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M
mr007
May 28, 2021
Question

Sole Prop-SEP-IRA in QB Pro Plus

  • May 28, 2021
  • 1 reply
  • 0 views

I am a sole prop, filing as an individual.  I use QB Desktop Pro Plus.  I use the Simple and Employer contribution for my employees.  I just do a weekly draw for myself which is an automated transfer from my business account to my personal account.  Then it is logged as a general entry under owner's drawing on the ledger.

 

I want to contribute to my SEP and include an employer portion if possible.  How do I do this if I don't physically write myself a paycheck?  The contribution portion, I'm assuming I could just create a contribution expense and write a check to financial institution.  However, the EER portion is a liability so I'm not sure I can do this if I don't have myself set up under the payroll.  

 

Any words of wisdom?  Thanks in advance.

1 reply

JoesemM
JoesemM
May 28, 2021

Thanks for joining the Community space, @mr007.

 

I can guide you through the steps of setting up SEP IRA in QuickBooks Desktop. This way, it will contribute to your SEP and include an employer portion. Let me show you how.

 

  1. Go to Lists and choose Payroll Item List.
  2. Click on the Payroll Item drop-down and select New.
  3. For the Select setup method, choose Custom Setup then press Next.
  4. If you want to set up an employee deduction, select the Deduction radio button. Give the item a name, correct agency, and pick 408(k)(6) SEP for the Tax tracking type. 
  5. Otherwise, use Company Contribution if this is an owner contribution. Again, add a name, the agency, and Tax tracking type (408(k)(6) Co. Match). 
  6. Select your option in the Calculate based on quantity window and click on Next.
  7. Set your default rate and limit and click on Finish.

 

For detailed information, you may refer to this article: Set up a payroll item for retirement benefits (401(K), Simple IRA, etc.)

 

 Also, I have here some resources to learn more about IRA Deduction Limits from the IRS website and retirement plans: 

 

 

Don't hesitate to post a comment below if you need further assistance, as I'd be around to help. Have a good one.

M
mr007Author
June 1, 2021

Thank you for the reply.  Do this make it a payroll liability.  If so, that would require me to actually write a payroll check, correct? 

 

I currently just do a transfer from my business account into my personal account as a draw.  I enter it as a general entry under owners drawing.  It is a flat rate.  I don't run my payroll through the payroll function in QB.

 

JoesemM
JoesemM
June 1, 2021

Thanks for getting back to us, @mr007. 

 

You can directly contact your accountant to ensure the record of your book. All businesses have a unique situation, which is why we always recommend you reach out to an accountant to ensure everything is 100%. You can find one in your local area from our find a pro-advisor page 

 

Also, you can set up manual payroll without any payroll subscription, make sure that your computer is offline or is not connected to the internet. 

 

Then, proceed with the following steps below.

 

  1. Click Edit at the top, and then select Preferences.
  2. On the left panel, select Payroll & Employees then go to the Company Preferences tab.
  3. In the QuickBooks Desktop Payroll Features section, select the Full Payroll radio button.
  4. Select OK. 

 

Once done, you can now create the manual payroll. Let me walk you through the steps:

 

  1. Click Help at the top, and then select QuickBooks Help (or press F1 on your keyboard).
  2. In the Search field, type manual payroll and press Enter on your keyboard.
  3. Select the topic Calculate payroll manually (without a subscription to QuickBooks Payroll).
  4. Under Set your company files to use the manual payroll calculations setting, click the manual payroll calculations link.
  5. Select Set my company file to use the manual calculations link. When your company file is set up for manual payroll computation, QuickBooks inserts a zero amount for each payroll item associated with a tax.
  6. Close and reopen QuickBooks Desktop.

 

Additionally, here's an article that'll further guide you in completing certain tasks in QuickBooks.

 

 

Please know that you're always welcome to comment below if you have other concerns or follow-up inquiries about managing payroll and employee transactions in QBDT. I'm just around to help.

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