Hi, I would like to know how to record SEP IRA contribution as this is a business expense. From what I understand Business owners can completely deduct SEP-IRA contributions as a business expense. Does it makes sense to record this expense in the books? If so, what’s the best way to do this. I am thinking like, have a contributions payable (liability) account and expense accounts related to this? Or should we deduct this contributions at the time of filing individual (owner) tax
From what I remember about SEP-IRA GAAP processing, putting aside how you are funding the SEP-IRA the you are recording the entry correctly. The Debit is to SEP-IRA Expense and the Credit to SEP-IRA Payments. You will then make payments to the account using the Payment Journal and Credit Bank Account and Debit SEP-IRA Payments.
Hope this helps.
if your SEP-IRA payments are drafted from your bank account, of course, just record directly to expense.