Context
Payroll is complex! A small word with wide reaching impact. Switching payroll companies is even more complex. It involves precise timing, exact data transfer between unrelated systems, and clean handoff of government reporting duties. You, your Previous Payroll Company, and Collective MUST all work in unison with clear communication. Collective's Payroll Rebuild service is designed to make that as simple as possible. The end result is that your Financial Reports, Quarterly Estimated Tax Payments, Employee W2s, Tax Returns, Payroll Taxes, and Payroll Reports are accurate.
If you are in a contract with your current payroll company, you may receive a cancellation fee due to breaking this contract before joining Gusto. We recommend that you do not cancel your current payroll provider until onboarding is complete. Make sure you are comfortable with this before joining Collective.
If your S Corp was using Gusto before joining Collective, stop reading, and click here: Add Collective To Your Gusto.
When Are Payroll Rebuilds Required
The Payroll Rebuild Service is for you if all of the following apply:
You joined Collective with an S Corp
That S Corp paid the owner as an employee in a year that Collective is filling the 1120-S
You used a Payroll Company other than Gusto
The EIN the Payroll Company ran payroll under matches our systems
You used a full service commonly known Payroll Company
We can't onboard members who manually calculated and paid, state and federal payroll taxes by themselves, or with another individual, in a year that Collective is filing the 1120-S
You have access to the Payroll Company, its software, and reports
The Payroll Rebuild Process
Summary
1. Member's Responsibilities
We'll conduct an education and strategy session for you to confirm that your Previous Payroll Company is responsible for:
Final Payroll Date
Chosing the final payroll date is very important. We'll review strategy and confirm the last payroll date together. Do not run another payroll after telling Collective this date. Stop running payroll through your payroll provider, but keep your prior payroll account active until your onboarding accountant instructs you to cancel it.
Final Payroll Tax Liabilities
Confirm that your prior payroll provider remitted all federal and state payroll taxes on your behalf for all payrolls you ran through your prior payroll system. Also confirm that you do not want your prior payroll provider to refund any payroll taxes to you. it is important that when you begin using Gusto at Collective, all of your prior payroll tax liabilities have been paid.
Employee and Employer Taxes are also called Payroll Taxes. Payroll Companies calculate these amounts, collect them from the S Corp checking account, and remit them to government agencies on behalf of the employer and employee.
Please tell your payroll company to submit these payroll taxes, also called tax liability payments, to the required government agencies. They need to include the taxes for payrolls you've already run. Wait to do this until you've run your last payroll with them.
or will run, if the final payroll run date you decided above has not passed.
Payroll companies differ on timing for when they:
Deduct Payroll Taxes from your S Corp's checking account
Remit those Payroll Taxes to government agencies
Some payroll companies only calculate the payroll taxes, leaving you to click buttons to pay the government agencies from your S Corp's checking account.
We've gathered a small list to demonstrate how payroll company handles this differently.
ADP
For each payroll run they withdraw all of the payroll taxes from your business checking, and send that money directly to the various payroll agencies.
Ask them for an "Agency Payment Report"
Paychex
For each run, they withdraw money from your business checking account and hold it for a period of time before sending those payments to the tax agencies.
Tell them "Please do not give me a refund of payroll taxes collected. Please send them to the tax agencies."
Quickbooks Payroll
For each payroll, they withdraw the net pay from your business checking account. Depending on your setup, they either:
Deducts no payroll taxes from your business checking and wants you to make the payments (or)
Deducts the payroll taxes from your business checking account at the end of the quarter and submits that money to the tax agencies.
Tell them "Please do not give me a refund of payroll taxes collected. Please send them to the tax agencies."
Final Report Filing
Coming soon. Until further notice, please wait for your Onboarding Accountant Zoom Meeting.
2. Documents from Previous Payroll Company
The documents we need depend on the decisions and responsibilities above not changing. Do not run any payroll with old company after uploading these documents. Do not run a payroll with us until we confirm we've finished rebuilding the data in our systems from these documents you upload.
You must get these documents from your Previous Payroll Company. It can be difficult working with them. Depending on the company or your tier of service, they may not provide much support and want you to get them yourself by navigating their software. That software may be confusing. Ask them for help in where to locate the forms in the software. Lastly, try researching on Google, for example "Where can I find payroll reports in ADP". Collective also provides some instruction on how to download documents from various payroll companies.
Collective can help, if your tried the above and it didn't work. You can create a user account for us and we can get them ourselves. Or you can set a zoom with your Onboarding Accountant, share your screen, and they'll work with you to find the documents.
Please upload the following documents as soon as possible.
Required Documents, in order of importance:
1. Paystubs
Every paystub for the year. Each paystub should show the amounts for that particular paystub as well as YTD (year-to-date) amounts. (Not needed if you are switching payroll providers on January 1st.)
2. Payroll Run Reports
Detailed payroll journal reports for each quarter in the current year. Also called payroll details report by some payroll providers. The detailed payroll journal report should show the breakdown of employee and employer tax separately for each employee for each paycheck issued.
Payroll Company | Payroll Run Report Name |
ADP | Payroll Details Report |
Gusto | Payroll Summary by Employee Report |
Intuit Online | Payroll Details or Total Pay Report |
Heartland Payroll | Check History Summary |
Paychex | Payroll Journal, Employee Earnings Report |
Payroll Systems | Labor Distribution Report |
Paylocity | Payroll Register Summary / Detail |
Quickbooks | Payroll Summary / Detail Report |
Square Payroll |
|
3. 941s
Quarterly 941 Report for each quarter that has passed. These are the reports that are filed with the Federal government. Not needed if still within the first quarter.
Payroll Company | 941 Download Location |
Square Payroll |
4. State Payroll Reports
Any Quarterly State payroll reports specific to the state in which you are registered as an employer. Not needed if still within the first quarter.
5. Proof of Tax Liability Payments
Any agency payment reports or proof of tax liability payments.
6. Payroll Liability Reports
Payroll liability report showing all payroll liabilities that are currently outstanding. This report may include medical insurance premium payments, retirement payables, or other fringe benefits.
3. Rebuild Document Data in our Systems
Collective rebuilds the data from your uploaded documents in Accounting and Payroll software. The end result is that your Financial Reports, Quarterly Estimated Tax Payments, Employee W2s, Tax Returns, Payroll Taxes, and Payroll Reports are accurate.
Depending on when your S Corp joined collective decisions you confirmed with us at the start of this process, we transfer the data from your uploaded documents into different systems.
Payroll Rebuild in Accounting System
Coming soon.
Payroll Rebuild in Payroll System
Coming soon.
4. First Payroll with Collective
The entire Payroll Rebuild service must be completed BEFORE you run your First Payroll with Collective. You can't run your First Payroll with Collective until all the data from your previous payrolls have been entered. If you do, taxes, reports, W2, and much more will be very inaccurate.
For S Corps Joining Collective with Non Gusto Payroll Last Year and Only Gusto Payroll This Year
This section is aimed at members joining Collective who ran payroll in the prior year but have not yet run payroll in the current year. If you already ran payroll during the current year, please scroll to the top of this artice.
It is important that you do not run payroll until you meet with your onboarding accountant. If your payroll is set to auto-run, you will need to turn it off.
Your onboarding accountant will ask you to upload the following payroll documents related to the prior year. Your onboarding accountant may ask for you to give them “accountant access” to your prior payroll platform so they can pull these reports.
If you were using Gusto as your previous payroll provider, disregard the remainder of these instructions and refer to this article instead: Add Collective To Your Gusto
Please Upload These Documents
All pay stubs for the periods in which Collective is doing your bookkeeping
All federal quarterly payroll tax returns (941) for the periods in which Collective is doing the bookkeeping
All state quarterly payroll tax returns for the periods in which Collective is doing the bookkeeping
All quarterly wage/tax register reports for the periods in which Collective is doing the bookkeeping
All quarterly payroll liabilities reports for the periods in which Collective is doing the bookkeeping (and one quarter prior)
Filed W-2
If you were running payroll previously without using a payroll platform (ADP, Paychex, Wave, Etc.) you will need to provide the following:
All federal and state quarterly payroll tax returns for the quarters in which Collective is doing your bookkeeping
A spreadsheet that contains the following data on a quarterly basis for the quarters in which Collective is doing your bookkeeping:
Gross Wages
Federal Income Tax Withholding
State Income Tax Withholding
Other State/Local Tax Withholdings if applicable
Employee Social Security Tax
Employer Social Security Tax
Employee Medicare Tax
Employer Medicare Tax
State Unemployment Tax
Federal Unemployment Tax
401(k) Employee Deduction if applicable
401(k) Employer Contribution if applicable
Health/Dental/Vision Insurance Employee Deduction
Health/Dental/Vision Insurance Employer Contribution
SEP IRA Employer Contribution if applicable
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.