July 23, 2020
We are a law firm using a PEO and all partners receive some amount of W-2 wages so that they can get medical benefits. The balance of the non-equity partners’ pay is distributed/paid as “Guaranteed Payments” via an ADP direct deposit. How/where do I post the non-equity partners’ guaranteed payments?
Posted by Armanino Financial Advisory Team
Guaranteed payments for non-equity partners should be added to the salary they were paid in the period the guaranteed payments were made, so that there is one entry for amounts paid to the employee in the pay period. Example: Salary payment (W-2) of $4,000, Guaranteed payment (K-1) of $3,000, enter $7,000 in the pay period for that non-equity partner.