How can I make this bookkeeping entry

This is for an S-Corp with a single (100%) shareholder using Cash Method and calendar year
I need to make a bookkeeping entry to accrue the last payroll check written on
Jan 5th so it's included in 2008 tax year but I'm not sure exactly how to do it. Using Quick Books if it matters
Thanks so much for the help
John ____ _ | __\_\_o____/_| <[___\_\_-----<------------------<No Spam Please>< | o'
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
This is for an S-Corp with a single (100%) shareholder using Cash Method and calendar year
I need to make a bookkeeping entry to accrue the last payroll check written on Jan 5th so it's included in 2008 tax year but I'm not sure exactly how to do it. Using Quick Books if it matters
Thanks so much for the help
John ____ _ | __\_\_o____/_| <[___\_\_-----<------------------<No Spam Please>< | o'
Entities on the cash method accouting do not accrue year-end expenses. That's the point of cash mehod. You recognize income when received and expenses when paid. What you described is a 2009 expense. In order to get it as a 2008 expense, it must be written on or before 12/31 (not necesarrily cashed by that date but written & sent).
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

I did not do a payroll on myself during the year and I was told that you HAVE to do the owners income through payroll or be in violation of avoiding payroll tax. And that income cannot be "passed through" the S-Corp. My Tax accountant says he cant do the S-Corp tax return until it's done. So I have to do a 90k payroll and apply it to 2008 and pay a penalty for late paying the payroll tax.
This was my first year as an S-Corp and I did not understand the rules so I was doing the books as though I was a Sole Proprietor. This year I have myself on the payroll so I don't have to go through this again. I just wished my tax accountant had explained this better at the beginning of 2008.
Is there a chance my tax accountant is wrong and that I should just forget about last years payroll for myself and "pass through" all the profits?
I'm starting to wonder why I let my brothers lawyer talk me into an S-Corp. My tax accountant sais it was a mistake. ____ _ | __\_\_o____/_| <[___\_\_-----<------------------<No Spam Please>< | o'
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Well, you're now into March, and the fourth quarter 941 and related tax payments were due at the end of January. Add to that for FUTA and SUTA payments.
I don't want to tell you to ~not~ take any payroll, but the past is past. It may be acceptable to start taking payroll in 2009 and forward. The penalty for late filing and late payment may not be worth the "fix" to 2008. Yes you should have, but you didn't, so fix it going forward.
I read through already, and the amount of profits is quite high. This isn't your first year in business either.

Income can indeed be, and in fact must be, "passsed through" to the shareholder.
The issue is that some of that (not necessarily all though) should have been paid to you through payroll with the payroll taxes being paid accordingly.

There's no law that mandates that prohibits him from preparing the return. There's no law that prohibits the profits from being passed through.
He's probalby telling you that he won't prepare your return unless..... He could prepare the return, but he's probalby worried about the hook that he may be placing himself on by doing so.

Ouch. That's almost $14K in Social and Medicare alone. Probably close to $3K in late filing and late payment penalties.
Ask your accountant how much less you can treat as payroll. Maybe $50K. Maybe $60. I don't know your business, and don't know if the $90K is his low number or the amount of profits on the books. It may not be necessary to treat all of the profits as wages, nor is it always necessary to treat all of the money you took form the business as payroll. The facts and circumstances dictate here.

Did you make quarterly estimates? That would ease the tax bite significantly.

You ~should~ have paid yourself through payroll. You didn't, so it needs to be fixed. I would be hesitant to do so retroactively into 2008 at this point without more information on the facts and circumstances surrounding your business.
--
Paul Thomas, CPA
Watkinsville, Georgia
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Mon, 2 Mar 2009 14:44:50 -0500, "Paul Thomas, CPA"

That's what I was wondering but he never completely says what he's thinking so I always have to search around to find out WHY he's saying what he's saying. If I ask him, he thinks I'm insulting his intelligence.
Thanks again. ____ _ | __\_\_o____/_| <[___\_\_-----<------------------<No Spam Please>< | o'
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:>

That's what I was wondering but he never completely says what he's thinking so I always have to search around to find out WHY he's saying what he's saying. If I ask him, he thinks I'm insulting his intelligence.
Thanks again. ____ _ | __\_\_o____/_| <[___\_\_-----<------------------<No Spam Please>< | o'
A primary role of a CPA is to educate our clients about the proper way to do things. It sounds like you need a level of service that your accountant is not providing. This could be for any of a variety of reasons, however, you need to talk to him/her to see if they can coach you through owning a business and what you need to be compliant with the myriad of laws, not limted to tax law, involved. Each type of entity is different, C Corp, S Corp, LLC, etc. and each has their own nuances. This is not meant to be condescending in any way, just informative. You need to be proactive and ask the right questions, the accountant needs to be proactive w/ you and do the same. If one side or the other doesn't communicate effectively, it's probably not a good fit for either. Keep in mind, your accountant is probably busy and charges for their time, you need to be mindful of that to use their time effectively, be prepared to pay for it and if you do both of those things, you'll likely maximize the value of your relationship.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here. All logos and trade names are the property of their respective owners.

Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.