which is exactly where the withdrawal should be reported as Rustler says if you are a sole proprietor) is not a company expense. It is recorded as a debit entry in QuickBooks, but not all debit entries in QuickBooks are expenses. An equity draw, although a debit entry, is not an expense. Expenses are recorded on profit and loss statements, not on a balance sheet.
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  #4  
Old 01-02-2018, 08:06 PM
dunnmfg dunnmfg is offline
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I am a corporation. I write myself a paycheck every Friday for 40 hours @ $7.50 an hour to stay on the books. I also write myself a check on the 1st of each month for Rent. I own the equipment personally and rent it to the company. I also own the building personally and rent it to the company as well.
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  #5  
Old 01-03-2018, 11:18 AM
Froid Froid is offline
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depends...

As a C corp, it sounds like a taxable distribution or compensation of some sort.
As an S corp, it sounds like a non-taxable distribution.
Proceed with caution.
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  #6  
Old 01-03-2018, 01:26 PM
Lorin Browning Lorin Browning is offline
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Dunnmfg,

There are three options, although the first two are for an IRA set up for you; the third in for a saving plan set up for your and your employees:

(1) Pay out of personal funds. You can write a check to Edward Jones from your personal checking account and then make an adjustment to gross income on Form 1040. There would be nothing to enter in QuickBooks.

(2) Pay out of company funds. If you don't have sufficient personal funds available, you can take a distribution from your equity account in QuickBooks, deposit that check in your personal bank account, and then remit your personal check to Edward Jones. The QuickBooks entry would be a credit to the bank and a debit to the appropriate subaccount in the equity section. Or, you can have the company send the fee to Edward Jones written by the company and the funds coming from payroll withholding. This would not be a expense to the company.

(3) Have Edward Jones set up a company program. You can have Edward Jones set up a SEP, SIMPLE or other qualified plan for the company. More than likely for the company to be able take an expense for its contribution, all employees would have to be eligible to participate in the plan, as contributors and as recipients of the company's support.

If such a plan is set up, (a) the employee's part of each month payment to Edward Jones would be shown in QuickBooks as a withholding in salary (but included in gross income) and (b) the company's contribution would be shown in QuickBooks an expense to the employee-benefit account. For more details, see https://www.irs.gov/pub/irs-pdf/p4336.pdf

Let Edward Jones set up the plan. That is part of its earning its fee and more than likely Edward Jones has reporting methods already in place.
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Last edited by Lorin Browning; 01-03-2018 at 02:17 PM.
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  #7  
Old 01-03-2018, 03:41 PM
Froid Froid is offline
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The QB transaction is the easy portion to answer.
But the OP needs to consult his accountant concerning the complexion of the distribution. I am nothing close to a tax expert, but my understanding is that C Corp distributions paid from retained earnings represent a dividend to the recipient; anything beyond positive retained earnings would reduce the corporate paid in capital - and, hence, the owner's paid in capital and basis in the company.
S Corp rules differ.
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  #8  
Old 01-04-2018, 12:37 PM
Lorin Browning Lorin Browning is offline
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How to treat the IRA in QuickBooks depends upon your answers to the following:
  1. Is the IRA set up solely in your name and not part of an employee benefits plan?
  2. Is the IRA part of an employee benefits package set up by the corporation?

(1) is very straight forward and is treated as you would treat, say, child support payments deducted from an employee's paycheck and remitted by the company to a third part. There is no expenses to be recorded to the company in QuickBooks.

(2) is more complicated but is required if the company itself is to make a contribution for you also.

The distinction and restrictions between these two approaches should be discussed carefully with your Edward Jones financial advisor.
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