Top 5 year-end questions: Paying taxes

This time of year, accountants are superheroes in the tax world. While many of you use their expertise, we know there are others who do this on their own. Whether you have help or not, this Top 5 is focused on paying those taxes. 

1. Can I have volunteers listed as employees and not have an issue with payroll - or taxes?

Yes, you can set these volunteers as your employees without affecting your payroll or taxes. As long as you don't run payroll for them, there will be no issues with your payroll.

Here’s what you need to do to add your volunteers to QuickBooks Online:

1. Go to Payroll and choose Employees.
2. Select Add an employee.
3. Fill in the necessary information.
4. Select Done.

Take a look at other tips for adding users: Add your new employee to QuickBooks Payroll.

2. How do I add $100 of taxable income to a payroll cheque without paying the employee?

To accomplish this, you can create a zero net cheque. This makes sure that all $100 goes toward income tax. Other reasons you may do this are to:

• Put an entire paycheque into a retirement plan. 
• Record a gift made to an employee, such as cash or a gift card.

First, you’ll need to add another earning pay type to the employee's profile, then use the net-to-gross formula to determine the gross pay amount. Once everything is all set, you can follow these steps:

1. Go to the Payroll menu, then select the Employees tab.  
2. Select the Run payroll button.
3. Choose the employee and pay schedule.
4. In the Other earning box, enter the amount determined by using the net-to-gross formula.
5. Select the Preview payroll button.
6. Select the Edit icon beside the Net pay amount.
7. Zero out all unwanted deductions.
8. Edit the Federal Income tax or Provincial Income tax amount, then select OK.
9. Select Preview Payroll, then select Submit payroll.

After that, run the Payroll Summary by Employee report. This will give you comprehensive details about your employee's wages, deductions, and tax info. Just go to the Payroll section from the Reports menu's Standard tab.

3. How do I add prior tax payments?

If you paid taxes in another software, etc., you can add that information into your QuickBooks account.

To record your tax payment:

1. Select Taxes, then Payroll Tax.
2. Select the Payments tab.
3. Review the payments listed and locate the tax you want to record a payment for.
4. If the payment is listed, choose Mark as paid, then select Yes, mark paid.
   Note: This will be a non-posting transaction. It won't affect the bank register, but it'll clear the taxes from showing due and record the deposits.

If the payment isn't listed, continue with the steps below:

1. Select Prior tax history.
2. Choose Add Payment.

Reminder: This will be a non-posting transaction. It won't affect the bank register, but clear the taxes from showing due and record the deposits.

1. Select the tax type and liability period (the period that the taxes were accrued), then enter:

o Payment Date

o Check Number (optional)

o Notes (optional)

o Tax Item Amounts

4. Select OK. You'll then be back to the Prior Tax Payments screen.

More details on this process are in this article: Recording prior tax payments.

4. How do I handle T4s for an employee that worked in Quebec for part of the tax year?

At the end of the tax year, you need to provide your employees with a T4 form for each province or territory they worked in for your company. You will also need to provide your employees with a RL-1 slip if they worked in Quebec.

QuickBooks can generate this form for you. 

Here's how:

1. Go to Taxes and select Payroll tax.
2. Select Annual Forms under the Forms section.
3. Select RL-1.
4. Select the tax year you want to view RL-1 slips for.
5. Select View to open and review the slips in Adobe Acrobat.
6. Make sure all the information is correct. You can download or print the slips using the icons in Adobe Acrobat, then close the window.
7. Give a RL-1 slip to each employee and submit your slips to Revenu Québec by the last day in February.

Note: The mailing address is included in the instructions on the last page of your printed form.

5. Are convenience fees taxable?

If the customer is paying the fee, it's taxable income. You'll have to create an income account and a service item for your convenience fee. Then, add it as a new line item to your transaction to make it taxable. Here’s what you’ll do:

1. Select Accounting, then select Chart of Accounts.
2. Select New. 
3. From the Account Type drop-down, choose Income.
4. Choose Service/Fee Income under Detail Type. Then, enter a Name.
5. Select Save and Close.

After that, create a service item following these steps:

1. Select the Gear icon, then select Products and Services.
2. Select New, then click Service.
3. Enter the product/service information and choose the Income Account you created.
4. Choose Save and close.

Once done, add the service item as a new line item to your transaction:

1. In your invoice, click the convenience fee item.
2. Enter the Amount, and make sure to mark the Tax column.
3. Select Save and close.

Here’s a great article to read more about recording processing fees in QuickBooks Online: Choose where to record payments and processing fees for QuickBooks Payments.

There you have it! By finishing these steps, you’re ready for the new year to begin with a fresh start to your books. Be sure to check out our QuickBooks Online year-end guide and checklist, and stay tuned for more great year-end content. 

Have more questions about preparing for year-end with QuickBooks Online? Our live social team is available to chat Monday through Friday from 9am to 8pm EST: https://quickbookshelp.ca/facebook