Frequently Asked Questions – October

In the decades we have spent with our clients, we often see the same questions come up. We thought it would be helpful to include some of the more frequently asked questions here. If you have a question you would like addressed, please feel free to send it to us.

Why do we use accrual vs. cash basis accounting?
While we pay taxes on a cash basis, accrual provides the business the ability to see specific expenses and revenue in the same timeframe. Cash basis waits to recognize revenue when the check is deposited and waits to pay suppliers before recording the expense.
—Jason Alexander

My employee lives in South Carolina, but works at my office in North Carolina. Is there a way to bypass the S.C. tax set up in QuickBooks Online?
Unfortunately there is no way to bypass it. This is a security feature within QuickBooks Online. You will need to go into the S.C. setup and enter dummy numbers, and when it asks for the withholding and unemployment rates, enter $0.00.
—Stephanie Carlson

How many accounts can an employee have his pay direct deposited into using QuickBooks Online payroll feature?
Two accounts, they can be either checking or savings or one of each.
—Stephanie Carlson

Is it better for employees to get a car allowance or a company car?
The answer depends on the benefits they are looking for. The math typically comes out about the same if the allowance is commensurate with the value of the car. It’s simpler for the employee of course if they get a company car and the company handles the maintenance, insurance, taxes, etc. But in the long run it’s better for the employee to get the allowance and keep ownership of the asset if they leave the company. For the company, the allowance is much easier to manage.
—Kurt Dyck