How to Set Up Employees in QuickBooks Enhanced Payroll Process
After you set up your company information for payroll in QuickBooks, you’re ready to set up employees for payroll. As part of the Enhanced Payroll setup process, QuickBooks displays a web page where you may add your employees.
You may also add employees by displaying the Employees Center. (Choose the Employees→Employee Center command, and click the New Employee button.) When you click the New Employee button, QuickBooks displays the Personal tab of the New Employee dialog box.
To describe an employee, you complete the fields supplied on the Personal tab. All this stuff is self-explanatory; you enter the person’s name in the Legal Name boxes. The employee’s first name goes in the First box, the middle initial goes in the M.I. box, and so forth.
You click the Address & Contact tab (not shown) to collect and store the employee’s mailing address and other contact information, such as his or her telephone number.
If you want to collect and store additional information for an employee (such as his bank account number for direct deposit), you click the Additional Info tab (also not shown). This tab provides a Define Field button that you can use to collect custom bits of information about an employee.
To use the Custom Field option, click the Define Field button and then use the Define Field dialog box to define the fields that you want to add.
Providing payroll and tax information
Use the Payroll Info tab to describe how an employee’s salary or wages are calculated. Use the Payroll Schedule drop-down list to set up a regular payroll schedule (such as weekly or semimonthly) and to assign the employee to the payroll schedule. Use the Pay Frequency drop-down list to identify the pay period.
Optionally, if you’ve turned on QuickBooks’s class tracking feature, use the Class drop-down list to classify payments to this employee. You enter the payroll item in the Earnings area. For example, if an employee earns an annual salary of $30,000, you enter the salary payroll item in the Item Name column. Then you enter the annual salary of $30,000 in the Hourly/Annual Rate column.
If you’ve set up QuickBooks to handle other additions or deductions on a payroll check (expense reimbursements or pension deductions), use the Additions, Deductions and Company Contributions area to describe these items and the item amounts.
To describe which taxes an employee pays, click the Taxes button. QuickBooks displays the Taxes dialog box. Use the Federal tab to identify the employee’s filing status, number of allowances claimed, and any extra withholding specified.
In addition, use the Subject To check boxes to indicate whether this employee is subject to Medicare, Social Security, or federal unemployment tax, or whether the employee is eligible for an earned income credit.
Not all employees are subject to Medicare and Social Security taxes. Consult your tax advisor for more information.
The State tab supplies boxes that you can use to describe state taxes, obviously. The State tax tab varies depending on the state you’re in.
The Other tab lets you describe and store any local tax information, such as a city income tax. Again, what you see on the Other tab depends on your locality.
If you click the Sick/Vacation button on the Payroll Info tab of the New Employee dialog box, you see the Sick and Vacation dialog box. This dialog box lets you specify how sick or vacation pay and personal leave time are accrued payroll period by payroll period. You can specify the number of sick or vacation leave hours in the Hours Available As Of text box at the time you’re setting up payroll.
You can use the Accrual Period drop-down list to specify how often sick or vacation pay should be accrued. If sick or vacation pay is accrued, use the Hours Accrued box to identify how many hours of sick or vacation time an employee earns each paycheck or hour, or at the beginning of the year.
If you have set a maximum number of sick hours or vacation hours that an employee can accumulate, enter this value in the Maximum Number of Hours box. If you want to reset the sick hours and vacation hours to zero at the beginning of each year, select the Reset Hours Each New Year? check box.
The Vacation area of the Sick and Vacation dialog box works the same way as the Sick area. For example, enter the number of vacation hours available in the Hours Available As Of box. Use the Accrual Period drop-down list to specify how often employees earn vacation time.
Use the Hours Accrued and Maximum Number of Hours check boxes to control how vacation-time accrual calculations work. Finally, select the Reset Hours Each New Year? check box to zero out vacation time at the beginning of each new year.
If you’ve chosen to use the Direct Deposit option, click the Direct Deposit button on the Payroll Info tab of the New Employee dialog box. QuickBooks prompts you to supply the information necessary to directly deposit checks for employees.
Providing other employment-related information
If you select the Employment Info tab of the New Employee dialog box, QuickBooks displays the tab you use to store the hire date, fire date, and similar bits of employment data.