Payroll Expense - Simple IRA Deduction

USA Discussion in 'General Accountancy Discussion' started by krcroteau, Dec 3, 2018.

  1. krcroteau


    Dec 3, 2018
    Likes Received:
    I'm a 1 person S-Corp where I am the single employee. I just transferred from QB Desktop to QB Online.

    Both my Employee & Employer Simple IRA contributions are falling under my Payroll Expense Retirement Account. I'm not sure if this is correct.

    As an example, each month the Company Contribution or employer contribution is $60 while the employee contribution or deduction is $1,041.66 for a total of $1.101.66. I think something is wrong with my payroll setup, what account should the employee contribution / deduction fall under? It seems it's going to Payroll Liabilities. The Total $1,101.66 transaction each month is initiated from Vanguard.

    Greatly appreciate it. As a small business owner who some years makes less than $50k I love to learn. Thanks.

    Payroll Expense:

    Payroll Liability:

    Attached Files:

    krcroteau, Dec 3, 2018
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  2. krcroteau

    kirby VIP Member

    May 12, 2011
    Likes Received:
    Let's use an example:

    Say you are paid monthly in the amount of $5,000. You contribute $1,041.66 to your Simple IRA each month and your company as employer contributes $60. We ignore all other taxes and withholdings.

    Your payroll entry is
    DR Salaries Expense 5,000.00
    CR Cash (paid to employee) (3,958.34)
    CR Liability for SImple IRA (payable to Vanguard) (1,041.66)
    DR Employee Benefits Expense - Simple IRA Contribution 60.00
    CR Liability for SImple IRA (payable to Vanguard) (60.00)

    and that leaves $1,101.66 total liability for when Vanguard charges for the payment
    kirby, Dec 5, 2018
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