Employee Retention Credit for 2021: What are the best practices for this? Specifically for entering it into QuickBooks software. Also, Q1 and past Q2 payroll credits?

Hello there, cousinssubs1.

I'll make sure to walk you through entering Employee Retention Credit in QickBooks Online.

To track the Employee Retention Credit for 2021, you'll need to set up your employees with the pay types in the program. To guide you further, follow the steps below:

1. Go to the Payroll menu.
2. Within the Employee tab,select the employee you’d like to add paid leave to.
3. In the How much do I pay an employee section, select the edit icon to add more pay types.
4. Under the CARES Act section, select the pay types that apply to you: CARES Act Regular and CARES Act Overtime.
5. If applicable, select and enter any Employer Paid Health Insurance Premium amount to be tracked on each check.
6. Select Done.

Once done, run your payroll using the pay types. These steps will guide you on how to do it:

1. Select Run Payroll from the Overview screen.
2. If you have multiple pay schedules select the schedule you are paying.
3. Enter hours in the corresponding fields:
   • For regular hours in the Employee Retention Credit Regular.
   • For any overtime hours in the Employee Retention Credit Overtime.
   • If applicable, enter in the Employer Health Insurance Premium.
   • If your employee is salaried, select the salary amount shown to reduce the hours by the number of hours you are paying your employee with the Employee Retention pay items.
   • If your employee is commission only, you will need to convert their pay to an hourly rate.
4. Enter any other items you need to include.
5. Select Preview Payroll.
6. Review the paychecks, and then select Submit Payroll.

For additional information, check out this article: Make sure you qualify for the credit.

Since you're recording Q1 and past Q2 payroll credits, we'll need to contact our payroll support team for payroll correction. They'll help you get your questions addressed in a secure environment. In QuickBooks Online, the best way to reach our support team is to sign in to your account, select the Help icon at the upper-right corner. Then, click Contact us and enter a brief description of your concern.

Lastly, you can check the additional details and tips when filing quarterly tax forms.
 

As always, you can go back here if you need help with your QuickBooks concerns. Take care!

Hi cousinssubs1,

Hope you’re doing great. I wanted to see how everything is going about entering Employee Retention Credit in QickBooks Online. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at anytime.

Looking forward to your reply. Have a pleasant day ahead!

How do you add it in the Desktop version?

Thanks for chiming in on this thread, @rbarnet.

Allow me to share some insights on how to add the Employee Retention Credit for 2021.

Let's make sure that the payroll item for retention is properly set up.  Here's how:

1. Go to the Lists menu, then select Chart of Accounts.
2. Choose the Account ▼ dropdown, then select New.
3. Select Expense, then select Continue.
4. From the Other Account Type ▼ dropdown, select Other Expense.
5. Give your expense account a name, such as CARES Expense, in the Name field, fill out all the relevant information, and select Save and Close.

In case you need a reference on how to set up Employee Retention Credit, just check out this article: How to set up and track the Employee Retention Credit

All  you need to know about how Employee Retention Credit works in QuickBooks can be found in the following article:

• What is the Employee Retention Credit?

To help you review this, you can ask your accountant for help. He or she can give your more insights about CARES Act. You can also check out the IRS website for more details.

Lastly, here's a few articles you can read to learn more about how it affects your payroll:

• How the Coronavirus Aid, Relief, and Economic Security (CARES) Act affects your payroll?
• Understanding the Affordable Care Act Employer Mandates

If you have other questions regarding with QuickBooks, I'm all ears. Just reply here or start a new thread and I'll help you out. 

Hello,

If my company does not use Quickbooks for our payroll (third party), how do I record the ERC check we received for 2021?

Thanks for coming here with us today, ShaunTuazonXGS.

You can create either a Bank Deposit or Journal Entry to record ERC but for the accounts to use, I recommend consulting your accountant. 

Here's how to record a bank deposit:

1. Click the Plus sign.
2. Select Bank Deposit.
3. Enter the necessary information.
4. Click Save and close.

More information about making bank deposits can be found in this article: Record and make bank deposits in QuickBooks Online.

You'll want to run Deposit Detail and customize the filter transaction type. Let me show you how:  

1. Go to Reports, and click the search bar. 
2. Click Customize. 
3. Under Filter, drop-down menu from Transaction Type and search Deposit. 
4. Tap Run report. 

If you choose to use journal entry, you can follow these steps:

1. Go to the + New icon.
2. Select Journal entry.
3. Enter information in the memo section so you know why you made the journal entry.
4. Select Save and new or Save and close.

To review the entries you've created, you can run the Transaction Journal Report. Follow the steps below to learn how:

1. Go to Reports and enter Transaction Journal Report in the search bar.
2. Filter the necessary information.
3. Click Run report.

The Community is always open if you have other questions while creating checks. I'll be around to help. Wishing you a great day ahead!

Which GL account should I use to book the ERC income to?