What Are Payroll Deductions? 2021

Now that you’ve got all of your employees set up, the next step is to run your payroll. You’ll enter payroll hours, and QuickBooks will automatically calculate payroll checks and taxes for you. You can print checks or submit direct deposit payments to employees. Regardless of the exact schedule, you’ll be thankful you did payroll reconciliation so dutifully each pay period come deposit time. Before you pay your taxes, look back at your ledger entries and add up all your employee deductions to confirm you’re paying the right amount. You’ll need to make periodic deposits toward your payroll taxes throughout the year, either every month or every two weeks.

To obtain full forgiveness, loan proceeds must be spent within 8 to 24 weeks immediately following disbursement of the loan, whichever is earlier. Spend the loan proceeds, or incur qualifying costs, within applicable Covered Period or Alternative Payroll Covered Period. To obtain full forgiveness, loan proceeds must be spent within to the 8- to 24 week period immediately following disbursement of the loan . The 3508S form eliminates the need for borrowers to demonstrate that they maintained wage and employment levels during the applicable covered period. Instead, borrowers will need only to demonstrate that they spent the loan proceeds on covered payroll (at least 60% of the forgiveness amount) and non-payroll costs. Borrowers can download the PPP Loan Forgiveness Payroll Costs report from their ADP system to submit to their lender with the 3508S form. If any of your employees are on paid leave due to coronavirus, you can classify this as QuickBooks Payroll so paychecks are booked correctly and paid on time.

Think Adp® Is Too Big For Your Small Business? Think Again

ADP has reports available to support clients that are navigating the forgiveness process. See below for more information about PPP loan forgiveness reports that are available. Do all payroll costs need to be paid within the Covered Period or Alternative Payroll Covered Period? Payroll costs are considered paid on the date of distribution of paychecks or origination of an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid within the Covered Period or Alternative Payroll Covered Period must be paid by the next regular payroll date to be counted for forgiveness purposes.

At the end of each quarter, you’ll file Form 941 to report to the IRS how much you withheld from your employees’ paychecks that quarter to cover income taxes, Social Security, and Medicare. Add up all your employee deductions for the previous quarter, make sure the sum matches what you paid in deposits over that time period, and write the total on the form. What is the period within which I must spend my loan proceeds to obtain full loan forgiveness? To obtain full forgiveness, loan proceeds must be spent within the 8- to 24-week period immediately following disbursement of the loan. The new round of PPP funding includes other important changes to the PPP loan forgiveness process, some of which may apply to loans issued previously in 2020.

The exact schedule depends on the size of your business’ total tax liability. Generally speaking, you’re on a monthly schedule if you pay $50,000 or less in payroll taxes each year, and semi-weekly if you pay more than that. You should check with your state tax authority to learn what the deposit schedule is for your state, though most will require monthly deposits for the majority of businesses. Payroll reconciliation may seem like a mammoth task with lots of moving parts, but the good news is that you can make it more manageable by spreading the work out. You’ll start the process each pay period before wages are paid out and then perform further reconciliation at different times throughout the year.

Payroll Deduction Faqs

If you’re planning to take a tax credit against the employees’ wages under the CARES act, you’ll need to elect this as well. You need to make sure that each employee’s total pay on the payroll register equals their pay rate multiplied by the number of hours worked. If you have more than, say, 20 employees, it may not be realistic to check each employee individually.

Below, we’ve broken the steps down over a simple timeline. Keep in mind that while these are the high-level tasks you need to accomplish for payroll reconciliation, there are additional rules to consider and potential variations for your process. We recommend consulting with a professional to get advice specific to your business. Many Americans who have health insurance purchase it through their employers via payroll deductions.

How Do I View Past Checks That Have Already Been Printed?

This offers considerable cost savings because the premiums can be withheld from their wages on a pre-tax basis under a Section 125 plan. In actuality, however, employees are not paying for their health coverage directly, but are reimbursing their employer, who submits payment to the health insurance provider. Your place of business and where your employees perform services also play a factor in payroll deductions because not every state collects income tax. QuickBooks offers a collection of payroll reports that generate a wealth of information about a company’s employees and expenses. These reports can provide information about general staff or about individual employees, and can be easily exported to share and diversify uses for the data.

In that case, we would recommend double checking records for new employees or for anyone who recently received a raise, as that’s where mistakes are most likely to occur. Beyond that, you can also spot check different employees each pay period to confirm wages are correct in a manageable way. Payroll deductions are generally processed each pay period based on the applicable tax laws and withholding information supplied by your employees or a court order. The calculations can be done manually or you can automate the process using a payroll service provider. Many businesses choose automation because it reduces errors and ensures that payments are filed with the proper authorities on time. Yes, the amount of the loan can be fully forgiven as long as certain conditions are met. The specific amount will generally depend in part on what portion of the loan is used on eligible payroll costs and whether the employer has maintained staffing and pay levels during the covered period.

Post-tax LTD deductions, on the other hand, result in employees receiving slightly less take home pay each pay period, but their benefits aren’t subject to any further tax if they use them. Short-term disability is often taxed in the same manner. I used payroll cost and headcount reports for the PPP loan application. Can I use the same reports for purposes of loan forgiveness reporting? No, the ADP payroll cost and headcount reports that were developed to support PPP loan applications cannot be used for PPP loan forgiveness purposes.

With each payroll that you run, QuickBooks calculates the amount of payroll taxes that you must remit on behalf of your business and your employees. The key is to make sure you complete and file both the payroll tax forms and payroll taxes by the due date. If you’re satisfied that everything is correct, click the “Submit Payroll” button that is located at the bottom right of the screen. You can view all payroll reports by selecting the option at the bottom middle of the page. You will be able to print payroll checks and/or direct deposit remittance advice to distribute to employees. The long-term disability deduction covers a percentage of wages for employees who are injured or too sick to work for an extended period of time. When LTD is deducted pre-tax, employees pay slightly less for premiums, but are charged federal income tax on any benefits received.

You’ve got your payroll running like a well-oiled machine now but you’re not quite done. Check out our article on payroll tax setup in QuickBooks if you need help.

The Treasury Department has indicated that at least 60% of the loan forgiveness amount must have been used for payroll costs. My company previously laid off an employee, but later offered to rehire the employee. If the employee declined the rehire offer, will my PPP loan forgiveness amount still be reduced? When calculating the amount of loan forgiveness, how will the determination of whether my business has maintained pay levels be made? Additionally, borrowers who previously received loans of $50,000 or less may be exempt from reductions in loan forgiveness amounts based on reductions of full-time equivalent employees or in salaries or wages. If eligible, borrowers would use the SBA Form 3508S, or their lender’s equivalent form, to submit their loan forgiveness application. ADP has put together a Loan Forgiveness Checkup which outlines important steps to take before year-end to maximize loan forgiveness.

ADP is actively evaluating these changes and will update the guidance below and in the PPP Loan Forgiveness Reports as additional guidance is issued by the Treasury Department and Small Business Administration. For example, the CAA 2021 provides that the SBA will issue a streamlined forgiveness application form for loans of $150,000 or less.

• To obtain full forgiveness, loan proceeds must be spent within the 8- to 24-week period immediately following disbursement of the loan.
• Add up all your employee deductions for the previous quarter, make sure the sum matches what you paid in deposits over that time period, and write the total on the form.
• At the end of each quarter, you’ll file Form 941 to report to the IRS how much you withheld from your employees’ paychecks that quarter to cover income taxes, Social Security, and Medicare.
• ADP is actively evaluating these changes and will update the guidance below and in the PPP Loan Forgiveness Reports as additional guidance is issued by the Treasury Department and Small Business Administration.
• What is the period within which I must spend my loan proceeds to obtain full loan forgiveness?

Borrowers would be required to retain – but not submit – documents substantiated their forgiveness application for 4 years for employment records and 3 years for other records. + To obtain full forgiveness, loan proceeds must be spent during the Covered Period or Alternative Payroll Covered Period.

You will need to complete the PPP loan application, which your lender will provide, and submit the application with your payroll documentation. If you are applying for a second PPP loan, remember to run new PPP loan application reports from your ADP system. The ADP reports are updated frequently to reflect the latest government guidance. You should always run the applicable PPP report as close in time to submitting your PPP loan application as possible. For your reference, click here for application form provided by the SBA. Total paid hours for employees who meet or exceed the total paid hours thresholds.

How will the determination of whether my business has maintained staffing levels be made? Borrowers may either use the period from February 15 through June 30, 2019 or January 1 through February 29, 2020. If the number of FTEEs during the Covered Period or Alternative Payroll Covered Period is lower than the time period chosen, the amount of loan forgiveness may be reduced proportionately. The QuickBooks Vendors & Payables Reports give you data about how much money your company owes. You will find a list of QuickBooks Vendors & Payables Reports with a description of the information contained in the report below.

What If My Wages Were Not Reported For Unemployment?

If the pay reduction was made outside the February 15 to April 26 timeframe, the forgivable amount may still be reduced even if the pay reduction is later reversed. If less than 60 percent of loan is used on payroll costs, the amount of loan forgiveness may be reduced proportionately and may need to be repaid. What happens if I use less than 60 percent of the PPP loan on payroll costs? The Paycheck Protection Program Flexibility Act provides that at least 60% of the covered loan amount must be used for payroll costs. If less than 60% of the loan amount is used on payroll costs, the amount of the loan that is forgiven may be reduced.