QuickBooks Federal Tax Withholding - Important Concepts
For small business owners, the term tax withholding is
generally connected to simply the checking or savings account. But there are
different kinds of taxes that must be reconciled or withheld if you want your
financials to be a hundred percent precise.
Although the process may seem rather confusing, it is
actually quite simple to perform QuickBooks Federal Tax Withholding. The only
thing to be careful about is whether they are completely accurate or not
because inaccuracy can cause problems when your financial reports are being
reviewed.Gaining knowledge of payroll liabilities and attempting to use
that information to make reports for your firm can get a lot different. There
are two broad categories of payroll liabilities - employee liabilities as well as
expenses of the employer. Do remember that both of these often differ among the
states, which means that the withheld categories and amounts might also be
mentioned differently.
These two chief categories are further divided into more
sub-categories. In certain states, these liabilities are separated into
- Federal Income Tax
- State Income Tax
- Medicare Withholding
- Social Security Withholding
Each of these is an item specifically meant to be reported in
the liability accounts started by your bookkeeper at the very beginning.
Furthermore, these liabilities must be nearly negligible or zero. This is the
money that is usually collected from every worker at the time of the check
being issued. After that, it is compensated to the respective tax institution
through tax payment cheques.
This is generally the place where a significant number of
mistakes are made. Small business owners are sometimes unaware of the proper
labels governing employer expenses and employee liabilities during QuickBooks
Federal Tax Withholding. This results in an incorrect recording of
liability into the expenses section instead. In turn, this amount of money will
show up in the employee’s paycheck as an expense, when it really is a
liability.
The employee paycheck is, at the end of the day, an expense.
So is the tax check and both of these may just as well be assigned to the
liability. Once both of them have been entered, it will be easy to observe that
the payroll liability accounts will have transactions that show zero net
balance in them. Keep in mind that the part that contains no liabilities has to
be written off as expense to your company.
Now that we have come to the Employer Expenses section, let’s
talk about its different types -
- Federal Unemployment Tax Act or FUTA
- State Unemployment Tax Act or SUTA
- Medicare Expenses
- Social Security Expenses
- Other garnishments that include
- Federal or State tax levies
- Child Support
- Spousal Support
- Federal debts like
- Student loans
- Administrative Wage Garnishments or AWGs
- Medical support
- Creditors
The part where you have to reconcile garnishments can get
tricky if you don’t pay close attention and fail to sufficiently account for
these before QuickBooks
Federal Tax Withholding. After all, you wouldn’t want inaccurate taxing
reports and these items accounted as expenses instead.
You need to perform constant scrutiny and make regular
reviews that will keep you from facing needless worry and headaches in the long
run. Surely, every business owner would prefer to maintain precise books if they
desire to make vital financial and accounting decisions wisely. For this, it is
important to ensure that you build a habit of reconciling QuickBooks
liabilities consistently.
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