Jaclyn Anku, ProAdvisor Training & Certification Leader: On today's episode of In the Know, we'll explore automated payroll taxes and QuickBooks Online Accountant.
Here's what to expect. You'll see the update in action, then hear from ProAdvisors and firm leaders Nayo Carter-Gray and Matt Skinner.
Hey ProAdvisors, I'm Jaclyn and you're watching In the Know. It's the show designed to keep you in the know on the most exciting updates to QuickBooks Online. Here's the scoop. We heard that it's hard for your clients to keep track of all of their payroll taxes, especially when there are multiple withdrawal dates. So, we're automating payroll taxes. That means we're moving into withdrawing taxes on payday for your clients with automated taxes.
And now for the Fast Facts:
- These enhancements are available to U.S. QuickBooks Online Payroll customers who have enabled auto tax as of fall 2024.
- To access it, enable auto tax and auto payroll.
If you find this update interesting or helpful, go ahead and like, comment, and subscribe.
Let me introduce you to Sean so you can see the product in action. Sean, welcome.
Sean Augustine-Obi: Hey Jaclyn, I'm so glad to be here and I'm really excited to be giving you a walkthrough of automated payroll taxes. The change to the experience we've had on the run payroll flow is that we've revamped the pages visually to reflect this change of taxes being withdrawn on payday. You'll see that it's delineated between withdrawals for paper checks and direct deposit, as well as which taxes need to be paid manually in the Payroll Tax Center versus which ones will be withdrawn automatically. Both the automated taxes and the payroll will be withdrawn from the same bank account. After you run payroll, you'll see which dates the tax withdrawals and the direct deposits will be withdrawn from your bank account, as well as any paper checks you need for any employees that have elected to be paid that way.
The Payroll Tax Center has also had a couple of changes. There's now a status bar that shows which taxes are being paid automatically, as well as which ones need to be paid manually. It also shows which actions need to be taken for taxes to be withdrawn automatically, such as those tax IDs I mentioned before. There's also a new report that shows all of the most recent tax payments if you click on payment history.
We're notifying these customers who are getting this change on Oct. 1 via email and in product. This is an example of a change for an auto payroll customer. They'll need to log in before Sept. 30 and click the green button if they're going to get the change on Oct. 1. If they didn’t receive an email on July 1, then they're going to be getting the change on a later date. Also on this screen, you can see a receipt that will be sent out to the primary admin each time taxes are withdrawn with all of the different jurisdictions that have been withdrawn.
That was a brief overview of our update to automated payroll taxes. Thank you so much for having me and I hope to see you soon.
Jaclyn Anku: Sean, thank you for that demo. We'll turn now to ProAdvisors Nayo and Matt for them to weigh in. Nayo, Matt, welcome. Thanks for being here.
Nayo Carter-Gray: Thanks for having us.
Matt Skinner: Hi!
Jaclyn Anku: Matt, let me kick it off with you. Payroll taxes … QuickBooks Online Payroll is now automating these. Why is this a big deal for your clients?
Matt Skinner: I think there are two things. One is that payroll taxes are really scary; no one wants to get them wrong and no one wants to think they owe Uncle Sam some money or the state. It’s key just knowing that it's not only resolved as it's always been by auto pay, but resolved right away and no one's going to lose any sleep. Second, in any small business or big business, the cash balance in the bank is a huge deal to them to be able to say, “Here's what I've got for bonuses, expansion, or whatever, and even treating myself to an ice cream sundae.” They look at the balance in the bank, knowing that all that money is theirs. Nothing is earmarked to be paid later. Their cash in hand is their cash in hand, which I think is really important to short-term decision- making.
Nayo Carter-Gray: I have to agree, Matt, because my client base is smaller and so every dollar matters. They look at that balance in the bank and think they can transfer some funds out because they have the money. And the next thing you know, they're like, snap, we forgot to pay those payroll taxes because they didn't automatically leave the bank. So for me, I’m celebrating all the way to the bank, although our clients will miss that little extra bump in income in that bank account.
For me, it helps me let them know that their liabilities will be taken care of. They can rest easy knowing that the IRS is not going to come knocking on the door saying, “Hey, you owe us those trust fund recovery penalties. We are going to hold up everything and anything.” You know what I mean? As an enrolled agent, those [payroll tax penalties] are some of the hardest penalties to get waived and the interest is ridiculous. So I am a big, big, big, big, big fan of this–the newest release. Thank you, QuickBooks, for listening.
Jaclyn Anku: So Nayo, let me build on a point you made. It sounds like this update is helpful for your clients, and also helpful for you as their accountant and advisor. Can you share more about how this helps you and your team?
Nayo Carter-Gray: Absolutely. For us, it is a conversation trying to explain to our clients, “Hey, you see this little line down here that says payroll liabilities? You're going to have to pay this in three months,” and they go, “okay.” Then, when they look at their financial statements, they gloss over the balance sheet, and just look at that profit and loss statement and say, “This is how much I have in profits. We've got cash in the bank we can spend all day.”
I hate to constantly say, “Don't forget you got this bill that's going to come out.” So now, we can kind of reduce that stressful conversation and make it one more—and more so about guess what? All of these things are paid. You now have a little extra cash sitting in the bank that you can actually spend on things you may need or want, opposed to worrying about invoices or bills that are going to come out later.
Jaclyn Anku: So Nayo, one of the things I'm hearing you say, which is really exciting, is that offering payroll really puts you in a better position to advise your clients. Matt, let me turn to you. I'd love to hear, through offering payroll and having these conversations with your clients—whether it be about payroll taxes or anything else—how it puts you in a better position as an advisor?
Matt Skinner: Yeah, absolutely. I mean, I think I would echo Nayo that liabilities are especially hard to explain, right? You owe this money and some of it is your expense. Some of it's money that was your employees and some of it's withholding. So that's just kind of muddies the water, right? About what? When you really talk about cash flow, versus really talking about the profit and loss, they are not the same number. Right. Double entry bookkeeping is a million years old so it becomes a baffling concept for people who don't spend all day talking about accounting. It's much easier to say you paid this and now you're done paying that. So let's talk about what's going on in the books, in cash flow, or profit and loss instead of saying it's not actually your money, dude. You've got it for now, but it's not really yours. You're just holding it for a second.
Jaclyn Anku: Makes sense. And Nayo, what about you? How does offering payroll to your clients put you in that better position as an advisor?
Nayo Carter-Gray: You know, payroll is one of those services that we tend to look at as a time suck or, you know, somebody else's emergency. But really, what I help my clients understand is you're helping build the local economy because you now are helping to fuel that by paying somebody else, who can then shop and pay their bills. So really, you should be celebrating this moment. You have employees. Kudos for you because now you're not just what you may have considered a little mom and pop. You are a real-life business. When you are going from what I call hustlepreneurship over to real-life entrepreneurship, you can look at this and say, “Wow, I am now making a difference even outside of just the customers we serve.”
Matt Skinner: It's a milestone. It's not a great one, it’s not a lot. and it’s got a lot of pressure. But it is a milestone of you advancing as a business, for sure.
Jaclyn Anku: That's a really powerful message that offering payroll is a huge milestone for any business owner. Being there as their accountant and advisor, and helping them on that journey is just an incredible way to build trust, deepen the relationship, and also get that data you need to then advise them. So Nayo and Matt, thank you so much for sharing your insights and for being on the show.
Matt Skinner: Thank you.
Jaclyn Anku: Thank you for watching this episode. I'm Jaclyn, host of In the Know and Leader of ProAdvisor Training and Certification. Be sure to like, comment and subscribe so that you don't miss a single episode. We'll catch you next time.
Meet the ProAdvisors
ProAdvisor Matt Skinner: Advisory Services Partner, Beaird Harris
ProAdvisor Nayo Carter-Gray: CEO, 1st Step Accounting
