To Manage Your Own Payroll In QuickBooks
®
Managing your own payroll used to be a daunting task. But not any longer! This book is the first comprehensive guide on using QuickBooks to perform all aspects of your company’s payroll…from setup to tax reporting. Whether you have five employees or five thousand, this book contains everything you need to know in order to handle your payroll functions quickly and efficiently. The writing is clear, concise and intuitive — making it ideal for new and veteran QuickBooks users alike.“This book is
an excellent
instruction and
reference guide
for setting up and
running payroll
in QuickBooks.
It is so easy to
understand that
even a novice
like me can feel
confident my
payroll is set up
properly right from
the start.”
— Carrie Williams,
Office Manager
Contents at a Glance ...
Contents at a Glance ...
SETUP PROCESSING REPORTING &PAYING
LIABILITIES EXTRAS Getting Started Setup Instructions Managing Tax Preference Items Timekeeping Tracking Classes & Customers Workers Compensation Solutions, Tips Tricks & Troubleshooting Sample Payroll Chart of Accounts Sample Payroll Item List Tax Payment & Filing Calendars Running Payroll Direct Deposits Payroll Taxes & Other Liabilities Payroll Reporting
About the authors ...
Sharon McCauley, Advanced Certified QuickBooks Pro Advisor, CPA (inactive) and founder of Barons’, Inc., a nationwide
provider of QuickBooks training and support. Sharon’s experience includes 25 years of accounting in both public practice and private industry, the last eight of which have been focused exclusively on QuickBooks training for business professionals.
Brandon Morris, Advanced Certified QuickBooks Pro Advisor and Certified Sleeter Group QuickBooks Consultant. Brandon
has 15 years experience in technical support, software installation and web design and is a co-founder of Barons’, Inc.
Melody Jones, Advanced Certified QuickBooks Pro Advisor. Melody has over twenty years of accounting and auditing
experience in public practice, state government and the private sector and is a recognized expert in QuickBooks and payroll management.
$69.95
i
Contents
Chapter 1 QuickBooks Payroll - Getting Started
1
QuickBooks payroll services ... 2
Basic payroll (Do-it-yourself) ... 2
Standard payroll (Do-it-yourself) ... 2
Enhanced payroll (Do-it-yourself) ... 3
Assisted payroll ... 3
Enhanced payroll for accountants ... 3
Cost vs. benefit ... 3
Signing up for QuickBooks payroll ... 4
Verifying and updating your payroll subscription ... 6
Updating QuickBooks tax tables and forms ... 8
Setting up and running manual payroll tax calculations ... 10
Chapter 2 QuickBooks Payroll Setup
15
Turning on QuickBooks payroll ... 16Payroll chart of accounts ... 18
Creating and editing payroll items (paycheck components) ... 22
Payroll items overview ... 22
Payroll item types ... 23
Creating a payroll wage item ... 24
Creating an addition item ... 28
Creating a deduction item ... 33
Creating a company contribution item ... 39
Editing a federal tax item ... 44
Creating a state tax item ... 47
Creating other tax items ... 51
Editing payroll items ... 52
Setting up or editing payroll liability due dates and payment methods ... 57
Creating a payroll schedule ... 64
Editing existing payroll schedules ... 68
Setting payroll preferences and updating employee default settings ... 71
Setting general payroll preferences ... 73
Setting employee defaults ... 75
Creating and editing employee payroll records ... 83
Running the payroll setup wizard ... 97
Entering payroll history ... 110
Chapter 3 Items With Special Tax Treatment
137
Health insurance (pre-tax) ... 138
Retirement contributions ... 149
Taxable fringe benefits ... 163
Chapter 4 Timekeeping
171
Timekeeping preferences and defaults ... 172Recording time directly into a paycheck ... 178
Using QuickBooks time tracking features ... 181
Maintaining time data in a third-party timekeeping application for import into QuickBooks ... 185
Printing time sheets ... 186
Chapter 5 Tracking Payroll Costs by Classes and/or Customer:Job
191
Setting class tracking and customer:job preferences ... 192Class tracking... 197
Customer:Job tracking ... 207
Chapter 6 Running Payroll
211
Running scheduled payroll ... 212Running unscheduled payroll ... 221
Printing payroll checks ... 230
Chapter 7 Direct Deposit
233
Setting up direct deposit ... 234Setting up employees for direct deposit ... 244
Creating direct deposit paychecks ... 246
Sending direct deposits to the bank ... 247
Viewing direct deposits in the register ... 250
Using your own bank's direct deposit service ... 252
Chapter 8 Payroll Taxes and Other Liabilities
257
Liability payment and reporting due dates ... 258Liability types ... 259
Federal tax liabilities ... 259
State and local tax liabilities ... 261
Other payroll liabilities ... 261
Paying payroll liabilities ... 262
Scheduled payments ... 262
Contents iii
Chapter 9 Payroll Reporting
269
Payroll management reports ... 270
Payroll summary report ... 270
Tying Payroll Summary numbers to financial reports ... 274
Paid time off list ... 279
Generating an employee contact list ... 282
Federal reporting ... 283
Federal 941 reporting ... 283
Federal 940 reporting ... 298
W-2 / W-3 ... 309
State reporting ... 329
Processing state tax withholding forms ... 329
Generating the information to fill out state unemployment tax forms ... 333
Summarize payroll data in Excel ... 336
State tax reporting using QuickBooks reports ... 340
Modifying reports ... 343
Display tab ... 343
Filters tab ... 344
Header/Footer tab ... 345
Fonts & Numbers tab ... 346
Memorizing modified reports ... 346
Chapter 10 Workers Compensation
347
Workers compensation settings ... 348Workers compensation setup wizard ... 350
Editing the workers compensation item for your payment method and mapping preferences ... 356
Setting up and editing workers compensation codes ... 366
Assigning workers compensation codes to paychecks ... 368
Workers compensation reporting ... 371
Chapter 11 Solutions, Tips, Tricks, & Troubleshooting
373
Garnishments and child support ... 374Employee advances ... 382
Issuing an employee advance within your regular payroll process ... 382
Issuing out-of-pocket employee advances ... 383
Issuing employee advances within a regular business check ... 387
Receiving repayment via recurring payroll deductions ... 390
Receiving payment with a one-time paycheck deductions ... 392
Receiving repayment via bank deposits... 393
Reconciling employee advances ... 395
Charitable contributions ... 398
Ongoing charitable contributions ... 398
One-time charitable contribution via regular payroll process ... 400
Incorrect payroll liability date for a given payroll run... 401
Correcting tax payment checks ... 403
Voiding paychecks ... 407
Voiding a check that will not be reissued ... 407
Replacing a paycheck in QuickBooks ... 409
Payroll liability adjustments ... 412
Payroll penalties and other changes to payroll liability check totals ... 416
Correcting payroll schedule date problems ... 418
Recording refunds from tax or other payroll associated vendors ... 420
Helpful hints for payroll liability clean up ... 426
Entering net pay and allowing QuickBooks to calculate gross pay ... 427
Appendices
429
Appendix A: Example Chart of Accounts ... 431Appendix B: Example Payroll Item List ... 433
Appendix C: 2010 and 2011 Payroll Calendars ... 434
QuickBooks class tracking gives you a way to separate transactions by profit center or other desired groupings. You can set up classes for location, business unit, department, product line, or any other
meaningful business segment, allowing you to see both revenue and costs by class. You may also track income and expense by customer:job.
Either or both of these choices can be useful under different circumstances. You might use class tracking to track the production of crews and simultaneously track customer: job income and expense to monitor your profitability on a job level. A sole proprietor that does all the work might only use customer:job tracking, but not class tracking. A mail order company with several product lines might use only class tracking but not customer:job tracking.
The assignment by customer:job function also allows you to optionally invoice your customers for payroll costs, either with or without a markup. We will touch on how to make the assignments, but the actual invoicing process is beyond the scope of this payroll manual.
After deciding on whether to use class and/or customer:job tracking you will need to decide what level of detail you wish to use for your company. Tracking payroll by classes and/or customer:job allows you to break down not only your wage expenses, but also every related payroll expense connected to a payroll check if you desire.
For example, if a payroll check has four different classes or customers attached to it, the social security taxes and workers compensation expense for that check will be prorated across the four classes or customers. This allows you to see the true costs associated with servicing a particular business segment or customer:job. If you do not need that level of detail breakdown, you can choose not to turn on this option.
In This Chapter
Setting class tracking and customer:job preferences 192
Class tracking 197
Customer:Job tracking 207
C
H A P T E R5
Setting class tracking and customer:job preferences
Customer:Job tracking is built into QuickBooks and requires no setup. Class tracking requires that you turn it on in QuickBooks preferences.To turn on class tracking:
Chapter — Trackng Payroll Costs by Classes and/or Customer: Job
2. Click Accounting Æ Company Preferences. 3. Select Use Class Tracking.
To set the reporting detail level:
Wage items will break down by class and customer:job if you have class tracking turned on and include the customer:job name on the earnings item line. Additionally, when paying employees you will have the option to track additional payroll costs such as taxes and worker’s compensation in total or in detail (on a pro-rata basis). Your choice will depend on the amount of detail you would like to have in your class and customer:job reporting.
As you set up your payroll items you will have an opportunity to select whether to track costs by job for addition and company contribution items.
Chapter — Trackng Payroll Costs by Classes and/or Customer: Job
2. Click Payroll & Employees to display that view.
3. Click the Company Preferences tab to display that view.
4. Choose one of the following options:
Option 1: To see detailed paycheck expense breakdown by class and/or customer:job with class tracking:
a) Check the Job Costing, Class and Item Tracking for paycheck expenses box.
b) Click Entire paycheck to assign a class to the entire paycheck (including paycheck expenses for taxes, etc.)
OR
Click Earnings item to assign a class to each earnings item.
If you select Entire paycheck, expenses such as taxes and workers compensation will be assigned in total to the class assigned to the employee or paycheck, but will be broken out to the individual customer:jobs that are selected on the paycheck.
If you choose to assign one class per earnings item, but have not selected Job costing, class and item
tracking (Accounting Æ Company Preferences) there will be no class assigned to the paycheck expenses.
Option 2: To see detailed paycheck expense breakdown by class and/or customer:job without class tracking:
a. Check the Job Costing, Class and Item Tracking for paycheck expenses box.
If you do not select this option, paycheck expenses such as taxes and workers compensation will simply be reported in total, not broken out by customer:job.
The Preferences dialog box will look like the image below:
In This Chapter
Garnishments and child support 374
Employee advances 382
Charitable contributions 398
Incorrect payroll liability date for a given payroll run 401
Correcting tax payment checks 403
Correcting a payroll tax accrual or withholding after failing to set it up on first paycheck 405
Voiding paychecks 407
Payroll liability adjustments 412
Payroll penalties and other changes to payroll liability check totals 416
Correcting payroll schedule date problems 418
Recording refunds from tax or other payroll associated vendors 420
Helpful hints for payroll liability clean up 426
Entering net pay and allowing QuickBooks to calculate gross pay 427
C
H A P T E R1 1
Garnishments and child support
When creating garnishment deductions, including child support, for your employees, you will simplify your reporting and bookkeeping if you create a new payroll item for each garnishment since each check will be paid to a different agency and/or have a different case number.
To create a garnishment payroll item:
1. From QuickBooks Home, click Lists Æ Payroll Item List.
Garnishments and child support
When creating garnishment deductions, including child support, for your employees, you will simplify your reporting and bookkeeping if you create a new payroll item for each garnishment since each check will be paid to a different agency and/or have a different case number.
To create a garnishment payroll item:
Chapter — Solutons, Tps, Trcks & Troubleshootng
2. In the Payroll Item List, click Payroll Item Æ New.
5. Select Deduction. 6. Click Next.
Chapter — Solutons, Tps, Trcks & Troubleshootng
9. Select a vendor from the Enter name of agency to which liability is paid.
The agency will always be a vendor.
If the agency is not on the list, you can create a new vendor on the fly by simply typing in the agency name and pressing TAB then Enter on your keyboard to Quick Add the vendor. You will need to go to the vendor center at a later time to complete the address information.
10. Enter the number in Enter the number that identifies you to agency (usually a case number) if applicable. 11. Select the Liability account for the garnishment payroll item.
For ease of tracking individual balances, you should have a separate general ledger account for each garnishment item. Each garnishment account in the Chart of Accounts should be a sub-account of Payroll Liabilities. If the general ledger account is not on the list, you can create a new general ledger account on the fly by simply typing in the account name and clicking TAB.
If the new account is a sub account, as is this one, choose the parent account, i.e. Payroll Liabilities, add a colon, and type in the new account name. Click TAB or Enter and QuickBooks will ask you if want to create the new account.
12. Click Next.
13. Garnishments typically have no Tax tracking type. In this case you should select None.
If you need to report a garnishment item in box 14 of the W-2, you could classify it as Other in Tax tracking type. Consult your CPA if you believe this to be the case.
15. Garnishments typically do not affect payroll taxes. Verify that no taxes are selected. 16. Click Next.
17. Because garnishments are not based on quantity, select Neither. 18. Click Next.
Chapter — Solutons, Tps, Trcks & Troubleshootng
21. Enter the default rate, that is the amount to withhold each pay period, and limit, if applicable, for the
garnishment.
When entering a garnishment levied for a debt collection, you would enter the total debt amount in the second text box and clear the annual limit.
To set up a payment schedule for this deduction: 1. From QuickBooks Home, click Payroll Center.
2. Click the Related Payment Activities drop-down arrow and choose Edit Payment Due Dates/Methods to
Chapter — Solutons, Tps, Trcks & Troubleshootng
3. Click a line item to select it.
4. Click Edit... to display the Edit Payment Schedule dialog box.
5. Select a Payee (Vendor).
6. Select the appropriate Payment Frequency.
7. Click Finish to save the changes and close the Edit Payment Schedule dialog box.
940 liability types • 257 reporting • 296 tax liability • 258 verifying • 299 941 interview • 286 reporting • 281 review • 289 tax liability • 257 verifying • 285 943 reporting • 281 tax liabilities • 258 944 reporting • 281 tax liabilities • 258 A Accrual period • 82, 94 activate • 24 adjustment • 263, 345, 403, 410 form 941 • 290 negative • 406 workers compensation • 354 administrator preferences • 71 advances • 380 out-of-pocket • 381 reconciling • 393
regular business check • 385
B
benefits • 39, 144, 163 review • 99
billing rate level field • 88 bonus • 219, 416, 425 C charitable contributions • 396 chart of accounts • 18, 429 child support • 372 class • 190, 191, 196, 354, 366 assigning • 198, 200, 203 columns • 211, 270, 341 Company Summary • 255 contact list • 280 custom fields • 89 customer:job • 190, 191, 354, 366 reporting detail • 193 tracking • 206 D data review • 133 default accounts • 18 employee • 71, 75 dental • 33 disability • 257 E E-File • 3 EFTPS • 258 EIN • 2, 3 E-pay • 59 F federal unemployment • 257, 258, 296 FUTA • 257, 258, 296 G garnishment • 257, 259, 372 garnishments • 110
general ledger account • 15, 138, 149, 163, 354, 424
creating • 19 gross pay • 425
Quckbooks Payroll Manual H health • 33, 138, 144, 163 history • 97, 110 setting up payroll • 111, 128 I inactive • 96 insurance • 22 dental • 33 health • 33, 138 life • 163 pre-tax • 144 state unemployment • 257 workers compensation • 345, 369 items • 91, 316, 380 addition • 23 company contribution • 23, 42 company contributions • 144 compensation • 32 deduction • 23 federal tax • 22, 23, 44, 257, 281 general ledger • 424 other tax • 23 other taxes • 51 payroll item list • 22 pre-tax • 138 retirement contribution • 149 setting up • 15 state tax • 23, 47 tax • 93, 115, 213 tax preferences • 97 wage • 23, 193 J job costing • 110, 171 L liabilities
incorrect payroll date • 399
liability • 57, 256, 257, 258, 259, 263, 401, 403, 404, 405, 410, 414 account • 22, 144 cleaning up • 424 federal tax • 44, 117 payroll history • 110 state reporting • 327 workers compensation • 345 M manual payroll • 10 mileage • 23, 31 N net pay • 110, 250, 425 non-tax payments • 117 O overtime • 184, 185 P
Paid Time Off • 277
Appendx A sick • 94 editing • 94 setting • 81 setting up • 94 Sick • 79
single user mode • 71
state unemployment • 256, 257, 259, 331, 334 stub • 228 printing • 218, 227 subscription • 2, 331, 338 assisted • 3 basic • 2 enhanced • 331
enhanced for accountants • 3 ordering • 4 standard • 2 verifying • 6 support • 3 Intuit • 8 T tax payments • 3, 110, 401 tax tables • 8
taxable fringe benefits • 163 termination • 96, 219, 416 time data • 185 time sheets • 171, 185 missing • 219 printing • 186 timekeeping • 171, 185 preferences • 172 U unscheduled liability payments • 263 payroll • 219 update • 8 employment info • 96 tax tables • 8 V vacation • 79, 94 preferences • 81 void • 219 paychecks • 405 transactions • 263 voucher • 290 W W-2 • 163, 258, 259, 307 W-3 • 258, 259, 307 W-4 • 92 wizard • 15, 97, 110 workers compensation • 348 workers comp • 190, 345, 348, 354, 364, 366, 369 workers compensation • 345, 346, 366 editing • 354, 364 reporting • 369 wizard • 348 setting • 81 setting up • 94 Sick • 79
single user mode • 71
state unemployment • 256, 257, 259, 331, 334 stub • 228 printing • 218, 227 subscription • 2, 331, 338 assisted • 3 basic • 2 enhanced • 331
enhanced for accountants • 3 ordering • 4 standard • 2 verifying • 6 support • 3 Intuit • 8 T tax payments • 3, 110, 401 tax tables • 8
taxable fringe benefits • 163 termination • 96, 219, 416 time data • 185 time sheets • 171, 185 missing • 219 printing • 186 timekeeping • 171, 185 preferences • 172 U unscheduled liability payments • 263 payroll • 219 update • 8 employment info • 96 tax tables • 8 V vacation • 79, 94 preferences • 81 void • 219 paychecks • 405 transactions • 263 voucher • 290 W W-2 • 163, 258, 259, 307 W-3 • 258, 259, 307 workers compensation • 348 workers comp • 190, 345, 348, 354, 364, 366, 369 workers compensation • 345, 346, 366 editing • 354, 364 reporting • 369 wizard • 348 sick • 94 editing • 94 setting • 81 setting up • 94 Sick • 79
single user mode • 71
state unemployment • 256, 257, 259, 331, 334 stub • 228 printing • 218, 227 subscription • 2, 331, 338 assisted • 3 basic • 2 enhanced • 331
enhanced for accountants • 3 ordering • 4 standard • 2 verifying • 6 support • 3 Intuit • 8 T tax payments • 3, 110, 401 tax tables • 8
Everything You Need To Know
To Manage Your Own Payroll In QuickBooks
®
Managing your own payroll used to be a daunting task. But not any longer! This book is the first comprehensive guide on using QuickBooks to perform all aspects of your company’s payroll…from setup to tax reporting. Whether you have five employees or five thousand, this book contains everything you need to know in order to handle your payroll functions quickly and efficiently. The writing is clear, concise and intuitive — making it ideal for new and veteran QuickBooks users alike.
“This book is
an excellent
instruction and
reference guide
for setting up and
running payroll
in QuickBooks.
It is so easy to
understand that
even a novice
like me can feel
confident my
payroll is set up
properly right from
the start.”
— Carrie Williams,
Office Manager
Contents at a Glance ...
Contents at a Glance ...
SETUP PROCESSING REPORTING &PAYING
LIABILITIES EXTRAS Getting Started Setup Instructions Managing Tax Preference Items Timekeeping Tracking Classes & Customers Workers Compensation Solutions, Tips Tricks & Troubleshooting Sample Payroll Chart of Accounts Sample Payroll Item List Tax Payment & Filing Calendars Running Payroll Direct Deposits Payroll Taxes & Other Liabilities Payroll Reporting
About the authors ...
Sharon McCauley, Advanced Certified QuickBooks Pro Advisor, CPA (inactive) and founder of Barons’, Inc., a nationwide
provider of QuickBooks training and support. Sharon’s experience includes 25 years of accounting in both public practice and private industry, the last eight of which have been focused exclusively on QuickBooks training for business professionals.
Brandon Morris, Advanced Certified QuickBooks Pro Advisor and Certified Sleeter Group QuickBooks Consultant. Brandon
has 15 years experience in technical support, software installation and web design and is a co-founder of Barons’, Inc.
Melody Jones, Advanced Certified QuickBooks Pro Advisor. Melody has over twenty years of accounting and auditing
