2 i Contents Chapter 1 QuickBooks Payroll - Getting Started 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 Chapter 2 QuickBooks Payroll Setup Turning on QuickBooks payroll Payroll chart of accounts Creating and editing payroll items (paycheck components) Payroll items overview Payroll item types Creating a payroll wage item Creating an addition item Creating a deduction item Creating a company contribution item Editing a federal tax item Creating a state tax item Creating other tax items Editing payroll items Setting up or editing payroll liability due dates and payment methods Creating a payroll schedule Editing existing payroll schedules Setting payroll preferences and updating employee default settings Setting general payroll preferences Setting employee defaults Creating and editing employee payroll records Running the payroll setup wizard Entering payroll history Skipping data review
3 ii ii Contents Chapter 3 Items With Special Tax Treatment Health insurance (pre-tax) Retirement contributions Taxable fringe benefits Chapter 4 Timekeeping Timekeeping preferences and defaults Recording time directly into a paycheck Using QuickBooks time tracking features Maintaining time data in a third-party timekeeping application for import into QuickBooks Printing time sheets Chapter 5 Tracking Payroll Costs by Classes and/or Customer:Job Setting class tracking and customer:job preferences Class tracking Customer:Job tracking Chapter 6 Running Payroll Running scheduled payroll Running unscheduled payroll Printing payroll checks Chapter 7 Direct Deposit Setting up direct deposit Setting up employees for direct deposit Creating direct deposit paychecks Sending direct deposits to the bank Viewing direct deposits in the register Using your own bank's direct deposit service Chapter 8 Payroll Taxes and Other Liabilities Liability payment and reporting due dates Liability types Federal tax liabilities State and local tax liabilities Other payroll liabilities Paying payroll liabilities Scheduled payments Unscheduled payroll liability payments
4 Contents iii iii Chapter 9 Payroll Reporting Payroll management reports Payroll summary report Tying Payroll Summary numbers to financial reports Paid time off list Generating an employee contact list Federal reporting Federal 941 reporting Federal 940 reporting W-2 / W State reporting Processing state tax withholding forms Generating the information to fill out state unemployment tax forms Summarize payroll data in Excel State tax reporting using QuickBooks reports Modifying reports Display tab Filters tab Header/Footer tab Fonts & Numbers tab Memorizing modified reports Chapter 10 Workers Compensation Workers compensation settings Workers compensation setup wizard Editing the workers compensation item for your payment method and mapping preferences Setting up and editing workers compensation codes Assigning workers compensation codes to paychecks Workers compensation reporting Chapter 11 Solutions, Tips, Tricks, & Troubleshooting Garnishments and child support Employee advances Issuing an employee advance within your regular payroll process Issuing out-of-pocket employee advances Issuing employee advances within a regular business check Receiving repayment via recurring payroll deductions Receiving payment with a one-time paycheck deductions Receiving repayment via bank deposits Reconciling employee advances Charitable contributions Ongoing charitable contributions One-time charitable contribution via regular payroll process Incorrect payroll liability date for a given payroll run Correcting tax payment checks Correcting a payroll tax accrual or withholding after failing to set it up on first paycheck
5 iv Voiding paychecks Voiding a check that will not be reissued Replacing a paycheck in QuickBooks Payroll liability adjustments Payroll penalties and other changes to payroll liability check totals Correcting payroll schedule date problems Recording refunds from tax or other payroll associated vendors Helpful hints for payroll liability clean up Entering net pay and allowing QuickBooks to calculate gross pay Appendices Appendix A: Example Chart of Accounts Appendix B: Example Payroll Item List Appendix C: 2010 and 2011 Payroll Calendars Keyword Index 437
6 191 C H A P T E R 5 Tracking Payroll Costs by Classes and/or Customer:Job 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
7 192 Quickbooks Payroll Manual 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: 1. From QuickBooks Home, click Edit Preferences to display the Preferences dialog box.
8 Chapter 5 Tracking Payroll Costs by Classes and/or Customer: Job Click Accounting Company Preferences. 3. Select Use Class Tracking. 4. Click OK to return to QuickBooks Home.
9 194 Quickbooks Payroll Manual 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. 1. From QuickBooks Home, click Edit Preferences to display the Preferences dialog box.
10 Chapter 5 Tracking Payroll Costs by Classes and/or Customer: Job Click Payroll & Employees to display that view. 3. Click the Company Preferences tab to display that view. You must have class tracking turned on to view the highlighted options shown below.
11 196 Quickbooks Payroll Manual 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 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: 5. Click OK to return to QuickBooks Home.
12 373 C H A P T E R 1 1 Solutions, Tips, Tricks, & Troubleshooting 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
13 374 Quickbooks Payroll Manual Garnishments and and child child support When When creating creating garnishment garnishment deductions, deductions, including including child child support, support, for your for your employees, employees, you will you simplify will simplify your your reporting reporting and bookkeeping and bookkeeping if you if create you create a new a new payroll payroll item item for each for each garnishment garnishment since since each each check check will be will paid be paid to a different to a different agency agency and/or and/or have have a different a different case case number. number. To create To create a garnishment a garnishment payroll payroll item: item: 1. From 1. From QuickBooks QuickBooks Home, Home, click click Lists Lists Payroll Payroll Item Item List. List.
14 Chapter 11 Solutions, Tips, Tricks & Troubleshooting In the Payroll Item List, click Payroll Item New. 3. Select Custom Setup. 4. Click Next.
15 376 Quickbooks Payroll Manual 5. Select Deduction. 6. Click Next. 7. Enter the garnishment in Enter name for deduction. 8. Click Next.
16 Chapter 11 Solutions, Tips, Tricks & Troubleshooting 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. 14. Click Next.
17 378 Quickbooks Payroll Manual 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. 19. Select net pay. 20. Click Next.
18 Chapter 11 Solutions, Tips, Tricks & Troubleshooting 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. 22. Click Finish. 23. Click OK.
19 380 Quickbooks Payroll Manual 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 display the Payroll Setup - Schedule Payments dialog box.
20 Chapter 11 Solutions, Tips, Tricks & Troubleshooting 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. 8. Repeat Steps 3-7 as needed to schedule additional payments.
21 Keywords 437 Keyword Index 940 liability types 257 reporting 296 tax liability 258 verifying interview 286 reporting 281 review 289 tax liability 257 verifying reporting 281 tax liabilities reporting 281 tax liabilities 258 A Accrual period 82, 94 activate 24 adjustment 263, 345, 403, 410 form 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
22 438 Quickbooks 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 M account 22, 144 cleaning up 424 federal tax 44, 117 payroll history 110 state reporting 327 workers compensation 345 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 payroll clearing account 252 Payroll Clearing Account 250 penalties 399, 414 pension 91 preferences 71, 73, 77, 80, 81, 172, 191 pre-tax 138, 144 R record edit employee 85 employee 83, 171, 280, 403 employee time 185 refund 354, 418 vendor records 420 reimbursed 173 reimbursement 23, 31 Release Date 96 retirement 149, 153, 158 S salary 211, 221 sales reps 74 schedule 256, B 286 creating payroll 64 payment 256, 260 payroll 210 reporting 256 tax 257
23 preferences 81 void 219 Appendix A paychecks 405 transactions voucher 290 sick 94 editing 94 setting 81 setting up 94 sick Sick single editing user mode state setting unemployment , 257, 259, 331, 334 stub setting 228 up 94 Sick printing , 227 single subscription user mode 2, 331, state assisted unemployment 3 256, 257, 259, 331, 334 stub basic printing enhanced 218, subscription enhanced for 2, 331, accountants assisted ordering 34 basic standard 2 2 enhanced verifying 6331 support enhanced 3 for accountants 3 ordering Intuit 8 4 standard 2 T verifying 6 support tax payments 3 3, 110, 401 tax Intuit tables 88 Ttaxable fringe benefits 163 termination 96, 219, 416 tax time payments data 185 3, 110, 401 tax time tables sheets 8 171, 185 taxable missing fringe 219 benefits 163 termination printing , 219, 416 time timekeeping data , 185 time preferences sheets 171, missing 219 printing 186 U timekeeping unscheduled 171, 185 preferences liability payments U payroll 219 update 8 unscheduled employment info 96 liability tax tables payments payroll 219 update V 8 vacation employment 79, 94 info 96 tax preferences tables 8 81 Vvoid 219 paychecks 405 vacation transactions 79, voucher preferences void 219 W paychecks 405 W-2 transactions 163, 258, 259, voucher W-3 258, , 307 W-4 92 W-2 wizard 163, 15, 258, 97, 259, W-3 workers 258, 259, compensation workers comp 190, 345, 348, 354, 364, 366, W wizard workers compensation 15, 97, , 346, 366 workers editing compensation 354, workers reporting comp , 345, 348, 354, 364, 366, 369 wizard 348 workers compensation 345, 346, 366 editing 354, 364 reporting 369 wizard 348
24 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. Contents at a Glance... SETUP Getting Started Setup Instructions Managing Tax Preference Items Timekeeping Tracking Classes & Customers PROCESSING Running Payroll Direct Deposits REPORTING & PAYING LIABILITIES Payroll Taxes & Other Liabilities Payroll Reporting EXTRAS Workers Compensation Solutions, Tips Tricks & Troubleshooting Sample Payroll Chart of Accounts Sample Payroll Item List Tax Payment & Filing Calendars 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 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