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Level 1

Insurance Expense Duplicating with Payroll Company Contributions

I have searched far and wide and have not found a similar discussion. Seems so simple, yet I can't figure it out. Appreciate the help!

 

I have an S-Corp with 2 owners and 1 employee.

I have QuickBooks Online Simple Start and QuickBooks Self Service Payroll.

 

Profit and Loss Statement is showing my full Health Insurance Expense AND Company Contribution: Health Insurance. I am not sure if I should set up a wash/reimbursement within an Expense account or if I should use liabilities/assets.

 

  1. Employer pays health insurance bill on 1st of Month for the remaining month.
  2. Record it as an expense under Health Insurance.
  3. 5th & 20th of each month, employee is paid and deduction is made reimbursing the 1st of month expense. Employer contribution is recorded on payroll.
    1. Employee's pay deducted for half of the her own insurance expense.
    2. Employer contributes half of the employee's expense.
  4. Employee's deduction is not displaying in Profit and Loss (i.e. it's not reducing the Health Insurance Expense).
  5. S-Corp Owners on Payroll DO NOT have any contributions/deductions recorded. Accountant said it's easier to not have that on the payroll to account for it at end of year.

Therefore, I believe, there should be three categorizes:

Health Insurance Expense

Company Contribution at Payroll time (which reduces Health Insurance Expense)

Employee's Deduction at Payroll time (which reduces Health Insurance Expense)

 

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2 Comments
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Community Champion

Insurance Expense Duplicating with Payroll Company Contributions

We use just Health Insurance Expense for the payment as a total, then use payroll deduction to post to same expense account, reducing the company deductible cost. We are LLC, not S-corp so I do not know if any of what you provide in insurance is a taxable to employee fringe benefit.  On our system the employee contribution reduces their income subject to SS/Med by the amount of the deduction.  You are not making an employee contribution unless you are giving the employee money to pay the insurance on their own.

Highlighted
Level 1

Insurance Expense Duplicating with Payroll Company Contributions

There is no option for Employee Deduction to post to an Expense account.  Under Settings > Payroll Settings > Preferences, I scroll down to "Other Liability & Asset Accounts" where the Health Insurance Premium is located. It only lists Liability accounts so the Employee's Health Insurance Payable grows. 

 

Similarly, Company Contributions only have Expense accounts but the company contribution from each paycheck goes to the same Health Insurance Liability as the Employees Deduction.  So my company contribution automatically duplicates the general health insurance expense.

 

First of Month - I pay full insurance expense

Paycheck  - Employee deducted share of insurance from paycheck, posts to Wages expense account and Insurance Payable Liability account. Company Contribution posts to same Insurance Payable Liability account and to a Company Contributions expense account (duplicating the health insurance expense I paid at the first of the month).

 

Is the only option to do a journal entry after every paycheck with the following:

 

Debit Health Insurance Liability and Credit Health Insurance Expense for the employee and company contributions?  Then the main Health Insurance expense account only shows the remaining expense (owner's health insurance). Then under Payroll expense, is has Company Contributions and then Wages (which includes employee's deduction).

 

Then the liability accumulating both 

 

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