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Old 11-04-2016, 03:51 PM
GirlFriday GirlFriday is offline
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Unhappy Prior Payroll Tax Payment Entries

I am getting no answers to this problem from Intuit and need help as the end of year is fast approaching. Our company used an outside Payroll company for the first half of the year and we would pay them with one lump sum and they would pay the payroll taxes. We decided mid year to bring Payroll in house and I contacted QB to make sure I entered all the prior payroll correctly. Until we came to the Federal 941 tax payments. The information I received from the prior company was a list of all payments made but only lump sums, not broken down by Med/SS etc. Now I am at a loss as to how to get these payments entered. QB support let me think they has a solution, but when the call was done, They said entering them manually instead of using Prior Tax Payments would be the only solution they could offer, but offered no help as to how I would do that. I am not even sure if that makes sense, it is hard to explain. But if you can help, please do.
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Old 11-04-2016, 06:57 PM
Lorin Browning Lorin Browning is offline
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QuickBooks is almost correct when you were told that ". . . entering them manually instead of using Prior Tax Payments would be the only solution they could offer."

If you have the 941s for the relevant period, extracting data from your company's 941s is relatively simple.

Look at each 941 you received from the payroll company. Each will give you the amount of federal withholding that was withheld from the employees’ paychecks. That is not an expense to the company and, if it was not for having to prepare W-2s at end of year, you would not have to make any entries to account for it.

The 941 will also give you amounts for Social Security and for Medicare. One-half of Social Security and one-half of Medicare will be expenses to the company. Just divide each amount of the 941 by 2 to get the amounts to enter for payroll expenses to the company.

CAUTION: QuickBooks will not work correctly when one makes general journal entries to correct or update payroll entries. All the entries that you may want to make must be made from the payroll module if you want prior data to integrate with data you add in-house.

But you have a much greater problem than just entering 941 data: Because your company must provide each employee with a federal and state (if there are state withholdings) W-2 at end-of year, you will need much more information than what you can extract from the 941. The records of withholding for each individual have to be re-constructed from somewhere and entered into QuickBooks.

There are three possibilities that I see for you:

1. I hope that whoever sent payroll data to the prior payroll company kept in-house records of employee withholdings necessary for both federal and state W-2s. If it did, all you have to do is to total (a) Gross Pay, (b) Federal Withholding, (c) State Withholding, (d) Social Security withholding and (e) Medicare withholding for each employee. Then for each employee, you can make a YTD entry of all five of those totals into your current payroll program.

2. It is possible that you are lucky enough so that the payroll company gave a breakdown of the earnings and withholding of each employee for each pay period. If it did, all you have to do is to total (a) Gross Pay, (b) Federal Withholding, (c) State Withholding, (d) Social Security withholding and (e) Medicare withholding for each employee. Then for each employee, you can make a YTD entry of all five of those totals into your current payroll program.

3. If the prior payroll company did not provide you with detailed contemporary reports, you may be able to get the company to prepare federal and state W-2s for part-year so that you can then enter the totals into your current payroll program, using the same procedure as in 1 above.

Good luck.
__________________
Lorin Browning, Ph. D.
Fellow -- National Tax Practice Institute
lorin@lorinbrowning.com

Last edited by Lorin Browning; 11-17-2016 at 11:34 PM.
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  #3  
Old 11-17-2016, 03:08 PM
GirlFriday GirlFriday is offline
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I think I am clear on W-2's

As far as I can tell when I entered Prior Payroll Data in for each employee the information took and is giving me an accurate W-2 for each employee. The only issue I had was the Payroll tax Payments, I will try your suggestions and see if the numbers add up correctly. Thank you so much for the help.
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