How to Set Up for a Payroll Service Option in QuickBooks 2016

By Stephen L. Nelson

If you want to use one of the QuickBooks Payroll service options because you want to save money, you aren’t scared of a little paperwork, or maybe you want the extra flexibility that comes with doing it yourself, you need to sign up for the appropriate flavor of service.

Costs of the QuickBooks Payroll services vary based on the number of employees you have and on how much work you want the nice folks at QuickBooks to do. Figure on spending at least $200 per year for the most basic package.

And note that if you want the full-meal-deal, you’re looking at a current cost of at least $1,000 per year. (In addition, if history is any guide, you’ll need to more regularly upgrade your QuickBooks software.) To set up for a payroll service option, get ready to hop on the Internet. Then follow these steps:

  1. Choose Employees → Payroll → Order Payroll Service.

    QuickBooks connects to the Internet and displays the first page of a multiple-page web form that enables you to sign up for and set up the QuickBooks Payroll service you want: the roughly $200/year Basic Payroll service (QuickBooks helps you with the checks, but you or your accountant do all the work of filing payroll tax returns) or the $500/year-ish Enhanced Payroll service (QuickBooks helps you prepare both the payroll forms and checks).

  2. Follow the onscreen instructions.

    Just carefully follow the instructions, and you’ll have no trouble.

    Setting up the QuickBooks Payroll service requires that you have accurate year-to-date payroll information for all your employees as well as state withholding rate information. You want to collect all this information before you begin. The process of setting up payroll — assuming that you have the information at hand and that you have only a handful of employees — shouldn’t take much more than half an hour.

  3. Schedule your payroll.

    After you sign up for (and indirectly set up) the QuickBooks Payroll service, you need to schedule your upcoming payroll activities. To do this, choose Employees → Add or Edit Payroll Schedules. When QuickBooks displays the Payroll Schedule List window, click the Payroll Schedule button and then click New. When prompted by QuickBooks, describe the payroll you’re scheduling.

    For example, if you’re setting up a weekly payroll, name the payroll something like Friday payroll. Furthermore, describe the frequency as weekly, biweekly, semimonthly, and so on.

  4. Describe your employees.

    You need to describe each of your employees and identify which payroll schedule they belong to. To do this, choose Employees → Employee Center. Click the New Employee button. Then, use the tabs of the window that QuickBooks displays to provide the employee’s name, address, Social Security number, and so on. Note that you use the Payroll and Compensation tab to specify the employee’s wage or salary and to assign the employee to a scheduled payroll.