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C
ColinC
April 2, 2019
Question

Recording both PAYE and self employed freelance income in QB

  • April 2, 2019
  • 2 replies
  • 0 views

I have 2 x permanent jobs which are paid via PAYE as well as income from freelance work that I need to pay tax on.  How do I account for PAYE income alongside freelance income in QB?

 

Thanks 

2 replies

R
RaymondJayO
April 2, 2019

Thanks for reaching out to us here in the Community, @ColinC. 

 

I'll walk you through categorising your PAYE and freelance income. 

 

For your PAYE income, you can classify it as an estimated employment income on the Tax Profile since it was deducted from PAYE taxes. It should be a positive amount deposited to your accounts that doesn't come from your self-employed work. Here's how: 

  1. Go to the Gear icon at the upper right. 
  2. Under Taxes, select Tax Profile. 
  3. Under Estimated employment income field, enter the PAYE amount. 
  4. Click Save. 

 

For your freelance income, you can categorise it as a business income. It is part of the calculations for estimated taxes so it'll only include money that comes from your self-employed work. Here's how: 

  1. Go to Transactions from the left menu.
  2. Select Add Transaction under Connect account. 
  3. Enter the transaction details.
  4. Choose Business income as the category.
  5. Click Save.

 

The steps and screenshots above will help you properly account your PAYE and freelance income, @ColinC. 

 

If you need further assistance, don't hesitate to click the Reply button. I'm always here to help. 

    C
    ColinCAuthor
    April 3, 2019

    Thank you so much - I am very impressed with the super quick and highly useful reply!!!!

     

    Have a great day!!!

      R
      RaymondJayO
      April 5, 2019

      Hello there, @ColinC,

       

      Thanks for confirming to me you're able to record properly your PAYE and freelance income.

       

      Please know that you're always welcome to click the Reply button if you have other concerns. I'll be here to help. Cheers to you, @ColinC.

        MaryLandT
        MaryLandT
        September 29, 2019

        Thanks for joining this thread, Annick.

         

        The amount entered in the Estimated employment income field is your gross income. 

         

        To ensure your income is reported correctly, all transactions from PAYE should be categorized as personal. QuickBooks is only tracking the money you earn for self-employed business.

         

        Then, record the actual income in the Tax Profile section. This helps identify your tax bracket and will show up under the W-2 Annual Income box.


        Feel free to read through this article: How to use QB reports to fill in your tax return for your guidance in filing your returns.

         

        Should you need anything else, please leave a comment below. I'm always around to help you out.

        J
        James59
        October 1, 2019

        Hi,

         

        I've followed the steps in this thread, but QB is not calculating the tax due on my self employed income.

         

        I have £12,000 PAYE Income i the 2019/2020 Tax Year and so far approx £4,300 in Self Employed profit. The current tax calculation is £0

         

        Should there not be a running tax calculation and then NI too, as thresholds are met?

         

        Thanks

         

        James.

        Rose-A
        Rose-A
        October 1, 2019

        Hi, James59.

        Let me help you sort this out and get your taxes calculated.

         

         We use the "other income" to determine the tax bracket. The tax is withheld automatically on that other income so include that as well. The tax brackets work so that only the amount over the threshold is taxed at that rate.

         

        Here's some additional information as to how we come up with the total income tax calculation:

         

        1. We calculate the total income (Employment income/other income + self-employment profit)
        2. Subtract the personal allowance from the total income
        3. Calculate tax on that amount according to the brackets: For 2018, income less than 34500 is taxed at 20%. income between 34500 and 150000 is taxed at 40%. We add those taxes together to get total tax.
        4. Subtract the withholding, which we calculate based on the other income. Since the employment income or other income is below the threshold, tax is withheld at 20%.

        See the example below:

         

        • Employment income is 21,295
        • Self-employment income is 16000
        • The Personal allowance is zero

        The total taxable income is 37295 minus the allowance of 0, which equals to 37295. The first 34500 of that is taxes at 20%, which is 6900. The remaining 2795 is taxed at 40%, which would be 1118. That puts the total tax in this scenario at 8018, we calculate withholding at 20% on the 21295 other income, which is 4259. That leaves a remainder of 3759.

         

        If your tax calculation is still zero, I'd suggest getting in touch with our QuickBooks Self-Employed to help you further. Here's how you can reach us: https://help.quickbooks.intuit.com/en_GB/contact.

         

        You may find the following articles helpful:

         

        I'll be around to help if you have any other income tax concerns in QuickBooks. Have a good one.

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