This article does not apply to you if you set up a Gusto account for your LLC before joining Collective. Click here to add us to your pre-existing Gusto account.
The estimated time to complete is 30-45 minutes.
Please read and action the following before your training. Reach out on your slack channel with any questions.
You will set up 2 profiles in Gusto: one for yourself as an employer and one for yourself as an employee. This might seem strange, but you are the employee of the company you own, so you need a profile for each version of yourself.
Gusto is used to meet the "pay yourself a reasonable compensation through a payroll process" requirement of S Corps. When you run payroll, Gusto takes two chunks of money from your business checking account. One chunk is called payroll taxes. This includes both employee and employer taxes calculated on the employee gross wages paid to employees. Gusto sends this money to various state and federal payroll tax agencies. The other chunk is called net pay. This is the employee gross wages minus the employee payroll tax. Gusto sends this money to the personal checking account entered on the employee profile setup process. You will find the employee gross wage and the employer payroll tax numbers on the expense section of your S Corp's Profit & Loss report. This payroll process is not designed to cover all the money you need to be transferred to your personal checking account. Read on!
When you want additional money, instead of running more payroll, please simply log into your business checking bank's website and transfer money to your personal checking. In a few days, this transaction will show on the banking screen of QuickBooks. Please categorize it as "shareholder distribution". Gusto does not play a part in this transfer of additional money. For the most part, shareholder distributions do not get taxed. You cannot avoid taxes by not doing shareholder distributions.
Payroll Taxes vs Quarterly Estimated Personal Income Tax Payments
Payroll taxes are local, state, and federal taxes that employees and employers pay each payroll run. You are both, so you get to pay both. Yay! They will show on your S Corp's P&L report as expenses that reduce your net income. There is no income tax for your S Corp, but the net income does flow through to your individual 1040 Tax Return. We provide you quarterly estimated personal income tax payment instructions and tell you to pay them from your personal checking account. This is also why, every year, we file both your 1040 Individual Tax Return and your 1120s Business Tax Return. Click here to learn more about quarterly estimated personal Income Tax Payments.
Employer Profile Setup
Check your email for two invites from Gusto. One is for your owner/admin profile. The other is for your employee profile.
Start with the owner/admin profile invite first. You can find it by searching for an email subject that contains "Prentiss has invited you to...."
Click accept and build your login.
Click to continue with the setup steps.
Add your LLC's checking account in step 6. This checking account needs to be opened with your LLC's EIN. Gusto uses Plaid to add and verify bank accounts. If Plaid is not working, look for the manual setup link on the far right of the screen.
Verify you bank account in step 9. Most members verify using Plaid as part of step 6. If Plaid was not available and you chose the manual verification method, then enter the micro-deposits in step 9.
Sign documents in step 8. The first few pages are building the electronic signature, the last few are applying that signature to the forms. Put "Owner" when it asks for your title.
Employee Profile Setup
Click the drop-down on the top right of your screen where it says Admin. Click the option to switch to the employee profile. You will now enter the flow to set up the employee profile. Click here to read more about switching between profiles.
When you get to the Federal tax setup section please enter "single" in the top drop-down, leave the second drop down as is, and leave all the amounts at $0. Entering Single causes more taxes to be paid during payroll, we want this. This section has nothing to do with the marital status of your tax return.
If you have a State section, enter "single" in any drop-downs, 0 if it asks about allowances and $0 on any dollar sections.
Make sure to enter your personal checking account as this is your employee profile.
Click here for additional help.
Run Your First Payroll
Only run payroll if your S Corp is generating sales from customers.
In the "Things To Do" section, look for a "Review & Approve" box. Click it scroll to the bottom of each page and click to continue to the next page. This is everything you entered in the previous Employee Profile Setup section, so it shouldn't be any surprises. On the second page, you will see it adds a radio button for "Yes Submit New Hire Report". You can leave that at "Yes".
In the "Things To Do" section, look for an "Approve I-9" box. Click it and follow the prompts. You won't be uploading any images, only typing in document numbers. The easiest option is to click both the "Driver License" and "Social Security Card" radio buttons. Don't worry you don't actually need your social security card. On the next screen follow the prompts. The issuing authority for your driver license is the state of the driver license. For social security card: the issuing authority is United States, the document number is your social security number, and there is no expiration date
Click here to run your first payroll. If you need help, we can review it during your training. You can also reach out to Gusto's excellent support team. See #5 below.
Click here to set payroll to run on autopilot. If you don't, please mark your calendar to log into gusto every month and run payroll.
Click here to contact Gusto support. They are based in Denver and will call, chat, or email you to answer all your questions. You can ask them about running special payrolls, understanding your payroll reports, explanations of the various employee and employer taxes, and anything else! Sign in to your Gusto account, go to the Help section and click Contact Us to send an email and/or schedule a callback.
Texas Members Only
Click here to authorize Texas to receive quarterly payroll reports sent by Gusto on your behalf.