Everything you need to know to get started using QuickBooks Payroll

Pay Your Employees Using QuickBooks Payroll Lesson #2: Running Payroll Create Paychecks Once you've finished setting up payroll, you're ready to start using QuickBooks to pay your employees. Important: Always use the Pay Employees window to create paychecks. Never use the Write Checks window. It is not designed to track the tax and other payroll information you'll need later to pay your payroll liabilities and prepare your payroll tax forms. To create paychecks, follow these steps: From the Employees menu, select Pay Employees. In QuickBooks 2006, you can also pay your employees through the Payroll Center. To display the Payroll Center, go to the Employees menu and select Payroll Center. Then click Pay Employees. Choose the account from which you'd like to write your paychecks. In the Paycheck Options box: Choose To be printed if you print your paychecks from QuickBooks. Otherwise, choose To be handwritten or direct deposited. Then, if you handwrite your paychecks, enter the number for the first paycheck from your bank book. If you direct deposit your paychecks, you can enter a memo like "DD" instead, or you can leave this field blank. Mark the employees you want to pay. Modify the Check Date or Pay Period Ends date, if necessary. Select one of the following: Enter hours and preview check before creating: Select this option if you want to review each paycheck before creating it. QuickBooks Payroll recommends that you choose this option the first few times you use QuickBooks to create paychecks, so you can familiarize yourself with how QuickBooks processes payroll. Create check without preview using hours below and last quantities: Select this option if you don't want to review your paychecks before QuickBooks creates them. QuickBooks will automatically take the values from this employee's last paycheck (such as hours worked) and use them on the new paycheck. Enter hours using Rapid Time Entry (QuickBooks Enhanced Payroll only): Select this option to use the Rapid Time Entry screen to quickly enter—on a single screen—the payroll information that changes from week to week for all your employees. Click Create. One of the following happens: If you chose to enter hours and preview check, QuickBooks displays each paycheck individually. Modify the appropriate information (hours worked, for example), and click Create to create the paycheck and proceed to the next paycheck. If you chose to create checks, QuickBooks creates all your paychecks immediately. You won't notice any action, but if you go to the bank account you used for your paychecks, you will see your new paychecks there. If you chose to enter hours using Rapid Time Entry (QuickBooks Enhanced Payroll only), QuickBooks takes you to the Rapid Time Entry screen. Enter the appropriate information for each employee. At the bottom of the screen, select either Preview check before creating or Create check without preview. Then click either Preview or Create. Depending on your selection, QuickBooks will either display each paycheck for review or create the paychecks immediately. For more information, see the topic "Paying employees" in QuickBooks Help. Create paychecks using QuickBooks Payroll. Rapid Time Entry (QuickBooks Enhanced Payroll only) If you subscribe to QuickBooks Enhanced Payroll or QuickBooks Enhanced Payroll for Accountants, you have access to the Rapid Time Entry feature, which lets you input hours for all employees on a single screen. Use the Enter Hours window to enter hours for as many as five payroll items. You assign pay rates to the items for each employee in the Edit Employee window. If an item does not have a rate assigned, you can assign temporary rates when you preview the paycheck. Payroll Groups (QuickBooks Enhanced Payroll only) The Payroll Groups feature in QuickBooks Enhanced Payroll gives you access to a Sort by drop-down list, which lets you sort your employees on the Pay Employees window according to certain criteria, such as those with a common pay period or those with a common pay rate. This feature lets you group employees quickly, so you can easily mark just those employees you want to pay at a particular time. Note: QuickBooks Payroll will not store the groups you select. This process must be performed manually each time you want to select a group of employees.

Print Paychecks

Once you've created your paychecks in QuickBooks, you need to provide something in writing to your employees. In many cases, this will be the paycheck itself. However, if you deposit your paychecks directly (using the QuickBooks Direct Deposit service or another), you still need to provide your employee with either a paystub or an advice of deposit. Follow these instructions.

To print paychecks, follow these steps:

1. Load your paychecks into your printer.
2. From the File menu, select Print Forms and then select Paychecks.
3. From the Bank Account drop-down list, choose the bank account that contains the paychecks you want to print.
4. Verify that the number in the First Check Number field matches the first number on the paper paychecks in your printer.
5. Click Preferences to modify your printing options. (See the tip Setting Your Payroll Printing Preferences.)
6. Mark the paychecks you want to print.
7. Click OK.
8. In the Print Checks window, choose the Printer type that corresponds to your printer.
9. Choose the Check Style that corresponds to the type of paper paychecks that are in your printer.
10. (Voucher checks only) If you need more than one copy of each paycheck, enter the number of copies in the Number of copies field.
    Note: This field appears only if you have a page-oriented printer. If you have a continuous-feed printer, you can print additional copies by using multiple-part check stock.
11. Click Print.
12. Fill in the Did check(s) print OK? window. This window gives you an opportunity to confirm that your paychecks printed correctly. If there were any problems, for example, if the paper tore or the ink ran out, enter the number of the first paycheck that didn't print correctly and proceed to reprint the remaining paychecks.

 

 

To create paystubs or advices of deposit:

1. Load your paystubs or advices of deposit in your printer.
2. From the File menu, select Print Forms and then select Paystubs.
3. From the Bank Account drop-down list, choose the payroll checking account that contains the paychecks for which you want to create paystubs or advices of deposit.
4. Verify that the number in the First Check Number field matches the first number on your paystubs or advices of deposit in the printer.
   Note: You can narrow your search by modifying the Dated and thru fields to the relevant dates.
5. Click Preferences to modify your printing options. (See the tip Setting Your Payroll Printing Preferences.)
6. Mark the paychecks for which you want to create paystubs or advices of deposit.
7. Click OK.
8. (Voucher checks only) If you need more than one copy of each paystub or advice of deposit, enter the number of copies in the Number of copies field.
   Note: This field appears only if you have a page-oriented printer. If you have a continuous-feed printer, you can print additional copies by using multiple-part check stock.
9. Click Print.
10. Fill in the Did check(s) print OK? window. This window gives you an opportunity to confirm that your paystubs or advices of deposit printed correctly. If there were any problems, for example, if the paper tore or the ink ran out, enter the number of the first paystub or advice of deposit that didn't print correctly and proceed to reprint the remaining paystubs or advices of deposit.

For more information, see the topic "Printing paychecks" in QuickBooks Help.

Send Paychecks to the QuickBooks Direct Deposit Service

If you use the QuickBooks Payroll Direct Deposit service, you need to send your paychecks at least two banking days before your company's payday.

To send your paychecks to the QuickBooks Direct Deposit service:

1. Create the paychecks in QuickBooks.
   Important: Make sure that the Use Direct Deposit checkbox is selected on the Preview Paycheck window for each check you want to pay using direct deposit.
2. After you finish creating your paychecks, QuickBooks prompts you to go online and send them.
   Tip: If you don't send your direct deposit to QuickBooks immediately, you can access the Send Payroll Data window from the Employees menu.
3. Click Go Online to send your paychecks.
4. Click Close when you're finished.
5. Print paystubs and distribute them to your employees.
   Even though your employees' paychecks are automatically deposited to their accounts, you still need to print an advice of deposit or paystub to give to them for their records. See the instructions above.

Quick Tip: You can order advice of deposit forms directly from Intuit. These forms are personalized with your company name and address. To learn more about and order advice of deposit forms, visit the Intuit Marketplace.

Quick Tip: In QuickBooks 2006, you have the option of e-mailing your paystubs directly to your employees. From the File menu, select Print Forms, then select Paystubs. Select the paystubs you want to send, and click E-mail.

Tips

Activating QuickBooks Direct Deposit

If you have QuickBooks 2006 or 2005, and you've decided to use the QuickBooks Direct Deposit service to deposit your employees' paychecks directly into their bank accounts, activating and setting up the Direct Deposit service consists of four steps:

• Enter a Direct Deposit activation request.
• Submit the necessary signed forms.
• Complete the bank account verification process.
• Set up direct deposit information for your employees.

To enter a QuickBooks Direct Deposit activation request (QuickBooks 2006 or 2005):

1. In QuickBooks 2006: From the Employees menu, select Payroll Service Activities, then Activate Direct Deposit.
   In QuickBooks 2005: From the Employees menu, select Payroll Services, then Activate Direct Deposit.
2. Follow the onscreen instructions to enter your Direct Deposit activation request.
3. You will now need to complete three more steps:
   • Submit the appropriate documents to the Direct Deposit service.
   • Complete the bank account verification process.
   • Set up your employees' direct deposit information.
     Important: Take time to review the Direct Deposit Getting Started Guide. It lists the complete details for each of these steps. You won't be able to use the Direct Deposit service until you've completed each step. For a copy of the Getting Started Guide, see the topic "Direct Deposit Getting Started Guide" in QuickBooks Help.

Setting Your Payroll Printing Preferences

Payroll Printing Preferences give you the flexibility to have your paychecks print the way you want them. For example, you can choose the font size you want on your paychecks or whether to include non-taxable items (such as employee advances) or the employee's Social Security number on the paystub.

To set your preferences:

1. From the Employees menu, select Preferences.
2. In the left-hand menu, select Payroll & Employees.
3. Click Company Preferences.
4. Click Printing Preferences.
5. Choose your preferences.
   Tip: For more detail about each preference, click Help.
6. Click OK on the Payroll Printing Preferences window when you are finished.
7. Click OK on the Company Preferences tab to save your preferences.

Paying Independent Contractors

Although many employers think of independent contractors as employees, the government views them as separate entities. The IRS states that if you incorrectly classify an employee as an independent contractor, you can be held liable for employment taxes for that worker, plus a penalty. The IRS article "Independent Contractors vs. Employees" discusses the differences between employees and independent contractors, and the importance of classifying them correctly.

To facilitate your compliance with the government view of independent contractors, QuickBooks has you set up independent contractors as vendors, track payments to them as bills, and report your payments to them on Forms 1099-MISC, which are located in the QuickBooks Vendors menu.

For more information about handling independent contractors in QuickBooks, see the topic "1099 Overview" in QuickBooks Help (QuickBooks 2006 and 2005).

For more information, see the topics "Adding a 1099 vendor (independent contractor)," "Paying independent contractors," and "Tracking bills vs. writing a check" in QuickBooks Help (QuickBooks 2004).

In QuickBooks 2006, you can also use the 1099 and 1096 Wizard to verify that you have correctly set up your independent contractors. From the Vendors menu, select Print 1099s/1096.

Important: The Print 1099s/1096 option appears only when you have turned on the 1099 feature in QuickBooks. To turn on the feature, from the Edit menu, select Preferences. In the left menu, select Tax: 1099. Click the Company Preferences tab. Next to Do you 1099-MISC forms?, select Yes.

Running a Test Form W-2 After Your First Payroll

Running a test Form W-2 for each employee after you've run your first payroll is the best way to ensure that you have correctly set up your payroll in QuickBooks, particularly your payroll items. Choosing the wrong tax tracking type for a payroll item could incorrectly affect your taxes and is a chief cause of errors at tax time. If you don't catch errors early, you could face the headache of making corrections at tax time. Running a Form W-2 for each employee will tell you if you've set everything up correctly or, alternatively, will reveal where errors were made, so you can correct them quickly and easily.

You run a test W-2 form the same way you prepare an official W-2 form. Just use blank paper instead of actual forms or official perforated paper. From the Employees menu, select Process Payroll Forms and follow the instructions from there.

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