Handling Payroll with QuickBooks 2003 - dummies

Handling Payroll with QuickBooks 2003

If you want to use QuickBooks for payroll because you want to save money, aren’t scared of a little paperwork, or maybe want the extra flexibility that comes with doing it yourself, you need to sign up for one of the QuickBooks payroll services: Basic Payroll Service or Deluxe Payroll Service.

To sign up for either service, get ready to hop on the Internet. Follow these steps:

1. Choose the Employees –> Set Up Payroll command.

Or Select Employees in the Navigators list and then click the Set Up Payroll icon.

QuickBooks connects to the Internet and displays the first page of a multiple-page Web form that enables you to set up either the Basic Payroll Service or the Deluxe Payroll Service.

2. Follow the on-screen instructions.

How’s that for perfectly, painlessly simple?

Tackling taxes

You need a couple of things if you want to do payroll the right way: an employer identification number, a state employer identification number if you withhold state income taxes, an unemployment tax identification number, and some W-4 tax forms.

Getting an employer ID number

To get an employer ID number, you need to file an SS-4, or Request for Employer Identification Number form, with the Internal Revenue Service (IRS) so that you can get an employer identification number. You can get this form at the IRS or by calling the IRS and asking for one.

You can also apply for and receive an employer identification number over the telephone. You still need to fill out the SS-4 form, however, so that you can answer the questions that the IRS asks during the short telephone application process. (You also need to mail or fax the form to the IRS after you have your little telephone conversation.)

Having employees do their part

You also need to do something else before you can know how to handle all those taxes — you need to have each of your employees fill out a W-4 form to tell you what filing status they’ll use and how many personal exemptions they’ll claim. Guess where you get blank W-4s? From your friendly IRS agent or the IRS Web site.

Paying your employees

After you subscribe to the QuickBooks Payroll Service, set up your payroll accounts, and get an employer identification number, you’re ready to pay someone. This section is going to blow your mind, especially if you’ve been doing payroll manually. The process makes your whole decision to use QuickBooks to do your payroll worthwhile. Here’s how:

1. Start the payroll process by choosing Employees –> Pay Employees.

Or select Employees in the Navigators list and click the Pay Employees icon. The Select Employees to Pay window appears. If you don’t see a name that you’re looking for in this list, then you never added the employee to your Employee list.

2. Change any settings that you want to.

You shouldn’t need to use any of the Select Employees to Pay window’s boxes and buttons to change the way QuickBooks does payroll. But you can make several changes:

    • If you’re not going to print checks — maybe you handwrite them or just use QuickBooks to keep the books — leave the To Be Printed check box selected.

• Confirm the bank account from which the employees are paid in the Bank Account drop-down list box.

• Typically, you want to leave the Enter Hours and Preview Check before Creating option selected, just in case. With this option selected, QuickBooks displays a summary preview for each paycheck you create. If you select the other option, Create Check Without Preview Using Below and Last Quantities, QuickBooks doesn’t let you check its work first — QuickBooks just creates the checks.

• Set the Check Date and Pay Period Ends dates appropriately.

3. Select the employees whom you’re paying and click the Create button.

If you’re paying all the employees listed, just click the Mark All button on the right side of the Select Employees to Pay screen. If you need to mark the employees individually, just click next to each one in the left column — the column with the check mark in the heading. Then click the Create button to have QuickBooks create “draft” versions of each of the payroll checks you need for employees. QuickBooks next displays the Preview Paycheck window if you indicated in Step 2 that you want to preview payroll checks. The window also shows the payroll tax and withholding amounts QuickBooks has calculated for you.

4. Fill out the payroll information, as necessary.

In the Earnings box, fill in the number of hours the person worked and apply these hours to a customer or job, if necessary. In the Other Payroll Items box, enter commissions, additions (such as tips, bonuses, and expense reimbursements), deductions (such as union dues and 401(k) contributions), and company contributions (such as insurance benefits or 401(k) matching amounts). You also can change the payroll item or rate or add another payroll item, if you need to.

Watch this. QuickBooks calculates the company and employee taxes and the amount of the net check. If some information is inaccurate, simply click the amount and change it, either by deleting it or replacing it with the correct information.

You may also note that QuickBooks keeps totals both for the current check and for the year to date.

5. Click the Create button to record the paycheck transaction.

After you check all the employees’ paychecks, QuickBooks returns to the Select Employees to Pay dialog box.

6. Print the checks.

You can print checks from the Select Employees to Pay window by clicking the Print Paychecks button. QuickBooks prints paychecks just like it prints regular checks.