Setup and Management of SEP-IRA for an LLC in QBO

It's great to see you here in the Community, @marcjp! I'm here to clear up any concerns you have about SEP-IRA contributions in QuickBooks Online (QBO).

Currently, there's no predefined account in QBO's Chart of Accounts for SEP-IRA contributions. You can create it manually. To do so, you can create the account under the Chart of Accounts and then make an expense transaction for the contribution. Here's how:

1. Go to the Accounting menu.
2. Click the New button under the Chart of the Accounts tab.
3. Select Other Current Liabilities as the Account Type.
4. Choose Other Current Liabilities as the Detail Type.
5. Enter the Specific Name and Description for the account.
6. Hit Save and Close to confirm.
7. Navigate to the + New menu.
8. Choose Expense, then select to whom you'd like to send the contribution (payments).
9. Under Account Details, locate the account you've created.
10. Enter the rest of the expense details, then Save and close.

You can include SEP-IRA contributions in a regular payroll run in QBO. Add the contributions as a non-taxed line item within the payroll run. Ensuring the contributions are accurately recorded and reported in compliance with the IRS regulations and guidelines is essential. We recommend consulting with a professional accountant or tax advisor to ensure the SEP-IRA contributions are correctly recorded and reported in QBO. 

Use the SEP-IRA contribution account you created if you prefer to keep the contributions separate from payroll. If you want to include it in payroll, set up a retirement plan and defer the tax to avoid taxation.

Regarding your follow-up question, the employer typically makes SEP-IRA contributions directly into the SEP-IRA accounts of eligible employees. The employees can only receive the contributions in their personal bank accounts after depositing them into the SEP-IRA accounts. The employer makes the contributions on behalf of the employees and isn't considered part of the employee's taxable income. Ensuring the contributions are accurately recorded and reported in compliance with the IRS regulations and guidelines is essential.

Check out this article for guidance on wrapping up this year's payroll and preparing for the next: Year-end checklist for QuickBooks Online Payroll.

Please let us know if you have additional concerns regarding the SEP-IRA contributions. We've got your back. Stay safe!

18 January 2024

Hi Jean,

Many thanks for the courtesy of your reply, informed responses to my questions, and step-wise tutorials.

By way of a quick follow-up to your guidance - regarding both after-tax and SEP-IRA contributions made within a single payroll run:

* I don't know of a way to split routing of the destination accounts by line-items i.e. direct deposit of after-tax net payroll into one (banking institution) account, whilst depositing the SEP-IRA contribution into another (investment brokerage institution) account. Is there a solution for this, or does this scenario require two separate transactions?

Thanks & best regards,

Marc

Thanks for getting back to us. I'm here to answer your follow up queries, @marcjp. 

In response to your question about dividing the destination accounts for direct deposit and SEP-IRA contributions, it's important to note that a SEP-IRA is a personal retirement plan and isn't directly associated with the LLC's business expenses. As a result, there isn't a pre-established account for SEP-IRA contributions in the business context.

As the previous agent suggested, you'll need to manually create two separate transactions to handle the direct deposit of after-tax net payroll into one banking institution account and the deposit of the SEP-IRA contribution into another investment brokerage institution account.

To track the contribution without affecting your profit and loss, we recommend recording a transfer from your business checking account to the account you've created for the SEP-IRA contribution. This approach will allow you to accurately track the contribution while keeping it separate from your business expenses.

For more detailed steps on how to transfer funds, you can check out this article: Transfer funds between accounts

Additionally, here's an article that may guide you in paying your payroll taxes to avoid penalties due to late payments: Pay and file payroll taxes and forms in Online Payroll.

Fill me in if you have more questions about managing your SEP-IRA plans in QBO. I'd be glad to help you some more. Take care and stay safe.

19 January 2024

Hi again Jean, and thanks for your ongoing support...

Based on your guidance, (with the understanding that an account for SEP-IRA contributions needs to be created manually), I have encountered the following behavior whilst trying to create the account:

* I do not see either an Accounting menu nor a Chart of Accounts tab navigations, however; when performing a Search I can bring up the CoA screen. Is this the normal U/I? behavior?

* When I click the "New" green button on the CoA screen, nothing happens.

I have attached a screenshot for your reference, review and consideration.

FYI: I am on a MacBook Pro M3 Max, macOS Sonoma 14.2.1, and Safari v17.2.1.

Thanks & best regards,

Marc

Thanks for the update, Marc. Based on your description, I can tell that you have the most recent interface update, which is why you don't see the Accounting menu. Let's work together to fix your Chart of Accounts button issue so you can create a new account for your SEP-IRA contributions accordingly.

In the new QuickBooks Online (QBO) interface, you can access Chart of Accounts (CoA) in two ways: via the Transactions menu and the Settings or Gear icon. Please see the screenshot below for your reference.

Since nothing happens when you click the New green button on the CoA screen, pop-up windows may be blocked. Troubleshooting this will vary based on your browser. If you're using Safari, here's how to check:

1. Select Safari, then choose Preferences.
2. Click Security.
3. Uncheck the Block pop-up windows box to enable pop-ups.

If you're utilizing the Firefox browser on Mac or you need another way to enable pop-ups in Safari, please see this article for the detailed steps: Why doesn't anything happen when I select a button or link?.

Once everything is all set, pay and file your payroll taxes and forms electronically in QBO Payroll.

If you need further assistance or any clarifications about creating new accounts in the Chart of Accounts in QBO, please add them below. I'm always here to provide extra information. 

19 January 2024

Hi Rea,

Thanks for the courtesy of your reply, and offer of support.

Your screenshots and step-by-step would be otherwise very helpful, but - as you will see from my screenshot attached for your review: there are neither BOOKMARKS nor MENU nor the sub-menus as nested dropdowns. FYI: I have detected all of Safari's Enable Content Blockers instances for QBO pages.

Thanks & regards,

Marc

I appreciate your immediate response and the additional information you've provided, Marc. I'll provide further details about your QuickBooks Online (QBO) interface and how you can track SEP-IRA contributions.

Based on your screenshot, you're using QuickBooks Standalone Payroll. This plan doesn't include an accounting feature that allows you to manually create an account in the Chart of Accounts to track your SEP-IRA contributions. Which is why your interface differs from what I demonstrated earlier. To know the features of your payroll subscription, you can check out this page: QuickBooks Payroll.

Moreover, do you have a separate QuickBooks Online (QBO) account? if so, you can follow my colleague's recommendation above to add an account in the Chart of Accounts and record an expense transaction for the contribution to manually record it.

Also, I've included this article to assist you in finalizing this year's payroll and preparing for the next using QuickBooks Payroll: Year-end checklist for QuickBooks Payroll.

For any other payroll concerns or questions about retirement plans, please don't hesitate to keep us posted in the Reply section below. We in the Community are always ready to help you out.