S Corp Payroll Setup for 1-person S Corporation - Explained

welcome back to our Channel clear value tax my name is Brian Kim I'm a certified public accountant and in today's video we will be discussing the S Corp payroll setup so this will not be a video about determining what should your salary be versus your distributions and the tax savings associated with that that's a separate video this video will be about the payroll setup for the S Corp so let's begin by just saying that now that you have an S Corp you will be an employee of your corporation so you will be an employee shareholder so because you're an employee you need to run a payroll on yourself ok so let's just say that I highly recommend going with the software to run your payroll functions because you can do all the payroll paperwork and tax deposits yourself manually on PDFs for doing the payroll or reporting to all the government agencies and the tax deposits however having a software just simplifies your life so much and the prices are very reasonable so if you wanted to do yourself manually this is what it would entail let's just say that ok you are an employee on your corporation your escort so then you need to do monthly tax deposits well if you're going to be paying yourself monthly which you generally would be you need to do monthly tax deposits for your employee withholdings so that's a monthly thing that you need to do and also you need to fill out the quarterly reports and you need to be sending those in the quarterly reports to the IRS to your Department of Revenue with the states to unemployment so state unemployment reporting so that's every 3 months you're gonna be filling in PDFs it's going to be so time-consuming the softwares they take care of all this for you automatically just based off your payroll what you're running it just automatically generates those reports and as simple as just clicking a button and then your taxes your tax deposits get be paid electronically so the reports they also get generated automatically and they get efile on basically all you need to do is just click Submit or just have it on autopilot so this eliminates the need for you to manually be sending in those tax deposits on a monthly basis and also they were it just eliminates the need for you to be filling out those PDFs and sending those in to those three agencies on a quarterly basis so if you want to do that if you'd be my guests but I'm telling you it's just so worth it to choose a pair of provider you know a cloud-based payroll service and have them take care of all those things for you just automatically so let's just go to the actual setup so before you go to the actual setup of the payroll you need to get your registrations done with your state that's the Department of Revenue so what do I mean by that let's just say okay there are some states where there's no state taxes so you would not be holding state taxes as the employee nor as the employer so even if that's the case you still have the state unemployment tax reporting obligation payment obligations so you still need to complete your state registration setup with the Department of Revenue or unemployment or both so that you can have those account numbers and those tax rates linked up to your payroll software whichever provider that may be without that without the registrations with the states your payroll setup will be incomplete a lot of times they won't even let you progress so you need to have this ready it would be better if you did that beforehand so that when you're going through the payroll setup process with whichever provider you can just take care of everything and have it set up fully and completely at that point in time rather than having to backtrack and just have your registration with your payroll just not finished of course so that would be my recommendation get your state registrations done before the actual payroll setup so once you have that you need to choose your software the most popular software's out there would be the quickbooks online payroll the QuickBooks payroll or gussto so that is what I typically see for my S corp clients so these you just make you just need to make sure that you don't choose the very cheapest option that does not allow you to do the payment methods for the tax deposits nor the efiling methods weather reports because I mean that's one of the the biggest beauties of having these software providers because they just take care of those reports and set them off with just a click of a button just instantaneously if you need to print those you know sign those snail mail those in I mean that just that just eliminates so much of the benefits so just make sure you choose the option where it offers the payments option and the efiling option because those are obligations that you need to do along with your payroll okay so when you are setting up your software for your payroll whichever provider that may be Gus though QuickBooks or any other I mean they're gonna be pretty much asking you the same questions you know they're gonna be asking you what's your salary going to be and again please check out my video about how to determine what your salary should be for maximizing your tax savings they're gonna be asking you what's the frequency of your payroll so how often do you want to pay yourself my recommendation if it's just going to be you as the only employee of your S corp it's to run a monthly payroll because you don't want to be going into the software if you do bimonthly or bi-weekly I mean you don't want to be going into the software twice a month to run the payroll on yourself you might as well just do monthly so that you can just do a payroll just once a month you know it's gonna be half this is gonna reduce your workload you know just I mean there's not going to be much work to do run the peer on yourself but again it's just gonna it's just going to be doing it once a month versus twice a month it's gonna be the same thing there's benefit of running it twice a month or bi-weekly so that's the frequency that's my recommendation on the frequency of the pay to yourself and then they're gonna be asking you just the basic questions about the employer data employee and employer bank account employer address all that and they're gonna be asking the employee the employee data you know what's your you know what's your bank account what's your personal address all that so when you run the payroll it's going to be a shifting of the funds from the employer bank account to your personal bank account because you are acting as a legitimate employee of the corporation so you're gonna be no different than any other employee at any other employer so you're actually gonna be see well for best practices the the movement of the salary going from your employer business account your business bank account to your employee to your personal bank account so you're gonna be seen the shifting of the funds the movement of the funds as if you are an employee of your own corporation which you are so every every quick Peck whether its QuickBooks are gusto or any other pyrrole provider third-party paychecks or ATP they're all gonna be asking you the same questions so it's just a matter of how much hand holding that you wants and also about the pricing so generally gusto is going to be cheaper than QuickBooks because QuickBooks is the biggest name-brand out there and even within QuickBooks they're gonna be asking you for the lowest version you know the mid-tier version or the most expensive version I mean it depends on what point in time that you're watching this video but generally you're gonna be wanting to select the middle option that is not the most expenses but it's not the cheapest because that's gonna give you everything that you need without all the bells and whistles so if you want everything just completely done for you and you just do not want to be involved whatsoever I mean some of those people will go to the full service paychecks or ATP but they're gonna be much more costly so the good thing about the gusto or the QuickBooks is that they allow the account it's sharing access so if you are working with the contents you know they can have their own login and they can look at your accounts to see that it's set up properly payrolls running properly the reports are being filed you know everything looks good okay how much is this software going to cost you so if you're gonna choose gusto or QuickBooks I mean generally that's gonna be running you about 25 a month to $50 a month just depending on the service plan if you choose the more expensive options you know other pair of providers they could be charging you as much as $100 a month you know just for you one employee for your employee S corp obligations the payroll the basic pair of functions and duties so it just depends on the service plan you wants but you should be expecting to pay about twenty-five to fifty dollars a month and again you know if you think about it that's going to eliminate the whole need for you to be manually doing all these things by yourself the techs deposits to the IRS to states unemployment and filling out those reports and sending those in quarterly w-2 creation and all that I mean it's just a huge you know time saver and it's most likely in most cases going to be you know worth it for you so I hope all this makes sense but if you have any questions please leave them below please leave them in comments below we'd be happy to get back to you and again if you are looking for more details about a particular topic about the S corp payroll or the S corp salary or just the S Corp in general then please check out our other videos I hope you found this helpful if you find stuff well please give me a like I'd highly appreciate that and please subscribe because we're always making great videos that are applicable to you take care

Channel: ClearValue Tax

Views: 112,472

Keywords: Setting up payroll for S Corp, Payroll for One-Person S Corps, S Corp payroll, S Corp payroll setup, S Corp payroll set up, reasonable salary, Quickbooks payroll, Gusto payroll, S Corporation payroll set up, how to pay yourself from an S Corp, S-Corporation owner payroll, how to process payroll yourself, S-Corp payroll, S Corporation payroll

Id: tHD68_533Y8

Length: 10min 27sec (627 seconds)

Published: Thu Nov 14 2019