Payroll is a complex part of every bookkeeper’s job, new requirements for 2012 include showing company paid health insurance premiums on employees W-2′s; making things even more complex. See this question asked by a reader of our blog.
I have a question that I’ve been searching for an answer to, I’ve even asked our Tax Accountant about it. In 2012 it is mandatory that we show the company share of employee health insurance on W-2′s, do you know if there is there a way in QuickBooks to track this on a regular basis, so that it shows on the employees paystubs and then have it flow through onto the W-2 at the end of the year? Thanks, Kathleen S.
——————————————————————–
Answer:
Hi Kathleen,
Yes, you can set QuickBooks up to track employer paid health insurance contributions, have those contribution amounts appear on employee pay stubs and then have the full yearly contribution appear on the employee’s W-2. I’ve been doing this for a long time – thankfully the QuickBooks payroll module is pretty flexible, the hardest part is the setup – and then the maintenance.
Important things to take into consideration prior to setting up QuickBooks to track this information – OR the planning stages:
- Health insurance premiums for all employees are usually paid on a monthly basis in one lump sum made up of a specific amount for each employee based on the type of plan or coverage each employee has. The chances are that you pay your employees more often than that – so you want to set up a method of tracking company contributions for health insurance based on how often you pay your employees – so that the contribution is done automatically for you when you run your payroll rather than having to “remember” to do something once a month.
- Will the company pay 100% of the cost of health insurance or will the employee also pay a portion through a payroll deduction?
- How many pay periods your company actually has during the year.
- When does your company health insurance policy renew?
- Will you also be using/taking credit for company paid health insurance against the full fringe benefit amount that must be paid when employees work on prevailing wage jobs?
We’ve put together a video demonstrating the required QuickBooks setup and a free Excel Spreadsheet for tracking the costs of 100% company paid health insurance.
———————————————————————————————–
Information from the IRS regarding Employer Paid Health Insurance Reporting:
Employer-Provided Health Coverage — Not Taxable; Reporting is Voluntary for All Employers for 2011 and Small Employers for 2012
Starting in tax year 2011, the Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To give employers more time to update their payroll systems, Notice 2010-69, issued last fall, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief for smaller employers filing fewer than 250 W-2 forms by making the reporting requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued. Notice 2011-28 also includes information on how to report, what coverage to include and how to determine the cost of the coverage.
The 2011 Form W-2 is available for viewing on IRS.gov. This is the W-2 that most employees will receive in early 2012. The form includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan. {Currently, as of 12/12/2011, you will report Health Insurance Costs in Box 12 of the W-2 using code DD}.
This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee’s income, and it is not taxable.
What types of health care coverage must be included in the amount reported on the Form W-2?
A. Employers are required to report the total cost of all “applicable employer-sponsored coverage” provided to an employee. For any employee, “applicable employer-sponsored coverage” is coverage under a group health plan that the employer makes available to the employee that is non-taxable to the employee (or that would be non-taxable if the coverage were employer-provided).
Certain types of coverage are excluded from the definition of applicable employer-sponsored coverage and are not included in the amount reported. These types of coverage are:
- coverage only for accident, or disability income insurance, or any combination of these coverages;
- supplemental liability insurance;
- liability insurance (including general liability insurance and automobile liability insurance);
- workers’ compensation or similar insurance;
- automobile medical payment insurance;
- credit-only insurance; and
- other similar insurance coverage specified in regulations, if the benefits for medical care are secondary or incidental to other insurance benefits.
In addition, employers should not include the following amounts in calculating an employee’s total cost of coverage:
For additional information on this topic, visit these links:
- Affordable Care Act Tax Provisions - http://www.irs.gov/newsroom/article/0,,id=220809, 00.html
- 2011 Form W-2 - http://www.irs.gov/pub/irs-pdf/fw2.pdf
- IR-2011-31 - http://www.irs.gov/newsroom/article/0,,id=237870,00.html
- Notice 2010-69 http://www.irs.gov/pub/irs-drop/n-2010-69.pdf
- Notice 2011-28 http://www.irs.gov/pub/irs-drop/n-11-28.pdf
- Employer-Provided Health Coverage Information Reporting Requirements – Q & A - http://www.irs.gov/newsroom/article/0,,id=237894,00.html
- IRS YouTube Video – Health Care: W-2 Health Insurance Reporting - http://www.youtube.com/watch?v= TFepqFnEj5I&feature= youtu.be
- IRS Webinar - Reporting of Employer Healthcare Coverage on Form W-2 - http://www.irsvideos.gov/ReportingEmployerHealthcareCoverage/
- New Info added 1/3/2012 – IRS Notice 2012-09 – http://www.irs.gov/pub/irs-drop/n-12-09.pdf – Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage
We hope that you’ve found this post informative, if so please take a moment to leave a comment or share it on your favorite social network.
———————————————————————————————————
Update 12/16/2011 – Intuit Releases Payroll Update 21201
Late yesterday afternoon Intuit released Payroll Update 21201, which includes revised tax tables and several form updates. Included in this update is the option for reporting Health Insurance under Code DD on employee W-2′s.
When creating or editing an existing Company Contribution item type for Employer Paid Health Insurance, when you get to the Tax Tracking Type window, from the drop down list, select Health Coverage Cost, as shown in the screenshot below:
Right click on the image to enlarge it
We will be updating our video by the first of the year to reflect the actual selection of the correct tax tracking type.
An “audit trail” for Accounts Receivable in QuickBooks is only one of the many complexities faced by government construction contractors. Running any sort of construction business can be difficult – but the amount of paperwork, the level of detail, and the additional requirements for a government contractor can cause 2 and sometimes 3 times the amount for a bookkeeper. Below is a question submitted by a reader named Shirley.
We are a Construction Company and do government contracting. Is it possible to use the Accounts Receivable Summary to track each Project and the invoices when received and when paid. It has been several years since I have used QuickBooks and have never used the Construction Version. We have QuickBooks 2011 Premier Construction.
————————————————————————————-
First, let me say that the Contractor version doesn’t work any differently than the Pro – it just has some built-in construction specific reports and other features that aren’t available in other versions. So your learning curve shouldn’t be difficult at all! That’s the good news 
As for using the Accounts Receivable Summary Report as an audit trail, personally I don’t think I would use that because it wouldn’t give me the detail that I would want – OR – that I “think” you are looking for. The A/R Summary report only shows you how much {total} money is overdue in 30, 60, and 90 day increments. This information may meet your needs if you just need to know how much money is how many days overdue by job.
Right click on the image to enlarge it
My own personal preference, would be to know which invoices were how many days past due; therefore, I would rather run the Accounts Receivable Aging Detail to determine exactly which invoices where outstanding.
Right click on the image to enlarge it
Both of these reports would provide me with information about just a specific job – each could be modified and filtered for a specific job or jobs.
Another very good report, especially if you are concerned about a specific job, is the Customer Open Balance Report {available from the actual QuickBooks job record and choosing Open Balance}.
Another alternative to obtain this information easily, without running and printing reports – would be to customize how job record information is displayed in QuickBook, that way anyone who has access to this type of information can easily see it without having to run, print, and then distribute reports. Remember, it’s all about efficiency and streamlining the workload/work flow. Customizing how information is displayed in the job record let’s you quickly see how much total money is outstanding for a specific job, when invoices were created {dated}, the date you anticipate receiving the money, how many days outstanding the money is, what the invoice was issued for and the open balance.
Right click on the image to enlarge it.
For tracking Vendor costs you could run a Job Cost by Job and Vendor Detail, click the Modify Report button and customize it like the screenshot below:
Right click on the image to enlarge it
QuickBooks can do many things, including provide you with an “audit trail” for Accounts Receivable and Accounts Payable. You just have to get in there an poke around and see what works for you.
While the information provided about may not answer the original question to the 100% satisfaction of the person asking it, based on the information provided it should at least provide you with things to look at and modify to best meet your needs.
If you found this tip to be helpful, please take a moment to leave a comment or share it on your favorite social network.
Dealing with special customer invoicing requirements can be a royal pain! Sometimes it feel like each customer you deal with says “if you don’t invoice me like THIS you aren’t going to get paid”. While QuickBooks is a very flexible software program, sometimes it’s very difficult to meet the requirements of specific customers or clients. Below is a perfect example, submitted by a reader of just how difficult billing requirements can be.
I use QuickBooks Contractor version as a self-employed contractor with a hospital. The problem is I get the job on a P.O. from the hospital, say it’s for $80,000. As I do different stages of the job I bill the hospital for that stage and they send me a check. When I do the next stage the hospital wants the invoice to reflect the original P.O. and the money they have already paid. How do I do that on this software? Jean
____________________________________________________
Jean, I’m pretty certain that you can meet these requirements – it will cause some extra work on your part each time you are ready to bill the hospital for the next stage; but I don’t think it will be a lot of work.
Go ahead and create your invoice as usual – I’m making a BIG assumption here that you take the PO from the hospital and set that up as a QuickBooks Estimate and generate Progress Invoices from your Estimate {but even if you don’t that’s ok}.
Once you are viewing that Invoice in QuickBooks, click the Letters icon at the top and choose Prepare an Invoice Letter
Right click on the image to enlarge it
When the Choose a Letter Template window appears, select Invoice Letter with Details and then click the Next button
Right click on the image to enlarge it
This now sends your Invoice into Microsoft Word and by default provides information about the invoice that you can then modify to meet the invoicing requirements of the hospital.
Right click on the image to enlarge it
For example, I would change the heading called Invoice Amount $720.00 to read Original PO Amount $80,000.00, Invoice Balance $720.00 to read Previous Payments Received $XXX.XX, and add a line that reads Current Payment Due $720.00.
Right click on the image to enlarge it
NOTE: You can edit this letter template and include the changes to the wording – that way all you have to do is enter the amounts for Original PO and Previous Payments. To Edit a letter template go to the Company menu -> choose Prepare Letters with Envelopes -> Customize Letter Templates -> View or Edit Existing Letter Templates -> choose Invoice Templates -> Invoice Letter with Detail.
QuickBooks has a lot of built-in functionality – the problem is finding it! We hope you found this QuickBooks tip for dealing with special invoicing requirements to be helpful. If so please take a moment to leave a comment or share it on your favorite social network.
This QuickBooks tip explains where you can easily access employee payroll forms; including the Federal I-9, W-4, and W-9′s.
Having used QuickBooks for many years, I can remember when needing an I-9 (Employment Eligibility Verification), a W-4 (Employee’s Withholding Allowance Certificate), or a W-9 (Request for Taxpayer Identification Number and Certification) meant a trip to the appropriate website to obtain the most current form – and depending on how busy I was at the moment, that could be a royal pain!
The I-9, Federal W-4, and W-9 are now available to anyone with a current payroll subscription using QuickBooks Pro/Premier 2009-2012 or Enterprise 9.0-12.0 from the Employees menu -> Employee Forms option; you’ll also find a Direct Deposit and Pay Card Authorization form.
Right click on the image to enlarge it.
NOTE: If you don’t see the Employee Forms menu option; choose the Get Payroll Updates option and get the latest payroll update. Restart QuickBooks after the update has been installed.
The forms open in a “fillable”. pdf format, so employees can type in their I-9, W-4, Direct Deposit or Pay Card Authorization information and it will be legible!
You can easily send W-9′s to your vendors as an email attachment {once the .pdf of the W-9 is open and visible, from the File menu -> choose Attach to email}.
You will still need to obtain the current version of the State W-4 from their website and have that on hand.
These are certainly handy forms to have quick access to and will save you from having to worry about whether or not you have a copy of the form, the most current version of the form, or from having to go searching on the internet to download the most current version that is available.
Critical note: You MUST have a .pdf creator/reader installed on your computer in order to open/use these forms. If you currently don’t have a pdf creator/reader, check out Foxit Reader – it’s free!
We hope you’ve found today’s QuickBooks tip to be helpful; if so please take a moment to leave a comment or share this tip with others via your favorite social networking site using the buttons below.
Many business owners feel that they can pay their employes “whenever” they want and that is true to a point. Business owners can pay their employees whenever they want as long as the “whenever” meets the laws of the state their business resides in.
As a business owner you probably feel “in control” when it comes to setting a payroll schedule for the people you hire. Certainly you have options, you can issue payroll on a:
- weekly
- bi-weekly {every other week}
- semi-monthly {twice a month, perhaps on the 1st and the 15th}
- or a monthly basis
While there is no federal laws that require how often you pay your employees, the payroll schedule you choose MUST conform to the requirements of the state that your business is located in.
Most states require that every employer has to pay all of the wages due to an employee on a regular payroll schedule, which is determined by you the business owner – BUT you must notify the employees of how frequently you intend to pay them. A “regular schedule” means that you must consistently pay your employees using whatever frequency you choose, in other words you can’t just randomly issue a payroll check.
Many states also tell a business owner how much of a “holdback” they can take. Meaning that if you decide your workweek starts on a Sunday and ends on a Saturday and that you will pay your employees on the Friday AFTER the end of the work week; you are holding back a week’s worth of pay.
A word of caution – a business can get into trouble if it doesn’t pay it’s employees as often as the law requires – and I’m sure you don’t want or need that additional headache! Believe it or not, but each state has their own set of rules and regulations {imagine that!}, in some states the rules are different depending upon the employees occupation. In other words, setting a payroll schedule that is realistic for your company AND that conforms to state requirements can be a mess!
The U.S. Department of Labor provides a fairly detailed overview of employee payroll schedules by state, you can find State Payday Requirements here, the information provided is ONLY an overview of general information – you should most definitely contact your state department of labor for all of the details!
We hope you’ve found this article to be helpful, if so please take a moment to leave a comment or share it with others on your favorite social network.
