How to set up Employees in Home, Business & Rental 2020

timberwolf4156

I guess the best thing is to explain what I would like to be able to do and hopefully someone can tell me if and how it can be done.
I would like to be able to create an invoice to a customer and have Quicken calculate the amount of income tax and self-employment tax and place those amounts in a business accounts like it does for sales tax, and then give me the net income amount ?

volvogirl

Income tax and self employment tax for your tax return?  No way can Quicken do that.  That's why you need a separate tax program.  It is not a set amount or percentage like sales tax.  You pay tax on your Net Profit after expenses.  Which you won't know until the year is over.

Frankx

Hi @timberwolf4156

Okay, I will admit that I am having a hard time trying to determine what you would like "to do" based on what you've said.  So let me ask a few questions:
a) are you planning to bill a customer for your "projected" income & self-employment taxes based on your hours/time spent on a project?
b) or are you simply wanting to know what your personal income/FICA tax consequences would be of your billing your clients?

I also have to warn you, that if it is either of the above, Quicken itself likely can't do it, but let's see.

Frankx

volvogirl

And what does your question have to do with employees?  Do you pay employees or sub contractors?  

UKR

Quicken does not support Payroll services. It's too basic for that.
However, based on other posts over the years here in the Community, there is (or once was) a Payroll service available from another company which would also allow data import into Quicken. The Q....... - product (which we are not allowed to mention here) and its payroll interface did work quite nicely. There also are other payroll service providers which, for a fee, will handle payroll tasks for you and send you a list of how much was paid for each category. That you can easily record as a split category transaction in your business checking account register.

I recommend you review what's available in the payroll service area and pick the best solution.

Oh, BTW, money paid to an employee would not be handled by making a Customer Invoice ... that's Accounts Receivable, money you collect from a customer who's buying service or product from you. If, at all, you'd create Vendor Invoices (Accounts Payables) to pay an employee, just like you'd pay a vendor, e.g., pay Office Depot for office supplies you bought.

timberwolf4156

Frankx, simply wanting to know what your personal income/FICA tax consequences would be of your billing your clients. I am using a separate program for calculating it but was hoping I could do it all in Quicken and save the extra work.

timberwolf4156

Vovolgirl, I guess I could be wrong but according to all the info I have from the state it is a set amount 10% for income tax and 12.3% for self employment.

volvogirl

Income tax, self employment tax, FICA etc. is not based on what you bill your clients. It is what you actually received during the year.  Especially if you bill someone in December and they pay you in January.  Quicken does not figure that out for you.  It doesn't take into account your expenses and Net Profit.

timberwolf4156

Volvogirl, I am referring to my personal income from my sales. sorry if I didn't explain it well !

volvogirl

Right.  But it is based on your Net Profit for the year.  

Ps56k2

timberwolf4156 said:  I would like to be able to create an invoice to a customer and have Quicken calculate the amount of income tax and self-employment tax

As others have mentioned, can't really treat those items like sales tax.

You could still create the invoice for Services, T&E, or whatever...
BUT.... the "tax" amounts would be created from a separate PAYROLL transaction to essentially pay yourself... and that's where the withholding, etc would come into play.

Frankx

Hi again @timberwolf4156,

Sorry for the delay in getting back to you.

As others have indicated, Quicken doesn't have a feature that would perform the calculations you are looking for.  So, I would suggest that you [continue to] calculate them separately.  For federal taxes, I suggest that you use your "marginal" income tax rate/bracket (that's the highest tax bracket that you fall into) - see these schedules for the brackets LINK.  And you should add the combined self employment tax (that rate is 15.3%) plus your state income tax rate.  And I would suggest that you call it something like "administrative costs" or "overhead" rather than a tax, so the client doesn't think they can deduct it as a tax paid.

Frankx

Ps56k2

Frankx said:  And I would suggest that you call it something like "administrative costs" or "overhead" rather than a tax, so the client doesn't think they can deduct it as a tax paid.

I personally would never include an invoice line item with "overhead" unless it made sense like travel, gas, copying, printing, general admin - else it should be reflected in your "cost of doing business" and finally reflected in whatever you are charging your customers... for your services or whatever