K-1 and K-1 Earners

This article will explain what a K-1 earner is and some of the nuances around processing them in Namely Payroll.

Schedule K-1/K-1 Earner Definition

A Schedule K-1 is a form that some owners/founders (K-1 earners) of companies use to report their earnings to the IRS. If you are an owner of a company, you receive a K-1 form at the end of the year. 

Note: No taxes are withheld from a K-1 earner's paycheck throughout the year, so they receive the full gross amount each pay period. K-1 earners pay quarterly estimated taxes to the IRS.   

Setting K-1 Earners Up in Namely

K-1 Earners in Namely Payroll

• You will need to create a Guaranteed Payment earning code for K-1 individuals. This earning code ensures that no W-2s are generated for these individuals. 

• The Namely Service Team can create the Guaranteed Payment earning code for you. 

• The amount of the Guaranteed Payment earning should be the gross payout minus any deductions- e.g., if a K-1 Earner's earnings are $500 per pay period, and they have $100 in deductions, the Guaranteed Payment earning should be set up for $400.  

K-1 Earners in HRIS

The K-1 Earner must be set up with a $0.00 wage in HRIS.