There are two main reasons employers use Section 105 Plans: 1. Click on the company you will be working on in the main QuickBooks menu. Then the employee is reimbursed up to a set amount by the employer. If you choose to set up this type of plan, funding an HSA can be an option under your cafeteria plan. It’s a self-funded health plan. A POP plan is the simplest type of Section 125 plan and requires little maintenance once it's been set up through payroll. Section 125 POP plans reduce employer payroll tax liabilities. Every employer offering at least a tax-favored payroll deduction or medical, dental or other benefits must have an up to date plan document. Only you can decide if and when it makes sense for your company to offer a section 125 plan to employees. ... Lynette Benton is a Certified QuickBooks ProAdvisor and offers over 18 years experience working with QuickBooks and lawyers. In fact, 80% of employees would choose benefits over a pay raise. Section 125 plans let employees use pre-tax dollars for these benefits, which include health and life insurance. A full Section 125 plan also allows you to deduct eligible contributions to flexible savings accounts (FSAs) and dependent child care on a pretax basis. In the taxes window, I think all taxes should be checked off. You have a group health insurance plan set up in payroll to deduct an employee contribution and keep track of an employer contribution. A town has a cafeteria plan (section 125 plan), which offers dependent care assistance. A common reason employers use a Section 105 Plan is it is a self-funded health plan, where the employer reimburses employees for health benefits rather than pay premiums to an insurance company.. The Section 125 cafeteria plan authorized taking pre-tax dollars from the employees gross income for the named purposes in Section 125 that include health insurance. Parents decide before the year begins how much to set aside for child care expenses. The B2B Promo Codes feature is available to customers subscribed to the Business plan and above (on new pricing plans) or as an Advanced B2B module add-on to lower plans for USD 125/month. Section 125 Plan . Section 125 of the IRS Internal Revenue Code allows for several different alternative plans, three of the most common are Premium Only Plans, Flexible Spending Accounts, and Cafeteria Plans. The benefits received by an employee exceed $5,000. 1.1 What information is required before they set up a QuickBooks file 1.2 How to start a new company data file in QuickBooks (Easy Step Interview) 1.3 How to keep the lists and preferences from an old file while removing old transactions 1.4 How to customize the home page 1.5 How to set up lists (customers, vendors, items, etc. To set up a payroll item for the deduction: From the QuickBooks Lists menu, choose Payroll Item List to open the Payroll Item List window. The Section 125 program is a tremendous opportunity for you to enhance your benefits package. The Premium Only Plan is the building block of the Section 125 Plan. She has set up hundreds of small businesses and law firms and trained staff members how to get the most out of QuickBooks with the least amount of time. However, to correctly handle taxes, set up the pre-tax HSA deductions separately from the cafeteria plan. QuickBooks is designed to deduct the employee share of premiums from each paycheck and create a payroll liability to the insurer. When you set up a payroll deduction, you are in essence paying your employee less. Everything in the plan … When you dive into different small business employee benefits, you might consider section 125 plans.. Due to the complexity of these plans and their compliance issues, contact a benefits administration professional who specializes in creating and administering these types of plans. 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