Advertise here    

QuickBooks Forums      

Go Back   QuickBooks Forums > QuickBooks Software Support > QuickBooks Pro Forum

Reply
 
Thread Tools Rating: Thread Rating: 2 votes, 5.00 average. Display Modes
  #1  
Old 04-04-2005, 11:30 AM
ashish ashish is offline
Junior Member
 
Join Date: Apr 2005
Posts: 4
SEP IRA Employer contribution

I have set-up a SEP IRA for my business. I have asked my employee to open a SEP IRA account. She will be opening it at Fidelity Investments. I will be making the full contribution to her account for 2004 and she will not be contributing anything. We will send the check made out to Fidelity Investments with her application. I use Quickbooks Pro Edition 2003. I have set-up a payroll item for SEP IRA in Quickbooks. What steps should I take in Quickbooks to write this check. Do I first create a paycheck showing the SEP IRA amount under "Other Payroll Items" on the paycheck and then go to Process Payroll Liabilities to process the SEP IRA amount by writing out a check to Fidelity? If this is the way to do it, then do I include this item on the next paycheck or can I create a paycheck just for this item? And how do I indicate on the paycheck that the SEP IRA contribution is for 2004 (or do I even need to do it)? I will appreciate any help. Thanks.
Reply With Quote
  #2  
Old 04-04-2005, 11:44 AM
Joey Joey is offline
Registered User
 
Join Date: Jan 2002
Location: South Florida
Posts: 6,258
The employer's contribution for last year must be made by your company before the due date of your company's tax return (which would have been March 15th for a corp that had a 12/31 year end) and is subject to preset limitations. You need to check the IRS web site to find out the limits for 2004 contributions.
On your books you make a 12/31/04 journal entry to Debit Employee Benefits expense and Credit Due to Fidelity IRA for the total. Then use Write Checks in the current year (but before the due date)and charge the entire check to the liability account. If you're after your due date, you will get a penalty for making a late contribution so if you have the choice, begin it for the current year instead.
The part listed on the employee's paycheck is any employee contribution that would be deducted from his/her paycheck. The employer's contributions will be listed on the statement they get from Fidelity.
__________________
Joey
www.casdelraybeach.com
Certified Pro Advisor
Reply With Quote
  #3  
Old 04-04-2005, 05:52 PM
ashish ashish is offline
Junior Member
 
Join Date: Apr 2005
Posts: 4
Joey,

Thanks for your response.

Since my business is not incorportated and I am using 1040 with Schedule C, I have upto April 15th to make the contribution.

I have never made an entry in General Journal before. Can you please help me out with these questions:

1. I have created an Expense account named "SEP IRA Contributions". Should I choose this account in the Account field in the General Journal Entry screen? Then, should I enter the amount of contribution under the Debit field, leave the Credit field blank, enter a note (eg SEP IRA 2004 contribution for Ms. ....) in the Memo field, select Fidelity Investments in the Name field (I created Fidelity Investments by using "Add New" feature there), and leave the last 2 columns blank?

2. What is the next step? Do I make another entry in the General Journal screen to Credit an account? If yes, which account do I choose? I am thinking I will need to choose a liability account. At present I have only one liability account (Payroll Liabilities). Do I use this one or create a new liability account? Does it matter what I name this new liability account? Do I need to select any name under the Name field for this entry?

3. From your message, I understand that after this I should Write Check to Fidelity Investments and select a liability account. Again, I am thinking I will not select the Payroll Liability account but the new liability account I would have created above in step 2. Please correct me if I am wrong.

I appreciate your patience. Thanks for your help.
Reply With Quote
  #4  
Old 04-04-2005, 06:39 PM
Joey Joey is offline
Registered User
 
Join Date: Jan 2002
Location: South Florida
Posts: 6,258
You go to Accountant, Make Journal Entry and make the same entry dated 12/31 that I told you before (I would name the expense account Employee Benefits instead of SEP IRA Contributions but it's your books). The idea for the journal entry is that you get to deduct the amount of the contribution in the 2004 year where it belongs and you're writing the actual check in March of 2005. So you charge the liability account with the check like I told you before.
__________________
Joey
www.casdelraybeach.com
Certified Pro Advisor
Reply With Quote
  #5  
Old 04-05-2005, 10:35 AM
ashish ashish is offline
Junior Member
 
Join Date: Apr 2005
Posts: 4
Thanks again. It is becoming clearer with your help. One other thing - right now I have only one liability account. It is named Payroll Liabilities. When writing the check to Fidelity Investments, do I charge it to Payroll Liabilities or should I create another liability account. Thanks.
Reply With Quote
  #6  
Old 04-05-2005, 10:51 AM
Joey Joey is offline
Registered User
 
Join Date: Jan 2002
Location: South Florida
Posts: 6,258
The program comes with the payroll defaulting to two accounts, Payroll Liabilities and Payroll Expenses. You should create new sub accounts for the different accounts that you use and then edit all your payroll items and link them to the new sub accounts. It's much easier to check the liability balances and look for any errors. I use the following:
Payroll Liabiliities:
Federal Tax Withheld
State Tax Withheld
Social Security & Medicare Tax W/H
SUTA Payable
FUTA Payable
SEP Contribution Payable

Payroll Expenses:
Salaries & Wages
Social Security & Medicare
SUTA Tax
FUTA Tax
Employee Benefits
__________________
Joey
www.casdelraybeach.com
Certified Pro Advisor
Reply With Quote
Reply

Bookmarks
Bookmark and Share
Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is Off
HTML code is On

Forum Jump


All times are GMT -5. The time now is 05:53 PM.


 

Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
All contents copyright (c) by AccountingUsers Inc.
You Rated this Thread: