APPENDIX
D
I
f you’re reading this appendix, you’ve probably decided to use Intuit’s Basic or Enhanced Payroll service. (Page 419 of QuickBooks 2016: The Missing Manual de- scribes those services’ features.) This appendix starts by describing how to sign up for an Intuit payroll service and then activate it in QuickBooks. After that, you’ll learn how to set up what you need to run payroll in your company file: accounts to track payroll liabilities and expenses; payroll items to fill out paychecks; and employee records for the people you need to pay.Once your payroll setup is complete, you’ll learn how to set up payroll schedules, which take the tedium out of paying employees on a regular timetable. You’ll also learn how to run an unscheduled payroll to, for example, dish out bonuses at the end of the year. This appendix wraps up with info about paying payroll liabilities, such as employer payroll taxes, employee withholdings, health insurance premiums, and retirement plan contributions.
NOTE Intuit regularly updates its payroll services and tax tables to keep up with ever-changing payroll rules, regulations, and rates. Sometimes, they introduce new payroll features or enhancements on a different schedule than QuickBooks releases. This online appendix will reflect new and enhanced payroll features when they become available.
Running Payroll with an
Intuit Payroll Service
FOR AN INTUIT PAYROLL
SERVICE
Signing Up for an Intuit Payroll Service
If you decide to use Basic or Enhanced Payroll, you can sign up from within Quick- Books. (Page 419 describes the various payroll services that Intuit offers.) Here’s how you sign up for Basic or Enhanced Payroll in QuickBooks:
1. Make sure that your company file contains your company’s legal name and Employer Identification number (EIN) by choosing Company→My Company, clicking the Edit icon at the Company Information section’s top-right, and then making sure the Legal Name & Address and EIN fields are correctly filled in.
The payroll service needs your EIN (see page 9) and the legal name of your company, which is on your Articles of Incorporation or other legal documents you received when you formed your company. With that info in your company file, QuickBooks pulls it from your file during the signup process and fills in the appropriate boxes for you. If you haven’t filled in those fields yet, jump to page 22 to learn how.
2. Choose Employees→Payroll→“Turn on Payroll in QuickBooks.”
QuickBooks opens the browser window shown in Figure D-1, and selects the first option: “I want to pay & file my payroll taxes myself in a few clicks, with forms completed by QuickBooks Payroll.” That option represents the most popular Intuit payroll service—Enhanced Payroll.
FIGURE D-1 To sign up for Enhanced Payroll, select the first option, as shown here.
Select the second option to choose Basic Payroll instead.
FOR AN INTUIT PAYROLL
SERVICE doesn’t provide federal or state payroll tax forms in QuickBooks. That means
you need to run reports (page D-47) after you run payroll to get the info you need to fill out those tax forms by hand.
3. After you select the option you want, click the See My Plan button.
Depending on which option you chose, you’ll see either the Turn on Enhanced Payroll screen or the Turn on Basic Payroll screen. If you want to learn more about the service before you sign up, click each of the tabs in the middle of the screen.
4. Select either the “Pay annually” or “Pay monthly” option.
You’ll pay less for your service overall by paying for an entire year up front.
5. When you’re ready to sign up, click the Try Now button.
You get a 30-day free trial. If you aren’t satisfied with the service, simply cancel it before the 30 days are up and Intuit won’t charge your credit card.
6. On the “Review your order” page that appears, fill in your payment infor- mation (if necessary), and then click the Place Order button at the screen’s bottom right. (If Intuit doesn’t have your company or user registration information, fill in the payment fields, and then click the Checkout button.) If Intuit already has your credit card on file, it automatically fills in the “Review your order” page with that info. If you prefer, you can enter info for a different credit card to use instead.
Be aware that Intuit automatically renews your subscription. So when you click Place Order, you authorize Intuit to charge the subscription price to your credit card after your free trial ends until you cancel the subscription. After you sub- mit your application, QuickBooks checks the company information and credit card number you provided. If it runs into any problems, a message tells you to contact Intuit (and conveniently lists the phone number to call).
7. On the “Confirm your business information” page that appears, make sure that your EIN, owner name, and legal business name and address are cor- rect (if they’re not, edit them), and then click Continue. (If Intuit didn’t have your user registration information in step 6, the button is labeled Place Order instead.)
When you click Continue or Place Order, the “That’s It! Payroll is on” screen ap- pears and tells you that QuickBooks is going to download the latest tax tables and help you set up payroll.
8. To complete payroll setup, click the Get Started button.
QUICKBOOKS PAYROLL
SETUP
TIP If you sign up for an Intuit payroll service outside of QuickBooks or your service doesn’t turn on auto- matically in QuickBooks, you can manually activate it. First, choose Edit→Preferences→Payroll & Employees.
On the Company Preferences tab, select the “Full payroll” option (if it isn’t already selected), and then click OK.
Then, choose Employees→Payroll Service Options→Enter Payroll Service Key. In the dialog box that appears, type the code you received from Intuit when you signed up.
An Intro to QuickBooks Payroll Setup
QuickBooks includes the Payroll Setup interview to help you with most of your payroll setup steps. However, that feature doesn’t handle every aspect of payroll setup. For example, you might create additional payroll-related accounts before you launch the interview. You can also fine-tune payroll items in the Payroll Item List at any time. This section gives you an overview of your payroll setup tasks. It also describes some of the payroll-related accounts you might want to create and introduces you to the QuickBooks Payroll Setup interview.
NOTE When you use the Payroll Setup interview, behind the scenes, QuickBooks creates Payroll items, which are similar to the service and product items you add to invoices, except that they represent the things you need to produce payroll checks, like compensation, benefits, taxes, and so on. All the data you see on paychecks and payroll reports comes from Payroll items. The Enter Payroll Information window (Employees→Pay Employees) and other payroll features use only Payroll items. Conversely, in the Write Checks window’s Items tab, the Item drop-down list includes every type of item except Payroll items.
An Overview of the QuickBooks Payroll Setup Process
To make payroll run as smoothly as possible, you need to set up payroll properly in QuickBooks. Here’s an overview of the steps you need to perform:
1. Gather employee information, such as names, addresses, Social Security numbers, and W-4 information, as described on page 417.
2. If you haven’t already done so, turn on payroll in your company file (see the Tip above).
3. Set up payroll accounts to track payroll liabilities and expenses (page D-5).
4. Use the QuickBooks Payroll Setup interview to set up payroll items (de- scribed beginning on page D-9), and fill in employee payroll records (page D-29).
PAYROLL ACCOUNTS 8. Compare your QuickBooks payroll setup and payroll reports with reports
from your accountant or prior payroll service to make sure that you have all the accounts, items, and other information you need.
The following pages cover these steps in detail. And the box on page D-8 offers advice about the right time to set up payroll.
Setting Up Payroll Accounts
When you first turn on payroll in QuickBooks, the program automatically creates two accounts to track payroll: Payroll Expenses for company expenses like wages and payroll taxes, and Payroll Liabilities for the payroll taxes, withholdings, and other payroll-related payments you need to make. If you use only those two accounts when you run payroll, QuickBooks posts expenses to the Payroll Expenses account and posts money you owe to the Payroll Liabilities account. Although your records will technically be correct, your accounts won’t show how much you paid for each type of expense or liability; to see that info, you’ll have to run a payroll report.
If you want to include more payroll detail on your financial statements, simply create additional accounts to track that detail. First, you need to decide which accounts you want to see on your financial statements. For example, you may want accounts such as Payroll Taxes, Wages and Salaries, Company-paid Benefits, and Officers Salaries on your Profit & Loss report (page 448). On the Balance Sheet (page 455), you may want to add subaccounts to the Payroll Liabilities account for federal tax withhold- ing, state tax withholding, Social Security, Medicare, Federal Unemployment, State Unemployment, Employee Deductions, and Benefits. (Expenses appear on Profit &
Loss reports, while liabilities show up on Balance Sheet reports.) Table D-1 shows one way to break down payroll accounts. See page 47 to learn how to create accounts.
TIP Breaking down payroll into finer detail also makes it easier to find the culprit if you spot a payroll error.
That way, instead of looking through all your payroll accounts, you can focus on the one account whose total is off.
TABLE D-1 Examples of additional accounts you can create to track payroll info in more detail
PAYROLL ITEMS ACCOUNT WHEN IT’S USED
Hourly, Salary, Commissions, Bonuses, Tips
Salaries and Wages expense account
Running payroll
Officers Salary Officers Salaries expense account
Running payroll
PAYROLL
ACCOUNTS PAYROLL ITEMS ACCOUNT WHEN IT’S USED Social Security Employer
(company paid)
FICA Payable liability account
Running payroll
Social Security Employer (company paid)
Payroll Taxes expense account
Remitting payroll taxes
Medicare Employee (employee paid)
FICA Payable liability account
Running payroll
Medicare Employer (company paid)
FICA Payable liability account
Running payroll
Medicare Employer (company paid)
Payroll Taxes expense account
Remitting payroll taxes
Federal Unemployment, State Unemployment
FUTA Payable and SUTA Payable liability accounts
Running payroll
Federal Unemployment, State Unemployment
FUTA Expense and SUTA Expense expense accounts
Remitting payroll taxes
State Withholding Tax State Withholding liability account
Running payroll
Union Dues, Simple IRA, 401(K), HSA, Child Support, Wages Garnishments
Employee Deductions liability account
Running payroll
Employer 401(K) match, Simple IRA match, HSA Contribution
Employee Benefits Payable liability account
Running payroll
Employer 401(K) match, Simple IRA match, HSA Contribution
Employee Benefits expense account
Remitting employee benefit payments
Working with the Payroll Setup Interview
The QuickBooks Payroll Setup interview guides you through the setup process and shows how far along you are, as illustrated in Figure D-2. This section explains how to navigate through the interview’s various steps.
Here’s a quick peek at how the QuickBooks Payroll Setup interview works:
1. To launch the Payroll Setup interview, choose Employees→Payroll Setup.
The first time you open the QuickBooks Payroll Setup window, the “Let’s start
PAYROLL ACCOUNTS
FIGURE D-2 A green arrow on the window’s left side indicates which task you’re working on (here, that’s Compensation).
As you complete the various payroll setup steps, the interview adds a green checkmark to the completed tasks.
The list displays only the steps for the payroll category you’re working on, such as Compensation and Employee Benefits in the Company Setup category. When you click or navigate into another category, the dialog box collapses the previous category.
2. If you’ve never run payroll before (with or without QuickBooks’ help), select
“No, there aren’t paychecks for any employee” option.
If you select the “No, there aren’t paychecks for any employee” option, the
“Do you need to pay employees today?” options appear. Continue with step 3.
If you’ve issued paychecks and paid payroll taxes in the past, select the “Yes, at least one employee received a paycheck” option instead, and then click Continue to jump directly into the Payroll Setup interview. If you do that, skip the rest of the steps in this list and set up compensation items as described on page D-9.
3. Below the “Do you need to pay employees today?” heading, select Yes or No, and then click Continue.
If you select the Yes option, the Payroll Setup interview chooses default values for all your payroll items and then jumps to Employee Setup. Skip the rest of the steps in this list.
PAYROLL
ACCOUNTS 4. Select the “Typical new employer setup” option or the “Custom setup”
option, and then click Continue.
The “Typical new employer setup” option is perfect if you haven’t yet set up accounts with the appropriate tax agencies, but you can’t wait because you need to pay your employees. When you select this option, the Payroll Setup interview chooses default values for all your tax items and then jumps straight to Employee Setup, so you can enter employee information and create paychecks.
Once you have your payroll tax information, you have to go back to the Payroll Setup interview (choose Employees→Payroll Setup and then, on the left side of the interview window, click Taxes) and modify settings and items to match how you pay employees. If your new tax settings differ from the default values the program chose, QuickBooks creates the necessary liability adjustments.
To make your own decisions about payroll items and settings, select the “Cus- tom setup” option instead. When you choose this option and click Continue, the Payroll Interview takes you straight to the Compensation category (page D-9).
You don’t have to go through the whole payroll setup process in one shot. You can click a category on the dialog box’s left to jump to that setup step. Click a subcategory to start filling in information. If you want to take a break, simply click the Finish Later button, and the interview remembers everything you’ve done so far. (If you selected the “Custom setup” option in step 4 or the “Yes, at least one employee received a paycheck” option in step 2, you have to complete every bit of payroll setup before you can run a payroll.)
UP TO SPEED
Choosing the Right Payroll Start Date
If you’ve paid employees using any method other than an Intuit Payroll service, there’s a right and wrong time to start using QuickBooks for payroll. You have to file 941 reports (Employer’s Quarterly Federal Tax Returns) quarterly, as their name implies.
Therefore, QuickBooks won’t let you summarize payroll data for the current quarter; instead, you have to enter individual pay period totals from the beginning of the current quarter up to the date you start using QuickBooks payroll.
If it’s nearing the end of the year, the easiest route is to wait until January 1 to switch to Intuit payroll. However, if you decide to start mid-year, you can save yourself a lot of data entry by starting to use QuickBooks for payroll at the beginning of a quarter. You’ll still have to enter summary values for each past quarter in the current year (page D-31), but you won’t have to enter any individual payrolls.
COMPENSATION ITEMS
Setting Up Compensation Items
The first items you define in the Payroll Setup interview tell QuickBooks how you compensate your employees—whether you pay them a salary, hourly wages, or additional income such as bonuses or commissions. This section describes how to set up a few commonly-used compensation items.
NOTE If you’re intimidated by the QuickBooks Payroll Setup checklist and the number of choices you have to make, you might consider hiring a QuickBooks ProAdvisor (to find one, head to http://proadvisor.intuit.com/
find-a-proadvisor/search.jsp) or an accountant who’s knowledgeable about QuickBooks payroll. Fortunately, once payroll is set up, running payroll is easy (see page D-34).
Here’s how to create compensation payroll items:
1. If the Payroll Setup interview isn’t open, choose Employees→Payroll Setup.
The Payroll Setup interview launches.
2. In the left navigation bar, click Company Setup, and then click Compensa- tion.
The “Review your Compensation list” screen appears. Depending on the options you chose when you started the Payroll Setup interview, the list may already include the most common compensation items, as shown in Figure D-2. You can add, edit, or delete items to reflect your payroll needs.
3. To add a new compensation item, click the Add New button below the list.
The Add New window includes checkboxes for several types of compensation items.
4. In the Add New dialog box, turn on the checkboxes for the compensation items you want to add. For example, you might turn on Salary and Commis- sion as shown in Figure D-3. Then click Next.
You can turn on the checkboxes for all the compensation items you want to cre- ate. When you click Next, if QuickBooks needs more info, the interview displays screens with fields and other settings.
COMPENSATION ITEMS
FIGURE D-3 When you turn on check- boxes for compensation items (as shown here) and then click Next, the interview asks questions about the items you’re adding. (Not surprisingly, if the interview doesn’t need additional info for an item, you won’t see a screen for that item.)
5. In the Add New dialog box, fill in the boxes and select options related to salaried compensation (Figure D-4).
For example, fill in the “Show on paycheck as” box with the label you want to appear for salaried compensation on paychecks, such as “Officers’ Salary.” Se- lect the Yes or No options to tell QuickBooks whether employees receive time- and-a-half or double-time pay. If you select the Yes option for either overtime rate, you can also change the label that appears on paychecks for those items.
COMPENSATION ITEMS
FIGURE D-4 In the Payroll Setup interview, you don’t specify salary or hourly pay rates.
Instead, you set up an hourly or annual pay rate for each employee as described on page D-30.
QuickBooks then uses those rates to calculate the values for each paycheck.
6. Click Next to display the settings for the next item—in this example, that’s the Commission item. Select the appropriate option (here, that’s “Percent- age of sales (or other amount)”), and then click Finish.
The new items appear in the interview’s Compensation list, and behind the scenes, QuickBooks adds them to the Payroll Item List (to open it, choose Lists→Payroll Item List). For example, if you add “Hourly wage and overtime,”
the program creates an Hourly item. If you selected the Yes options for overtime, it creates “Double-time hourly” and “Overtime (x1.5 hourly).” QuickBooks also links those items to accounts in your chart of accounts so you can track your payroll liabilities and expenses.
If you want to review or edit the items you just created, here’s what you do:
1. On the interview’s “Review your Compensation list” screen, select the item, and then click the Edit button below the list.
COMPENSATION ITEMS
FIGURE D-5 For some payroll items, the Edit dialog box contains additional fields that aren’t available when you first create the item. So if you don’t see a field you want to set when you create a payroll item, simply edit the item to change that setting. You can edit payroll items in the interview or in the Payroll Item List window (see page D-24).
2. Make the changes you want, such as the account linked to the item, and then click Finish.
For example, when you edit the Hourly item, you’ll see the “Account type” field set to Expense, which is what you want. But if the “Account name” is set to something generic like Payroll Expenses, click the down arrow and choose the subaccount you want, such as “Payroll Expenses: Salaries and wages.” If you edit the Commission item, you can also specify the commission rate or amount.
3. When you’re done setting up compensation items, click Continue at the dialog box’s bottom right.
The interview jumps to the Employee Benefits category, which is described in the next section.
EMPLOYEE BENEFITS
Setting Up Employee Benefits
As you probably already know, employee benefits come in many shapes and sizes.
The Payroll Setup interview helps you set up these items. This section shows you how to set up some typical employee benefits.
You can get to the interview’s Employee Benefits category in two ways: click Em- ployee Benefits on the interview’s left or, if you’re finished working on Compensation items, click Continue on the “Review your Compensation list” screen. Either way, the Employee Benefits category on the interview’s left expands to show the types of benefits you can define: Insurance Benefits, Retirement Benefits, Paid Time Off, and Miscellaneous.
Defining Insurance Benefits
The Payroll Setup interview lets you define benefits for health, dental, vision, and life insurance. You can also set up other types of insurance, such as health savings accounts or flexible spending plans. Here’s an example that shows how to set up health insurance benefits:
1. On the interview’s left, click Insurance Benefits. (If you don’t see it, click Company Setup→Employee Benefits to display it.)
Alternatively, if the “Set up employee benefits” screen is visible, click Continue.
2. In the interview window, click the Add New button, and then, in the Add New dialog box, turn on the checkboxes for the insurance items you want to add, such as “Health insurance.”
If you don’t know what an insurance benefit represents, click the Explain link to the label’s right.
3. Click Next to begin setting up the items you selected.
If you turned on more than one checkbox, the interview will step you through screens for the benefits you selected.
4. In this example, on the “Tell us about health insurance” screen (Figure D-6), select the “Both the employee and company pay portions” option, select the “Payment is deducted after taxes” option, and then click Next.
When you choose these options, QuickBooks creates payroll items for the company’s and employees’ payments with the employees’ portions deducted after taxes.
EMPLOYEE BENEFITS
FIGURE D-6 When you share the expense with employees or they pay the entire amount, options appear so you can specify whether the pay- ment is deducted before or after taxes are calculated.
For example, Section 125 health plan payments are deducted before taxes, so they reduce employees’
tax bills.
NOTE If your company pays for health insurance, you need a payroll item only if you include those benefits on employees’ W-2s. If you aren’t sure whether you need payroll items for company-paid benefits, ask your ac- countant or tax professional.
5. On the “Set up the payment schedule for health insurance” screen, fill in the vendor’s name (the company that you send health insurance premiums to), your company’s account number, and, if necessary, specify your payment schedule, as shown in Figure D-7. Then click Finish.
When you click Finish, you see the “Review your Insurance Benefits” list, which now includes your health insurance items. For this example, you’ll see a “Health Insurance (company paid)” item for the company’s portion and a “Health Insur- ance (taxable)” item for what employees pay after tax.
EMPLOYEE BENEFITS
FIGURE D-7 Initially, the interview selects the “I don’t need a regular payment schedule for this item” option, which means you have to make your payments manually. If you select one of the other options, QuickBooks sets up a payment schedule so you know when the next payment is due. Page D-43 explains how to make pay- ments with this payment schedule.
6. To edit the “Health Insurance (taxable)” item, select it, and then click the Edit button.
The Add New dialog box doesn’t give you a chance to specify all the settings for this item, so you have to edit it to make those changes.
7. Click Next until you see the Edit After-Tax Employee-Paid Health screen.
In the “Account name” box, choose the liability account you want to use (such as Payroll Liabilities:Emp. Health Ins Payable), and then click Next.
The “Tell us which taxes apply to this item” screen appears and selects the “Use standard tax settings” option. In most cases, QuickBooks chooses the correct tax tracking type for the item you’re creating, so you can click Next to jump to the next screen.
8. On the “Tell us how to calculate the amount” screen (Figure D-8), fill in the boxes to specify how to calculate the employee’s premium.
Suppose the employee pays a flat amount per paycheck. In that case, keep the
“Calculate amount” box set to “Do not calculate. Enter flat amount” and, in the
“Default rate or amount” field, enter the amount the employee pays, such as 50. If necessary, fill in the boxes to define any limits to what the employee pays.
EMPLOYEE BENEFITS
FIGURE D-8 You’ll see different fields depending on the choice you make in the “Calculate amount” drop-down list. For example, if you calculate the premium as a percentage of pay, the
“Based on” field appears and you can choose “% of net” or “% of gross” to use the employee’s net (after deductions and taxes) or gross pay.
9. Click Finish.
The “Review your Insurance Benefits list” screen reappears.
10. If you want to edit another item, select it, click the Edit button, and then answer the interview’s questions. When you’re done, click Finish.
When the health insurance items are set up the way you want, click Continue to jump to the Retirement Benefits category, which is described in the next section.
Setting Up Retirement Benefits
Retirement benefits include various tax-advantaged plans like 401(k)s and 403(b)s, which are named after the tax code sections that cover them. When you offer retire- ment benefits, you can set up Payroll items for your employees’ contributions along with any matching contributions your company makes. This section uses employer and employee contributions to a 401(k) plan as an example of defining retirement benefits in QuickBooks.
Here’s how you set up employee and company matching contributions to a 401(k) plan:
1. On the Payroll Setup interview window’s left, click Retirement Benefits.
(If you don’t see that category, click Company Setup→Employee Benefits
EMPLOYEE BENEFITS 2. In the Add New dialog box (Figure D-9), turn on the checkbox for the plan(s)
you offer—such as “401(k) (most common)”—and then click Next.
The “Set up the payment schedule for 401(k)” screen appears.
FIGURE D-9 In addition to different retirement plans, you can also turn on checkboxes to tell QuickBooks that your plan offers Roth contribu- tions.
3. On the “Set up the payment schedule for 401(k)” screen, in the Payee (Ven- dor) box, choose the company that manages your retirement plan.
You can’t add a new vendor from the drop-down list. If you haven’t created the vendor yet, continue with the next step to save the new payroll item. Then, create the new vendor (page 78); after that, you can edit the 401(k) payroll item (page D-18) to add the vendor.
4. Fill in your company’s account number, and, if necessary, specify your pay- ment schedule. Then click Finish.
When you click Finish, the “Review your Retirement Benefits” list includes two new items (in this example, 401k Co. Match and 401k Emp.). You need to edit these items to add the rest of the info, as described in the next section.
EMPLOYEE
BENEFITS EDITING RETIREMENT BENEFIT ITEMS
You can edit payroll items in the QuickBooks Payroll Setup interview or from within the Payroll Item List. Here’s how to do the latter:
1. If the interview window is still open, at its bottom left, click the Finish Later button to close it. In the Finish Later message box, click OK
2. Choose Lists→Payroll Item List.
The Payroll Item List window opens.
3. Right-click the 401k Co. Match item, and then choose Edit Payroll Item on the shortcut menu. In the “Edit payroll item (Company Contribution: 401k Co. Match)” dialog box, click Next.
If you want to change the label that appears on paychecks, before you click Next, edit the value in the “Enter name for company contribution” box.
4. If you didn’t add the vendor and account number when you created the payroll item, then in the “Enter name of agency to which liability is paid”
drop-down list, choose the company that manages your plan and in the
“Enter the number that identifies you to agency” box, enter your plan ac- count number.
5. In the “Liability account (company paid)” drop-down list, choose the li- ability account for your company matching contributions. In this example, that’s Payroll Liabilities: Employee Benefits Payable (Figure D-10).
This account holds your company matching funds until you deposit them in your 401(k) plan account to be distributed to your employees’ accounts.
FIGURE D-10 If you can’t see the entire account name in the field, click within the field, and then press the End key to show the end of the account name.
EMPLOYEE BENEFITS 6. In the “Expense account” drop-down list, choose the expense account you
want to use for company matching contributions, such as Payroll Expenses:
Employee Benefits, and then click Next.
This expense account tracks your company’s matching expenses after you pay off your 401(k) plan liabilities.
7. On the “Tax tracking type” screen, keep 401(k) Co. Match selected, and then click Next. On the Taxes screen, click Next.
QuickBooks usually chooses the correct tax tracking type and associated taxes for the payroll items you create. If it doesn’t select the correct tax tracking type, choose the one you want from the drop-down list. Then, on the Taxes screen, you can select the affected tax items by turning on their checkmark cells.
8. On the “Calculate based on quantity” screen, keep the Neither option se- lected and click Next.
The Neither option is the most common choice; it tells QuickBooks you want to specify a percentage of pay or a flat amount per paycheck. You can choose other options to calculate company matching based on the hours worked or a value you enter on employees’ paychecks.
9. On the “Default rate and limit” screen, fill in the first unlabeled field with the flat rate or the percentage you want to use, such as 4%.
You can also fill in the second unlabeled field with your upper limit for company matching. In most cases, you keep the Limit Type field set to “Annual – Restart each year”.
10. Click Finish.
Here’s how you edit the Payroll item for employee 401(k) contributions.
1. In the Payroll Item List, right-click 401k Emp., and then choose Edit Payroll Item from the shortcut menu. In the “Edit payroll item (Deduction: 401k Emp.)” dialog box, click Next.
2. If necessary, on the “Agency for employee-paid liability” screen, choose the vendor who manages your plan. In the “Liability account (employee- paid)” drop-down list, choose the liability account for employee 401(k) contributions (in this example, that’s Payroll Liabilities: Employee Deduc- tions). Then click Next.
The liability account holds the employee contributions that you deduct from their paychecks until you deposit those funds in the 401(k) plan. You don’t specify an
EMPLOYEE
BENEFITS 3. On the “Tax tracking type” screen, keep 401(k) selected, and then click Next. On the Taxes screen, click Next.
On the Taxes screen, QuickBooks automatically turns on the Federal Withhold- ing item’s checkmark cell. That’s because employee 401(l) contributions reduce employees’ taxable income, so you don’t have to withhold as much federal tax.
4. On the “Calculate based on quantity” screen, keep the Neither option se- lected and click Next.
Selecting this option lets you specify the percentage or amount you want QuickBooks to deduct.
5. On the “Default rate and limit” screen, fill in the first unlabeled field with the flat rate or percentage you want to use, such as 15%.
QuickBooks uses the value you enter here if you don’t specify a value in an employee’s record.
6. In the second unlabeled field, fill in the upper limit for employee contribu- tions (for example, $18,000 for the year 2015). Keep the Limit Type field set to “Annual – Restart each year,” and click Finish
Setting Up Paid Time Off and Miscellaneous Items
Benefits like sick time and vacation pay fall into the Paid Time Off category. The Mis- cellaneous category covers anything else that’s added or deducted from paychecks, like cash advances, mileage reimbursements, or union dues. This section describes how you set up these payroll items in the Payroll Setup interview.
Here’s how to add and edit paid time off items:
1. If the interview window isn’t open, choose Employees→Payroll Setup. On the interview’s left, click Paid Time Off.
If you don’t see that category, choose Company Setup→Employee Benefits→Paid Time Off. Alternatively, if you just finished setting up retirement benefits, on the “Review your Retirement Benefits list” screen, click Continue to jump to the Paid Time Off category.
2. To add paid time off items, in the “Review your Paid Time Off list” screen, click the Add New button.
The Add New dialog box opens with two checkboxes: “Paid sick time off” and
“Paid vacation time off.”
EMPLOYEE BENEFITS 4. If you want to edit your paid time off items (for example, to change the ex-
pense account to which they’re linked), select the item, and then click the Edit button below the list. Make the changes you want, and then click Finish.
You can also edit these items in the Payroll Item List window as described for retirement benefit items on page D-18.
5. On the “Review your Paid Time Off list” screen, click Continue to move to the Miscellaneous category.
You can also click the Miscellaneous category on the interview’s left.
6. To add items for other additions or deductions, click the Add New button below the list. In the Add New dialog box, turn on the checkboxes for the items you want to create. Then click Next and fill in any fields you want to change.
If the interview doesn’t need any information about the items, the label on the button at the dialog box’s bottom right changes to “Finish.”
7. When you see the Finish button at the dialog box’s bottom right, click it to save the items.
The items you created now appear on the “Review your Additions and Deduc- tions list” screen.
If you want to edit your paid time off and miscellaneous items in other ways, at the interview window’s bottom left, click Finish Later. Then, choose List→Payroll Item List to open the Payroll Item List window. Right-click the payroll item you want to edit, and then choose Edit Payroll Item on the shortcut menu. When you’re done editing the item, in the Edit dialog box, click Finish. (Page D-27 explains how to specify accrual rates for paid time off.)
Setting Up Payroll Taxes
Although the Payroll Setup interview wants to take you from the Employee Benefits category to the Employee Setup category, you’re better off creating the rest of your Payroll items before setting up employees. That way, you can use your Payroll items to set up employee default settings (page D-25). Then, when you create your employee records, QuickBooks automatically assigns those default Payroll items and values.
Taxes are the last category of Payroll items you need to set up: your tax ID numbers, the tax agencies you pay, and federal, state, and local payroll taxes. Here’s how to set up payroll taxes in the Payroll Setup interview:
1. On the left side of the interview window, click Taxes→“Federal taxes.”
EMPLOYEE
BENEFITS 3. To add taxes for a state if they aren’t already in the list, click Add New below the list.
The “Add a new tax” dialog box shown in Figure D-11 opens.
4. In the State drop-down list, choose a state, and then click Finish.
QuickBooks adds the typical taxes for that state—like income tax, unemploy- ment tax, and so on—and fills in tax rates that are standard for all companies.
FIGURE D-11 When you select a state in the “Add a new tax” dia- log box (foreground) and click Finish, QuickBooks creates all the typical taxes for that state, com- plete with standard rates.
If you have to pay local or other payroll taxes that QuickBooks doesn’t know about, select the “Create a specific local/custom tax” option instead.
5. If the “Set up payroll taxes” dialog box appears, fill in the Unemployment Company Rate box with the unemployment rate your company pays. If other payroll tax boxes appear, fill them in, too. Click Finish.
Because the unemployment tax rate depends on your payroll, QuickBooks can’t fill this rate in for you. If you receive a SUI rate change notice, you can change the rate for the first quarter of the following year. However, you must wait until after July 1 of the current year to make that change.
EMPLOYEE BENEFITS Payments dialog box, tell QuickBooks whom to pay and when. If you use Enhanced
Payroll, you can also select the Check or E-pay option to specify the payment method you want to use. (If you opt for E-pay, clicking Next displays a screen with instructions for setting up e-payment accounts and enrolling with the appropri- ate tax agency.) In the “Payment (deposit) frequency” drop-down list, the typical frequency for that tax has the words “usual frequency” appended to its name. If you have questions about which frequency you should use, call the IRS, your state, or your accountant. (You can also learn more about payroll taxes at Intuit’s Payroll Tax Compliance website, http://payroll.intuit.com/support/compliance.) After you assign frequencies to payments, QuickBooks keeps track of what you owe to each tax agency and reminds you when it’s time to pay your taxes.
Fine-Tuning Payroll Items
To see the Payroll items in your company file, choose Lists→Payroll Item List. This section steps you through adding and editing Payroll items.
ADDING A NEW PAYROLL ITEM Here’s how to add a new Payroll item:
1. Choose Lists→Payroll Item List. In the Payroll Item List window, click Payroll Item→New or press Ctrl+N.
The “Add new payroll item” dialog box opens. QuickBooks automatically selects the EZ Setup option, which is usually what you want, so click Next.
2. On the “Payroll item type” screen, select the type of Payroll item you need, and then click Next.
Payroll items fall into seven categories: Compensation, Insurance Benefits, Retirement Benefits, Paid Time Off, Other Additions, Other Deductions, and Custom Setup.
When you click Next, the Add New dialog box (which looks like the one in the Payroll Setup interview) opens.
3. Fill in the settings.
Click Next to step through screens, filling in what QuickBooks needs to know about the item, such as the vendor and account number for a 401(k) plan, the Tax Tracking type (which specifies whether the item shows up on your payroll tax returns and employee W-2s), and the taxes that the item affects. For example, if you select an expense item, QuickBooks asks for the expense account you want to use. For a Company Contribution Payroll item, QuickBooks needs to know which liability and expense accounts to use.
EMPLOYEES To make sure that your new item appears correctly on your financial statements, run a Profit & Loss report and a Balance Sheet report (page 586).
EDITING A PAYROLL ITEM
You might need to edit Payroll items, for example, to change the limits for 401(k) contributions, to change a tax rate, to change the liability and expense accounts you use, or to fill in values QuickBooks didn’t when you first created the items. Here’s how you edit a Payroll item in the Payroll Item List window:
1. Choose Lists→Payroll Item List. In the Payroll Item List window, right-click the item you want to edit, and then choose Edit Payroll Item on the shortcut menu.
The “Edit payroll item [item name]” dialog box opens, where [item name] is the item you right-clicked.
2. Make the changes you want, click Next, and when the Finish button becomes active, click it to save your changes.
The changes you made appear in the Payroll Item List window.
Rinse and repeat until all your payroll items are set up the way you want.
Setting Up Employees
After you set up Payroll items, your next task is setting up employees in QuickBooks.
If you haven’t gathered the info you need about your employees, in the QuickBooks Payroll Setup window, click Finish Later, and then perform these steps:
• Gather employee information and records. You need personal info, such as Social Security numbers and hire dates, along with signed W-4 and I-9 federal forms. For employees already on the payroll, you need their pay rates, the total pay they’ve received, and deductions taken, along with sick time and vacation balances. If you’ve paid employees during the year, gather your historical payroll info and all tax deposits you made.
• Set up employee payroll defaults. If you have more than a few employees, you can save time by setting up standard values for the Payroll items that apply to every employee, like common deductions and typical 401(k) contribution percentages. That way, QuickBooks automatically fills in these items for you when you create a new employee record, so all you have to do is make any
EMPLOYEES
Setting Employee Defaults
Typically, you use a common set of Payroll items for all your employees, such as salary and wages, tax deductions, health insurance, and 401(k) contributions. And many employee records probably use the same values for those items. For example, if all your employees live in California, they all pay federal and California state taxes.
And perhaps most of your employees contribute the same percentage to your company’s 401(k) plan.
Instead of assigning the same Payroll items and values to each employee manually, you can save these standard items and settings so that QuickBooks fills in most of the payroll fields for you whenever you create a new employee. You can also specify the pay period you use and the class to apply (if you track performance by class).
Here’s how to specify the Payroll items and values that apply to most of your em- ployees:
1. Choose Employees→Employee Center (or, on the Home Page, click the Employees button at the top of the Employees panel).
The Employee Center window opens.
2. In the Employee Center window’s toolbar, choose Manage Employee Information→Change New Employee Default Settings.
The Employee Defaults dialog box (Figure D-13, background) opens. You can also open this dialog box from the Preferences dialog box. To do that, choose Edit→Preferences→Payroll & Employees, click the Company Preferences tab, and then click the Employee Defaults button at the dialog box’s bottom right.
See page 663 to learn about other employee preferences you can set.
NOTE The Employee Defaults dialog box includes the same set of fields and checkboxes that you’ll find in the Payroll Setup interview and in the New Employee window’s Payroll Info tab (in the Employee Center’s toolbar, click New Employee, and then click Payroll Info). When you edit an employee’s record, you can change any default payroll settings that don’t apply to that person.
3. If you don’t have a payroll schedule set up, in the Payroll Schedule field, choose <Add New> from the drop-down list.
By creating a payroll schedule, you can group employees who are paid on the same frequency (such as weekly, bi-weekly, and so on) and run payroll for all of them. In addition, QuickBooks creates a reminder (page 487) when a scheduled payroll is due, so, for example, you don’t have to remember whether your bi- weekly pay period ends this Friday or next. If a scheduled payroll is due or over-
EMPLOYEES 4. In the New Payroll Schedule dialog box, enter your payroll schedule infor- mation as shown in Figure D-12, and then click OK.
In the first box, type a name for the schedule, such as Biweekly if you pay your employees every other week. In the second box’s drop-down list, choose the frequency (in this example, it’s already set to “Biweekly (Every other week)”).
The boxes on the screen change depending on the frequency you select.
For a biweekly schedule, in the “What is the pay period end date?” box, choose the last day of the first payroll period you’ll run with this schedule. In the “What date should appear on paychecks for this pay period?” box, choose the date when employees are actually paid (typically a few days after the end of the pay period so you have time to process payroll).
FIGURE D-12 A payroll schedule makes it easy to run payroll for all the employees you pay on the same schedule.
You set the frequency, the pay period end date, and the paycheck date. After you assign the payroll schedule to your employ- ees (page D-34), you can run that payroll schedule and QuickBooks creates paychecks for every em- ployee on that schedule, automatically updates the next pay period’s end date and the check date for the next scheduled payroll run, and creates a reminder to run it.
5. In the Employee Defaults dialog box, set up frequently-used items for every type of Payroll item you use, as shown in Figure D-13.
Be sure to specify a state for withholding, because QuickBooks doesn’t fill this in automatically. To do so, in the Employee Defaults dialog box, click the
EMPLOYEES
FIGURE D-13 Although your standard items for taxes don’t appear in the “Addi- tions, Deductions, and Company Contributions”
list (background), when you click Taxes, you can see the payroll tax items that will be assigned to each new employee you create (foreground).
Similarly, by clicking the Sick/Vacation button, you can set how sick and vacation time accrue, the maximum accrued hours each year, and whether hours roll over from one year to the next.
6. To set the default values for paid time off, click the Sick/Vacation button.
The “Sick and Vacation Defaults” dialog box opens.
7. In the Sick section’s “Accrual period” drop-down list, choose how sick time accrues.
If employees receive their entire allowance of sick time at the beginning of the year, choose “Beginning of year.” If they earn a portion of sick time on each paycheck, choose “Every paycheck.” For hourly employees, you can dole out some sick time for every hour they work by choosing “Every hour on paycheck.”
8. In the next box, fill in the number of hours of sick time accrued in each period you specified in the “Accrual period” box, as shown in Figure D-14.
For example, if you chose “Every paycheck” in the “Accrual period” drop-down list, you might type 3 in the “Hours accrued per paycheck” box to allot 3 hours of sick time to each paycheck. At that rate, if employees are paid biweekly, they would earn 78 hours of sick time over an entire year.
EMPLOYEES
FIGURE D-14
You can set up sick time and vacation pay to accrue at the beginning of the year, on every paycheck, or for every hour on a paycheck. When you choose the accrual period, you then set the number of hours of paid time off em- ployees accrue each period. If you limit how many hours an employee can accrue, fill in the “Maximum number of hours” box.
9. In the “Maximum number of hours” box, fill in the maximum number of hours of sick time an employee can accrue.
When you set a maximum value for sick time, the employee won’t accrue any more sick time once they’ve reached that number of hours.
NOTE The “Reset hours each new year?” checkbox is turned off initially, which tells QuickBooks that em- ployees can continue to accrue hours from year to year. If you turn that checkbox on, QuickBooks resets accrued hours to zero at the beginning of each year. (In other words, employees lose any unused hours at the end of the year.)
10. Fill in the Vacation section’s fields in the same way you filled in settings for sick time. When you’re done, click OK.
The “Sick and Vacation Defaults” dialog box closes.
EMPLOYEES When you create a new employee, QuickBooks automatically fills in the fields you
specified in Employee Defaults. For example, if you add a Salary item without an hourly or annual rate, QuickBooks adds the Salary item to each new employee’s record but leaves the value field blank. On the other hand, if most people contribute 15% to their 401(k) plan, in the Employee Defaults dialog box’s “Additions, Deduc- tions, and Company Contributions” table, choose 401(k) in an Item Name cell, and then type –15% in the Amount cell. That way, when you create a new employee, the 401(k) percentage deduction is automatically set to 15%, but you can change it to match the percentage the person chooses to contribute.
GEM IN THE ROUGH
Building Paychecks from Time Worked
If you pay your employees by the hour and use one of Quick- Books’ payroll services to generate employee payroll checks, time tracking can automate your payroll process a bit.
When you link your employees to their QuickBooks timesheets, the program takes care of calculating how much they’ve earned. Here’s how to link employees and timesheets to take advantage of this feature:
1. On the Home Page, click the Employees button to open the Employee Center (or choose Employees→Employee Center).
2. On the Employees tab, double-click an employee whom you pay by the hour (or click the employee’s name and
then press Ctrl+E).
3. When the Edit Employee dialog box opens, click the Payroll Info tab.
4. Below the Earnings table, turn on the “Use time data to create paychecks” checkbox, and then click OK to save the record.
Employees can still track time without this checkbox turned on, which is ideal if you don’t need a connection between the hours worked and the employee’s paycheck. For example, leave the checkbox off if you bill customers for employee time but pay those employees a straight salary.
Creating Employee Records
You can create employee records either in the Payroll Setup interview window or by creating new employee records in the Employee Center (in the Employee Center toolbar, click New Employee to open the New Employee window). The info you have to provide is the same either way. If you set up default employee values (page D-25), the Employee Center is the way to go because it uses your default values to fill in many fields in new employee records.
TIP You can add or edit employees using the same techniques you use to add and edit customers (page 63).
As in other QuickBooks Centers, when you select an employee in the Employees tab, you can see transactions and info related to that employee on the Transactions, To Do’s, Notes, and Sent Email tabs.
EMPLOYEES
FIGURE D-15 The New Employee win- dow has tabs for various categories of employee information. The Personal and Address & Contact tabs cover basic 411 like name, gender, date of birth, address, and contact info. The Payroll Info tab has fields for compensation, benefits, and other payroll-related items. You provide details about employment status on the Employment Info tab.
Here’s how to fill out employee information in the New Employee window:
• Personal. This tab has fields for the basics about an employee, such as name, Social Security number, gender, date of birth, and marital status. You can also fill in boxes for disability, immigration, and military info.
• Address & Contact. This tab collects the person’s contact information. (You should have all this info on the employee’s W-4 form.)
• Additional Info. If you use employee ID numbers, you can enter them on this tab.
• Payroll Info. This tab is where you fill in info QuickBooks needs to run payroll:
payroll schedule, compensation, benefits, and other paycheck additions and deductions. It automatically fills in the default Payroll items and values for new employees. (The box on page D-29 explains how to tell QuickBooks to use employee timesheets to calculate paychecks.)
EMPLOYEES To specify sick time, vacation time, tax info, and direct deposit values, click the
corresponding buttons at the window’s top right. If you offer direct deposit, you can turn it on for an employee here and specify whether the deposit goes to only one bank account or to two (checking and savings, for example). If you click the Direct Deposit button and don’t have direct deposit set up, QuickBooks automatically starts the direct deposit setup process described in the box on page D-32.
• Employment Info. This tab is where you can record info like the employee’s hire date and whether the person is an officer, owner, or regular Joe. You can also enter a release date, which is a diplomatic name for the last date the person worked for you.
• Workers’ Comp. If you have to track workers’ comp, you fill in the appropriate workers’ comp code on this tab.
NOTE Corporations have to keep track of officer compensation separate from employee compensation, which you do by choosing Officer in the “Employment type” drop-down list. In addition, you’ll need two separate expense accounts for compensation, such as Salaries & Wages for your employees and Officers’ Salaries for the officers.
When you finish filling in the various fields, click OK to close the New Employee window. The new employee’s name appears in the Employee Center’s Employees tab.
Entering Historical Payroll
It’s essential to enter all the payrolls you’ve processed since the beginning of the current calendar year. That’s the only way to produce W-2s at the end of the year with the correct totals for the whole year. In addition, entering previous payroll data means that the payroll calculations take into account deduction limits. For example, for 2015, Social Security taxes apply to only the first $118,500 of income; income that an employee earns beyond that is free of Social Security tax.
You have two ways of getting this year’s historical payroll information into your company file:
• Run previous payrolls one by one. Using the payroll data from your previous payroll service, enter the info for each payroll you’ve run into QuickBooks as described on page D-35. The only difference between entering a historical payroll run and a current one is that you select the “Handwrite & Assign check numbers” option in the Review and Create Paychecks dialog box (see Figure D-19). This approach has an added bonus: You can take practice runs through the payroll process and verify the values against existing payroll reports from
EMPLOYEES
UP TO SPEED
Setting Up Direct Deposit
Direct deposit makes everyone’s life a little easier: You don’t have to worry about guarding cashable checks until you deliver them to your employees, and your employees don’t have to make a trip to the bank to deposit their earnings. The money gets transferred directly from your payroll account to the accounts that employees specify, such as checking and savings accounts.
Direct deposit is an add-on service that you can sign up for no matter which Intuit payroll service you choose. Once you complete the signup process for your Intuit payroll service, you’re ready to sign up for direct deposit:
1. To sign up for direct deposit, click the Payroll Center’s Pay Employees tab, and then, in the Other Activities section, click the Set Up Direct Deposit link. Then provide your company’s basic and bank account info, create a PIN, and agree to the direct deposit terms of service. (After you’ve signed up for direct deposit, the link in the Other Activities section changes to View Direct Deposit Status, and the Employees menu includes a “Pay with Direct Deposit” entry.)
2. After you see two small withdrawals by Intuit Payroll Services (less than $1 each) in your bank account (usually within 48 hours), choose Employees→My
Payroll Service→Activate Direct Deposit and record those two amounts in QuickBooks. By doing that, you validate that the bank account number is correct and that you are authorized to view your bank account information. Once your direct-deposit service is activated, QuickBooks removes the Activate Direct Deposit entry from the Employees menu and sets up refunds for the two withdrawals.
3. To set up direct deposit for an employee, in the Employee Center, right-click the employee’s name and choose Edit Employee. On the Payroll Info tab, click the Direct Deposit button and then fill in the boxes in the Direct Deposit window. You need the nine-digit routing number for the employee’s bank and the employee’s account number(s) at that bank. Voided checks from employees are a great way to verify the routing and account numbers (and verify their accounts). When you split direct deposits between two accounts, the money that goes to each has to add up to the total amount of the paycheck.
Make sure to keep the PIN you create in step 1 above handy.
You’ll need this PIN whenever you send direct deposit pay- checks to Intuit. If you forget your PIN, you can request a PIN reset only if you require an Admin password for your company file (page 724) and you’re logged in as the administrator user.
• Use the Payroll Setup interview to add amounts for the payrolls you ran without Intuits’ payroll services. Of course, you have to complete the interview setup steps described on the previous pages. In the Payroll Setup interview window, when you see checkmarks in front of Introduction, Company Setup, Employee Setup, and Taxes, you’re ready to enter the year-to-date amounts.
EMPLOYEES You can fill in either individual paychecks or summaries. In the Pay Period Start
and Pay Period End cells, simply choose the start and end date of the payroll period or summary period. For example, to summarize the first quarter, use January 1 for the Pay Period Start and March 31 as the Pay Period End. For deductions, such as taxes and 401(k) contributions, type positive numbers;
QuickBooks automatically changes them to negative numbers to deduct those values from the employee’s paycheck. To view a report that summarizes your historical payroll, click the View Reports button below the table. Then compare the values in that report with the ones from your previous payroll service. Repeat those steps for each paycheck or pay period for each employee. When you’re done, click Done Entering Paychecks at the window’s bottom right.
FIGURE D-16 The Enter Paychecks by Employee window is ginormous, but don’t let that scare you. If you have your previous payroll reports, you can use those reports’ values to fill in the table’s cells. Select the employee you want to record historical payroll for, and then fill in the values for each paycheck or summary period in the table.
PAYROLL
UP TO SPEED
Working with Payroll Schedules
If you pay employees on different schedules—for example, weekly for hourly employees and biweekly for salaried em- ployees—you can set up a payroll schedule for each frequency you use. When you run a scheduled payroll, QuickBooks au- tomatically selects the employees assigned to that schedule.
To set up a payroll schedule in the Payroll Center, click the Pay Employees tab, click the down arrow on the Payroll Schedules button, and then choose New. Name the schedule and set its frequency, the pay period end date, and the date that should appear on paychecks for that period. Then click OK to save the schedule. (See page D-25 to learn how to create a payroll schedule when you set up Employee Defaults.)
After you set up a payroll schedule, you can assign employees to it to specify when they should be paid. To do that, click the Employees tab on the window’s left. Double-click an em- ployee’s name to open the Edit Employee dialog box. Click the Payroll Info tab and then, in the Payroll Schedule drop-down list, choose a schedule. If most of your employees are paid on the same schedule, set that schedule in Employee Defaults (page D-25); after you do that, QuickBooks will automatically assign that schedule to new employees you create.
Running Payroll
Once you’ve set up payroll, generating payroll checks each pay period takes only a few minutes. This section explains the steps involved in running a payroll, from selecting which employees to pay to printing the checks.
NOTE When you use direct-deposit services, you have to run payroll and send it to Intuit before 5 p.m. Pacific Time two banking days before the actual pay date so the service can process the payroll and transfer money into your employees’ accounts. The transmission date may change due to bank holidays, so be sure to check payroll messages from the bank to see if you need to transmit payroll data earlier than usual. If you pay employees by the hour, this processing period creates a lag in employees’ pay. For example, if you pay employees for the hours they work between the 1st and the 15th of the month, direct deposits wouldn’t appear in their accounts until the 17th at the earliest.
Payroll schedules make it easy to pay all the employees that receive paychecks on the same schedule. For example, if you pay all your employees every two weeks,
PAYROLL To ensure that your tax tables are up to date, it’s a good idea to get payroll updates from Intuit before
every payroll run. To do that, choose Employees→Get Payroll Updates. In the Payroll Updates dialog box, select the “Download entire payroll update” option, and then click Update.
Here’s how to run a payroll:
1. Choose Employees→Payroll Center. (Or, on the Home Page, click the Pay Employees icon.)
Across the right side of the Center are three tabs corresponding to the three main payroll tasks: Pay Employees, Pay Liabilities, and File Forms (see Figure D-17).
FIGURE D-17 Payroll schedules make it easy to select the employees you want to pay, especially when you pay them on different schedules.
To set up a payroll schedule, below the Create Paychecks table, click the down arrow on the Payroll Schedules button, and then choose New. After you create a scheduled payroll, you run it by clicking the Start Scheduled Payroll button (circled).
2. If you’ve set up a payroll schedule, in the Pay Employees tab’s Create Pay- checks table, select the scheduled payroll you want, and then click the Start Scheduled Payroll button (Figure D-17).
If you haven’t set up a payroll schedule, you’ll see two buttons: Pay Employees and Start Scheduled Payroll. If you want to run payroll without setting up a payroll schedule, click Pay Employees. To set up a payroll schedule, click the Start Scheduled Payroll button. After you set up a payroll schedule, the buttons change to Start Scheduled Payroll and Start Unscheduled Payroll. Clicking Start Scheduled Payroll runs a scheduled payroll. Clicking Pay Employees or Start Unscheduled Payroll runs a payroll that isn’t scheduled.
PAYROLL The Pay Period Ends field represents the end date for the pay period—in other words, the date through which employees are paid. Each time you run a sched- uled payroll, QuickBooks changes that field to the next payroll date based on the payroll schedule’s frequency.
On the other hand, the Check Date field is the date that appears on the pay- checks you create; it also controls when some payroll expenses, such as wages, appear in reports.
4. Make sure that the Bank Account box is set to the account you use for payroll.
5. To pay an employee who’s listed in the employee table, if necessary, click the corresponding checkmark cell in the table’s first column to turn on its checkmark (see Figure D-18). If you don’t want to pay an employee, make sure that the corresponding checkmark cell is empty.
QuickBooks automatically lists and selects all the employees assigned to the payroll schedule you selected in step 2. In a scheduled payroll, you can’t add an employee who’s not assigned to that schedule. However, you can turn off employees’ checkmark cells if you don’t want to pay them.
FIGURE D-18 Employees who are set to inactive status in the Employees List don’t show up in this window’s table. Neither do employ- ees whose release dates (page D-31) are prior to the date in the Pay Period Ends box.
PAYROLL to fill in hours for salaried employees if you don’t track things like vacation and
sick time.)
If you link time tracking to payroll (page D-29) and you want to change the hours that QuickBooks filled in, simply click the cell you want to change and then type the correct number.
NOTE QuickBooks doesn’t let you enter hours in gray cells, which prevents you from mistakenly entering a salaried employee’s hours in a Regular Pay cell or an hourly employee’s hours in a Salary cell.
7. If you want to see what the payroll service calculated for each employee’s paycheck, click in the employee’s row in the table, and then click the Open Payroll Detail button to open the Preview Paycheck dialog box.
The Preview Paycheck dialog box (Figure D-19) starts with the selected em- ployee’s paycheck. You can change the values in white cells; gray cells like the ones for year-to-date values aren’t editable. If you need to add a one-time item like a mileage reimbursement, click a blank Item Name cell in the appropriate table, and then choose the item from the drop-down list. If any items are written in red, they’re late or past due.
FIGURE D-19 In this dialog box, the Earnings section shows the gross amount of the employee’s paycheck.
For salaried employees, QuickBooks prorates the salary to the length of the pay period.
In the Other Payroll Items and Company Summary sections, QuickBooks uses tax tables and your Payroll items to calculate deductions or additions.
Below the Class box is a list of available sick and vacation time. The Employee Summary section shows the entries you typically see on a
PAYROLL 9. Back in the Enter Payroll Information window, click Continue to move on to creating paychecks. (If you aren’t ready to complete your payroll, click Finish Later instead.)
The “Review and Create Paychecks” window shown in Figure D-20 opens. The employee table shows the values for each employee’s paycheck and the total for each category. If you see any numbers that don’t look right, click the Open Paycheck Detail button and repeat steps 6 and 7 to correct the values.
If you click Finish Later or click the X at the window’s upper right to close it, QuickBooks saves your payroll information. To return to your saved payroll, in the Payroll Center’s Pay Employees tab, click the Resume Scheduled Payroll button. When the Enter Payroll Information window opens, any rows that you changed in the previous session are shaded yellow.
FIGURE D-20 If you print paychecks, se- lect the “Print paychecks on check stock” option, as shown here.
If you’re filling in payrolls you ran before using Intuit’s payroll services or you hand-write payroll checks, select the
“Handwrite & Assign check numbers” option.
Then, in the First Check
# box, type the starting check number for that payroll run. For current payroll runs, select the option for how you produce paychecks. For employees who have their paychecks deposited directly (page D-32), click the employee’s Direct Dep. cell (in the rightmost column—circled) to turn on its checkmark.
