If you need to prepare payroll in a one-employee situation, such as when you’re a single-employee single-shareholder S corporation, you’ve got a variety of approaches available.
You can, for example, select one of the popular and very competent payroll preparation services like ADP, Paychex, QuickBooks or Gusto Payroll. All these options work well for small businesses. No question.
Dealing with Payroll After-the-fact
If you want to save money and time, however, you also have another option. You can, after the fact, file payroll tax returns that tell the IRS, the Social Security Administration, and any State payroll tax agencies that, yes, last quarter your firm did do a bit of payroll and here’s the money owed and the payroll tax returns required.
Just to make this clear, then, rather than fiddling with payroll checks and deposits and returns every week or month you can instead just forget about doing anything about payroll over the quarter other than writing yourself some checks. And then you can get to the end of the quarter and say to the tax agencies, “Hey guys? Last quarter I paid myself $10,000. And here are the payroll tax returns I owe you.”
Note: If you write checks in excess of the stated quarterly payroll amount, that excess would be treated as a dividend, distribution or draw and so not subject to payroll taxes.
Limits of After-the-fact Payroll
The only practical problem with this approach pops up due to some IRS rules about timing payroll tax deposits. With the approach described above, you can’t pay shareholder-employee more than $16,000 a quarter or $64,000 for the year. The good news, though, is that that limit should affect almost no one. (Few S corporations pay or need to pay their shareholder-employees more than this amount.)
Where the $20 Five-minute Payroll System Monograph Fits
The first time you use this “after-the-fact” approach, however, the mechanics can seem almost too simple because you do save so much time. Which is why we’ve developed a short $20 monograph that explains the process, that shows you examples of how the quarter-end and year-end forms look, and that provides nearly complete “blank” forms to which you can just add your name, address and employer identification number too.
Note: The “Five Minute Payroll” monograph gives you detailed instructions and example forms for two single-employee payroll scenarios: One where you pay the employee $10,000 a quarter and one where you pay the employee $16,000.
If you’re interested, click the button below to purchase and then immediately download the 2017 version of the monograph:
As with all of our digital goods, if the product doesn’t work the way you want or what you purchase doesn’t seem a good value for your hard-earned money, no problem. Just request a refund.
A related point: If you’re a client of our CPA firm, you have complimentary access to all of our digital goods, so don’t purchase this or any other monograph or kit. Just ask one of us for your complimentary copy, okay?
Additional Free Resources for Simplifying Small Business Payroll
While we’re on the subject of simplifying and expediting payroll for single-employee, single-shareholder situations, let me also point out that four other posts at this blog provide useful background information:
Electing Out of State Payroll Taxes