As businesses continue to navigate the complexities of payroll and tax compliance, staying informed about software updates is essential. At Smith Schafer, we strive to empower our clients with actionable insights into these changes. QuickBooks Online Payroll has recently implemented an important update that could impact your cash flow management and tax processing strategies. Here’s what you need to know.
What You Need to Know About QuickBooks Online Payroll Changes
Who Does This Change Affect?
This update applies to businesses using QuickBooks Online Payroll who began using the service prior to August 2024. If your payroll is managed through a different provider, this change will not impact you, even if you use QuickBooks Online for accounting.
What Is the Change?
Starting January 1, 2025, QuickBooks Online Payroll will debit payroll taxes from your bank account each time you process payroll or when there are changes to your tax obligations. Previously, payroll taxes were only withdrawn when they were due to be remitted to government agencies.
How Will This Impact Your Business?
Under the new process, federal, state, and local taxes will be deducted directly from your account with each payroll run. QuickBooks will provide a summary of total cash requirements for every payroll, ensuring you have full visibility into how much will be debited.
The Benefits of the New Process
This change is designed to enhance cash flow management. Instead of making large tax payments monthly or quarterly, smaller, incremental withdrawals will occur alongside each payroll cycle. By the time taxes are due, they’ve already been paid, reducing the risk of last-minute cash flow surprises.
Considerations for Your Business
While this change simplifies tax management for many businesses, it’s not a one-size-fits-all solution. If you prefer the flexibility of manual tax payments, you can opt out by navigating to Payroll Settings > Taxes and Forms and disabling the “Automated Taxes and Forms” option. However, this decision comes with the added responsibility of manually tracking, filing, and paying your payroll taxes to avoid penalties.
What Does This Mean for You as a Business Leader?
This update reflects a broader trend in accounting technology toward automation and real-time cash management. By adopting these changes, businesses can free up time to focus on growth and strategy while ensuring compliance. However, it also underscores the importance of working closely with your accounting team to understand how these shifts align with your financial goals.
Questions? Let Smith Schafer Guide You
Navigating payroll changes can be daunting, but you don’t have to go it alone. At Smith Schafer, our Accounting Services team is here to help you evaluate your broader financial strategy and provide tailored guidance.
Ready to learn more? Explore Intuit’s Guide to Online Payroll Tax Withdrawal Changes or contact our team directly for personalized support. Let us help you make informed decisions that keep your business on track for success.
