QuickBooks Tips and Tricks – Effective Monthly Reports

As a nonprofit, your financial records mean a lot to your board of directors and for your audits. Here are a few tips and tricks for getting the most out of QuickBooks for both.

Each month, you have meetings for your board of directors, where budgets, grants, and fiscal year planning are analyzed. You look at budgets, grants, fiscal year planning and so much more. The great thing about board members is the diverse skillset they bring to the organization.   However, that also means that each member sees financials differently.  As such, consistent and concise monthly reports will benefit everyone.

Be Concise – Use Classes and Customers/Jobs

Two great features that QuickBooks offers are classes and customers/jobs. These features both allow a non-profit to break down income and expenses by grants, events, or programs, while still allowing total expenses by natural classification to be presented as well.

Be Consistent – Memorize Reports

There are some generic reports that QuickBooks offers, but all can be customized by filters. After generating a report, by clicking Customize and the Filters Tab, reports can be created for exactly what you need.  That way, the report can be saved and easily utilized each month to create useful reports. In addition, folders can be created to keep your list of memorized reports organized and grouped.

Set a Closing Date

QuickBooks allows you to set a closing date so users are warned if they are changing a transaction in a period that is prior to that closing date – this warning will ask the user if they are sure that change should be made, and you can also go as far as including a password so nothing gets changed without it.  This will prevent figures already having been audited, reviewed, or compiled from getting changed erroneously.

Voiding Checks

Voiding a check in QuickBooks voids the check on the date that the check was written, not the date you are voiding it. Therefore, voiding a check in a prior fiscal year is not as easy as opening the check and clicking “void.” Instead, voiding checks in a current period should be done with a journal entry.

Account DebitCredit
Checking Account X
Original Check Expense(s) X

When reconciling the next month’s bank statement, check off the original check that was voided and the corresponding journal entry you created so your reconciliation still balances and they are removed from future reconciliations.

Before you have your next monthly board meeting, do not hesitate to reach out to the Ketel Thorstenson, LLP QuickBooks ProAdvisor Team for any assistance.

June 5, 2020

Payroll Reporting for Deceased Employees

In the last Ketel Thorstenson, LLP newsletter, Denise Webster, CPA, PFS and Managing Partner wrote about the income tax filing requirements when someone passes away. What some employers might not know is that there are also special filing requirements in regards to the final paycheck of an employee who passes away during their employment. The taxability of their final wages depends on the date of death and the date of the last payroll check.

Wages that are paid after a death include all time worked, plus any accrued vacation time owed to the employee if that is the company’s policy. Since the Fair Labor Standards Act (FLSA) does not require employers to pay vacation, sick, holiday or other pay for time not actually worked, be sure to follow your company’s handbook and employment contracts when issuing a final paycheck to the deceased.

If the final paycheck that is owed to the deceased employee will be in the same year as the employee’s death (i.e.> if they passed away on November 30, 2016, but the final payroll check will be dated December 15, 2016) those paycheck wages are exempt from Federal Withholding, but are taxable for Social Security, Medicare and Federal Unemployment.

If the final paycheck that is owed to the deceased employee will be in the year following the date of death (i.e.> if they passed on December 31, 2016, but the final payroll check will be dated January 15, 2017) those paycheck wages are exempt from Federal Withholding, Social Security, Medicare and Federal Unemployment. If accounting software is used, it is easiest to prepare a vendor check instead of a payroll check. In this instance there will not be a W-2 issued.

In both instances, State Unemployment varies and the state guidelines should be referenced for proper reporting.

In addition, the IRS requires a 1099 to be issued to the estate or trust of the deceased employee. According to the IRS, “Whether the payment is made in the year of death or after the year of death, you also must report it in box 3 of Form 1099-MISC, Miscellaneous Income, for the payment to the estate or beneficiary.” Therefore, if the final paycheck date is in the year of death, the employee will receive a W-2 for the whole year’s wages and the estate will receive a 1099 for the portion of wages paid on the last paycheck. If the paycheck date is in the following year, only a 1099 to the estate is needed. In Denise Webster’s article mentioned earlier, she explains that an estate is set-up after the death if the decedent’s assets are not titled in a trust.

As stated above, there are some unique reporting items when a tragedy like this happens. To report the payroll taxes correctly on the final payroll and the W-2, you may have to set up a new payroll item. Please don’t hesitate to contact the KTLLP accounting services department for assistance.

Final Payroll Check Date Federal Withholding Social Security & Medicare Federal Unemployment State Unemployment W-2 Reporting 1099 MISC
Same year as employee’s death Exempt Taxable Taxable Varies by State Yes Box 3
Year after employee’s death Exempt Exempt Exempt Varies by State No Box 3
September 19, 2017