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Charbel1
June 8, 2023
Question

How to record SEP-IRA for an LLC?

  • June 8, 2023
  • 1 reply
  • 0 views

I am an accountant for an LLC. The owner made a contribution to a sep-ira. It is a personal retirement transaction to him only and not related to the employees of the company. Please I need assistance to record the entry in QuickBooks Online. Is it recorded as an expense? Thanks

1 reply

M
MichelleLongCPA
June 8, 2023

The SEP-IRA contribution made by the owner of the LLC is a personal retirement transaction and is not related to the business expenses of the LLC. Therefore, it should not be recorded as a business expense in QuickBooks Online.

However, it's important to track these contributions for the owner's personal tax purposes. You can create a separate equity account to track these contributions. Here's a general guide on how you could record this:

  1. Go to the Chart of Accounts.
  2. Click on New to create a new account.
  3. Select Equity from the Account Type drop-down menu.
  4. Give the account a relevant name, such as "Owner's SEP-IRA Contributions".
  5. Save and close.

When the owner makes a contribution, you can record it as a transfer from the business checking account to this equity account. This way, the contribution is tracked but does not affect the business's profit and loss.

Please note that this is general advice and may not apply to your specific situation. It's always a good idea to consult with a tax professional or a Certified QuickBooks ProAdvisor to ensure you're handling these transactions correctly.

    C
    Charbel1Author
    June 9, 2023

    Thank you Michelle. Okay this is clear. To continue my question, later this year the owner will also contribute to SEP-IRA for him personally and to one of our LLC employees. Can you please assist me how to record this transaction? 

    M
    MirriamM
    June 9, 2023

    Hi there, @Charbel1. I'm here to share some insights about recording SEP-IRA.

     

    At this time, QuickBooks Online (QBO) doesn't currently support SEP-IRA contributions. In the meantime, you can create an expense check and record the payments in your chart of accounts under "Other Current Liability." However, I recommend checking with your accountant or a tax specialist for the best advise on how to correctly record this.

     

    To create an account under the Chart of Accounts, here's how:

     

    1. In the left menu, click Accounting menu.
    2. Click the New button under the Chart of the Accounts tab.
    3. Choose Other Current Liabilities as the Account Type.
    4. Select Other Current Liabilities as the Detail Type.
    5. Type in the Specific Name and Description for the account.
    6. Click Save and Close to confirm the actions made.

     

    After that, make an expense transaction for the SEP-IRA contribution. 

     

    1. In the left menu, click the + New button.
    2. Choose Expense, and then select to whom you'd like to send the contribution(payments).
    3. Under the Account Details, look for the account you've created.
    4. Enter the rest of the expense details.
    5. Select Save and New or Save and Close.

     

    To know more about retirement plan deductions and contributions in QBO, check out this article.: Set up a retirement plan.

     

    Feel free to click the Reply button below if you have other questions in QuickBooks Online. I'll be here to answer it for you. Have a great day.

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