Month: April 2018

Quickbooks

Tracking Time in QuickBooks, Part 2

Last month, we learned about getting QuickBooks ready for time-tracking by activating it in Preferences and creating a record for a service item. This month, the focus is on using that record in the two different ways you will be using it in QuickBooks: to pay employees for their hourly work and to bill customers for services.

Recording Employee Hours

There are two ways to enter hours for your employees who provide services to customers and are paid by the hour. The first is to create a work ticket for a single activity. Click Enter Time on the home page, and then Time/Enter Single Activity to open this window:


Figure 1: Single-activity work tickets for employee hours are especially useful if you need to set a timer.

First, check the date to make sure it displays the day when the work was actually done, not recorded. Click the arrow in the field next to Name and select the employee’s name from the drop-down list that opens, then do the same in the Customer: Job field below. The Service Item field needs to display the name of the service performed by the employee.

If you want to time a period of activity, use the Start, Stop, and Pausebuttons under Duration. You can also replace the 0:00 that appears by default with the number of hours and minutes that were worked.

In the middle column, select the correct Payroll Item from the drop-down list. You can add a new employee if necessary without completing his or her entire record, but be sure to go back and complete it before your next payroll.

Hidden behind the drop-down menu is a field titled WC Code, which stands for Workers’ Compensation Code. It will only appear if you are using QuickBooks Enhanced Payroll and have that feature turned on.

Tip: If these two fields do not appear, you have selected an employee who is not timesheet-based.

In the upper right hand corner, you will see a field labeled Billable. Be sure you click in the box to create a checkmark if you will be invoicing a customer for the work done.

Save the activity record when you have completed it.

Using Timesheets


Figure 2: You can enter employees’ hours directly on a timesheet instead of creating a single activity record. 

QuickBooks offers a second option for entering employee hours: timesheets. You will notice that there is a Timesheet icon in the toolbar of the Time/Enter Single Activity window. If you click on it with a completed record open, a new window opens containing a graphical representation of a paper timesheet.

If you enter employee hours in a single activity record, they will appear on a timesheet, and vice versa. There are two advantages to entering hours directly on the timesheet, though. The first is that it is faster. Second, you can click the Copy Last Sheet icon if you are just going to duplicate an employee’s previous pay period’s hours. If you want to go there straight from the home page, click Enter Time | Use Weekly Timesheet.

Billing Customers for Time

QuickBooks makes it easy to transfer billable hours worked by employees to the corresponding customers’ invoices. After you have entered blocks of time spent on services, open an invoice form and select the customer. This window will open:


Figure 3: Once you’ve entered billable hours worked by an employee, simply open an invoice form and select that customer to open this window.

By default, Select the outstanding billable time and costs to add to this invoice? is checked. When you click OK, a new window opens displaying a grid that contains all of that customer’s billable time. You can Select All or click in front of each entry you want to include. You will notice here that there are also tabs on the grid for Expenses, Mileage, and Items that can be billed back to the customer.

If you choose not to carry billable hours over to the invoice at the present time, you can always add them by clicking Add Time/Costs in the invoice’s toolbar.

Questions? One of our QuickBooks experts is always available to help ensure that you are billing customers for all costs they incur–and to talk about any other element of accounting that affects your cash flow.

Tax

Correct Filing Status and Reporting Name Changes

If you haven’t filed your taxes yet, it’s time to stop procrastinating. If you’re not sure what to do first, the fastest way to get started is to figure out which filing status applies to you. In addition, if your name or that of a dependent changed during the tax year for which you are filing, then you will also need to report the name changes to the Social Security Administration.

Choosing the Correct Filing Status

Choosing the correct filing status is important because it can affect the amount of tax you owe for the year. It may even determine if you must file a tax return. Here are the five filing statuses you can choose from:

1. Single. This status normally applies if you aren’t married. It applies if you are divorced or legally separated under state law.

2. Married Filing Jointly. If you’re married, you and your spouse can file a joint tax return. If your spouse died in 2017, you can often file a joint return for that year.

3. Married Filing Separately. A married couple can choose to file two separate tax returns. This may benefit you if it results in less tax owed than if you file a joint tax return. You may want to prepare your taxes both ways before you choose. You can also use it if you want to be responsible only for your own tax.

4. Head of Household. In most cases, this status applies if you are not married, but there are some special rules. For example, you must have paid more than half the cost of keeping up a home for yourself and a qualifying person. Don’t choose this status by mistake. Be sure to check all the rules.

5. Qualifying Widow(er) with Dependent Child. This status may apply to you if your spouse died during 2015 or 2016 and you have a dependent child. Other conditions also apply.

Taxpayers are reminded that your marital status on December 31 determines your status for the whole year. Sometimes, however, more than one filing status may apply to you. If that happens, choose the one that allows you to pay the least amount of tax.

Reporting Name Changes

All of the names on a taxpayer’s tax return must match Social Security Administration records and a name mismatch can delay a tax refund. Here’s what you should do if anyone listed on their tax return changed their name:

1. Reporting Taxpayer’s Name Change. Taxpayers who should notify the SSA of a name change include the following:

  • Taxpayers who got married and use their spouse’s last name.
  • Recently married taxpayers who now use a hyphenated name.
  • Divorced taxpayers who now use their former last name.

2. Reporting Dependent’s Name Change. Taxpayers should notify the SSA if a dependent’s name changed. This includes an adopted child who now has a new last name. If the child doesn’t have a Social Security number, the taxpayer may use a temporary Adoption Taxpayer Identification Number (ATIN) on the tax return. Taxpayers can apply for an ATIN by filing a Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions.

3. Getting a New Social Security Card. Taxpayers who have a name change should get a new card that reflects a name change. File Form SS-5, Application for a Social Security Card. Taxpayers can get the form on SSA.gov or by calling 800-772-1213.

If you have any questions about these or any other aspects of filing your tax return, don’t hesitate to call the office immediately.

Tax

Time for a Paycheck Checkup

Withholding issues can be complicated, and with the passage of the recent tax reform legislation–most of which takes effect starting in 2018–, it’s important to make sure the right amount of tax is withheld for your personal tax situation. As a first step to reflect the tax law changes, the IRS released new withholding tables in January 2018. A revised Form W-4 was released on February 28, 2018. These updated tables were designed to produce the correct amount of tax withholding.

For taxpayers with simple tax situations, the easiest way to do check whether their withholding is correct is to use the IRS Withholding Calculator on IRS.gov, which is designed to help employees make changes based on their individual financial situation.

Using the Withholding Calculator to perform a quick “paycheck checkup” protects employees from having too little tax withheld and facing an unexpected tax bill or penalty at tax time in 2019. It can also prevent employees from having too much tax withheld. With the average refund topping $2,800, some taxpayers, of course, might prefer to have less tax withheld up front and receive more in their paychecks.

Taxpayers should keep in mind, however, that the IRS Withholding Calculator results are only as accurate as the information entered. If your circumstances change during the year, come back to the calculator to make sure your withholding is still correct.

With the new tax law changes, people with more complex tax situations such as married couples who both work, higher income earners, and who take certain tax credits or itemize might need to revise their Form W-4 completely to ensure they have the right amount of withholding taken out of their pay.

Small business owners or sole proprietors who owe self-employment tax, or individual taxpayers who need to pay the alternative minimum tax, or owe tax on unearned income from dependents, as well as people who have capital gains and dividends should contact the office and speak to a tax professional.

Using the Withholding Calculator

The Withholding Calculator asks taxpayers to estimate their 2018 income and other items that affect their taxes, including the number of children claimed for the Child Tax Credit, Earned Income Tax Credit and other items. It does not request personally-identifiable information such as name, Social Security number, address or bank account numbers, nor does the IRS save or record the information entered on the calculator. Here are the steps you need to take:

    • Gather your most recent pay stub from work. Check to make sure it reflects the amount of Federal income tax that you have had withheld so far in 2018.
    • Have a completed copy of your 2017 tax return handy. Information on your return can help you estimate income and other items for 2018. If you haven’t filed your 2017 tax return yet you can use a 2016 tax return; however, please remember that the new tax law made significant changes to itemized deductions.
    • Use the results from the Withholding Calculator to determine if you should complete a new Form W-4 and, if so, what information to put on a new Form W-4. There is no need to complete the worksheets that accompany Form W-4 if the calculator is used.
    • As a general rule, the fewer withholding allowances you enter on the Form W-4 the higher your tax withholding will be. Entering “0” or “1” on line 5 of the W-4 means more tax will be withheld. Entering a bigger number means less tax withholding, resulting in a smaller tax refund or potentially a tax bill or penalty.

If you complete a new Form W-4, you should submit it to your employer as soon as possible. With withholding occurring throughout the year, it’s better to take this step early on. If you have any questions, please call.

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