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Join nowIt sounds like you just left a job (your old W2 income) and now you're staring a new Self-Employed business (your new QBs program).
If this is the case, then only the new work you do in your new company would go into QBs. If this is truly all new to you, you really should go talk to an Accountant. You need to figure out how much your business could potentially earn in a year and how you're going to deal with taxes, etc.
A big discussion, if you haven't done this already, is to determine if you need to create a S Corp, LLC, etc. Related to that is how you're going to pay yourself. The accountant may also want to make you an employee of your new company where you'll be able to pay into a retirement account (similar to what you probably had at your last W2 job). Or, based on age and what you already have put away, they may opt not to do that so you're not paying extra taxes.
So I strongly suggest you set up an appointment sooner than later.
Yes, SA08.
You still need to include your old W2 income into QuickBooks Self- Employed especially if it's within this year.
I'm adding these articles to learn more information about QBSE for your reference:
I'll always be around if you have any other QuickBooks related concerns.
@GlinetteC really think that may be incorrect information....
@SA08 said s/he had a "previous employer" which provided a W2. That income would have NOTHING to do with the new Self Employed income. Yea, it all gets reported on the same tax return, but as far as the company books, the W2 income is separate.
And I'm not a Tax Accountant, who is really whom SA08 needs to talk to, so I'll be the first to learn something new and admit I'm wrong if SA08 comes back and says the Accountant said to add his old W2 income from a prior employer into the new company's income.
It will also be quite a task to them enter in all the withholdings taken out earlier in the year and then trying to show where they are held since this new company did not withhold anything. Same with showing where the payments actually originated? Guess he could show the old employer as a Client that paid him, but then again, how will he report the taxes as the Net Pay would appear as additional income to his new company....
Well, I think from a practical point of view, my sole proprietor income should be separate from my previous job that withheld all appropriate taxes. I wish Intuit would clarify their Tax Profile section when they ask for W2 income, either ask "This is from ANY and ALL income made in 2019" or "This is only for W2 income from 2019 that did not have appropriate taxes withheld".
I appreciate you bringing this to our attention, @SA08.
I'll be sure to pass along your thoughts about this to the appropriate channel. This way, they can check and verify what details should be included in the W2 income.
In the meantime, I'd recommend reaching out to your tax adviser as suggested by one of our Community backers.
Leave a comment if there's anything else you need. I'm more than happy to help. Have a nice day!
Hi! Did you receive a definitive answer on this?
Thanks for joining this conversation, @cl_hale.
I agree with @Pete_Mc that both W2 incomes should be separated. However, I'd suggest consulting an accountant to help and guide how to record this. Your accountant can provide more expert advice in dealing with this concern.
Just in case, I'll add these articles for future reference:
Reach out to me in the comment if you have any other questions or concerns. I'll be here to help. Have a wonderful weekend!
Would it make sense to report the total W2 income/withholding in the "Tax Profile" section, and then select the "Exclude this transaction" option for all deposits that came from W2 employers when reviewing transactions and/or "tag" them as W2 paychecks?
Maybe they'd have to be added together again in the end to determine TOTAL annual income tax liability, but at least this could help keep them separate/ easy to see what's been "taxed" already and what hasn't?
Hi there, @CaitMnYc.
Thank you for reaching out to the Community. Yes, you can exclude the paycheck transactions. However, I would always recommend confirming with an accountant to help and guide with this. Your accountant can provide more expert advice in dealing with this concern.
I've also added these articles to know more about the different categories in QuickBooks Self-Employed:
Please touch base with me here for all of your QuickBooks needs, I'm always happy to help. Thanks for dropping by. Take care!
Tax return for any year would include all income you earned, whether from W-2 job or business profit. Payroll taxes withheld from your previous W-2 are just estimates based on how you completed W-4 form, so you won't know how much you actually owe for taxes until you do your tax return for the year with the totals. You may have a refund coming from that W-2 or you may owe more, definitely will never be an exact right amount that you owe. Hopefully you are not trying to do your own accounting and taxes without any help from accountant or at least a bookkeeper experienced with your situation. For tax returns you can hire an EA (Enrolled Agent). These are people who are specifically trained to do tax returns, but not for accounting but should be cheaper than a CPA. Remember that if you pay a CPA to do your taxes only, that does not mean they will review your accounting, most just take your numbers and put on tax form. Some include an hour or two of accounting/tax consulting but if you are not paying for that then don't expect it to be done for you for free. No one is going to do your accounting for free, why should they?
Agree with most of your advice here, but will clarify just a bit. If he chooses LLC, he still must choose entity type for paying taxes as Sole Proprietor, Partnership, S Corp, or C Corp since LLC is not one of the choices for tax returns. The entity type selected determines whether he can or must be a W-2 employee in order to take money out of the company, not age or how much money he saved for retirement. Anyone can pay into a retirement plan, regardless of entity type. Those two factors would most likely be considered when choosing an exit plan. Payroll taxes will not be any less with the different organization types. The only way to pay less is when you work for a Corporation since they pay half, but as the owner of one, you pay that half and the other half as an employee. I agree that anyone starting a business should first do their online homework to understand entity types and then consult an accountant (not me) regarding entity selection. It is your decision, not the accountant's. Many people make the wrong choice and can have issues later.
It looks like this discussion has gone a couple of different directions. So let me just reiterate my comments.
And again... I'm not an Accountant... Go Ask one. :)
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