941 Reports with Employees and Non Employees

[domr12]

Hi,
I own my company and I just added employees. I will be filing 941 forms. I was running Zpay just for me in which I had listed myself as an employee. The IRS told me I cannot be considered an employee of my own company (sole propietorship), and that the 941 report MUST only include the actual employees of my company (NOT me).

As I guess this is very common need, how do I configure Zpay to ignore my payroll info (salary, taxes) in the 941 and NJ state quarterly tax reports? Should I run two payroll files, one for the employees, which I would use to prepare the reports and another for me alone? Or, preferable, how can I handle this with the existing file?

Thanks.

Fernando

[Paul Mayer]

If you are only taking a draw on the profits, I'd set myself up as a non-employee worker. But if you want to calculate taxes, set up a second company to do that. The bad news is you'd not be deducting FICA and Medicare and just paying quarterly federal taxes.

You might want to get incorporated and become an employee.

[domr12]

Hi Paul,
Thanks for the prompt reply. I am going to setup two files for two companies: one to calculate my payroll taxes and another to calculate the taxes of the employees, with which I will use to generate the 941 reports.

Some questions.
1. What is the best way to set up the other company, while keeping all the info I currently have in the existing company (I saw that there is a new company option in the file menu, but I do not want to screw up the file I already have)?

2. Do I have to pay more ZPay licencee fees for running payrolls on two companies?

3. On running the payrol just for me, I have to pay payroll taxes on pay that I get on working on my company for the client, which Zpay will calculate. But also I have to pay taxes on the profits I will make from my employees (not my payroll taxes, but the difference between what I charge the client and what I pay the employees). Any suggestion on a software/method to regularly calculate the taxes on the profits I will make from the employees of my company?

4. On calculating the payroll taxes just for me, as I pay the estimated taxes quarterly, instead of running monthly payrolls, to save time, will Zpay give me the same results if I lump 3 to 4 months and instead run quarterly payrolls? In other words, would 3 payrolls be equivalent to one combined payroll with the 3 months? Any issue with doing it this way to save time?

Thanks!
Domr12

[Paul Mayer]

You can create as many company files as your hard drive will hold at no extra charge. We have several accountants that have over 100 company databases on their computer. You just need to use a different filename when creating them.

You could use PayWindow to estimate the quarterly estimated taxes, just don't save the transaction, but cancel out instead. You do not want that mixed in with regular payroll records.