QuickBooks Payroll: How to Use QuickBooks for Your Small Business Payroll
According to its website, QuickBooks works with more than 1.3 million businesses managing payroll and taxes. Could your business be next?
Developed by the creators of TurboTax and the personal finance service Mint, the software also has a number of predesigned payroll reports — such as a payroll summary — to aid with organization.
- Calculates paycheck information and payroll tax
- Guarantees business owners will avoid tax penalties
- Offers various modes of customer support
Whether a business owner wants to do payroll on their own or have a U.S.-based expert complete it for them, QuickBooks’ online and desktop versions can bring organization and simplicity to the payroll process.
Keep reading to learn about the platform’s payroll functions, the summary versus the detail method of entering payroll and other, valuable tips for using QuickBooks Payroll.
The basic payroll functions
QuickBooks has two different versions, one online and another for desktop. Each version comes with slightly different features.
A business can access more features if it uses full-service payroll, which places the responsibility of your company’s payroll into the hands of an outside, U.S.-based expert.
Here are some of the basic functions of each version.
Some of the basic capabilities of the online QuickBooks version include:
- 24-hour direct deposit
- Calculate paychecks for employees
- Calculate and file end-of-year forms
- Quick payroll runs
Some of the basic capabilities of the desktop QuickBooks version include:
- Pay both 1099 and W-2 employees by entering hours
- Pay via check or direct deposit; print checks/free direct deposit
- Free customer support via phone, chat, email
- File W-2s for at the end of the year (printable for business owners)
- Federal and state payroll tax forms included
How to enter payroll in QuickBooks
QuickBooks Payroll requires you to enter information for each employee. The service also offers a number of built-in template reports, such as a summary of payroll information, said Lynn Bennett, lecturer of accounting at Valdosta State University’s Langdale College of Business.
In order to enter employee information, you will need tax forms such as the W-2, 1099 and W-4. You will also need to subscribe to the service to understand the following step-by-step breakdown of how to enter your company’s payroll into QuickBooks Payroll.
After you decide on the online or desktop version — and which tier you want — this section will be clearer to understand.
Here is basic, step-by-step look at how to enter payroll into QuickBooks:
- Go to the QuickBooks Payroll homepage.
- On the left side of the page on the sidebar, click “Employees.” Next, click “Get started with payroll” at the bottom, right side of the page. You will be directed to the Payroll module.
- QuickBooks will ask a few questions about your “payroll story.” QuickBooks offers help tools along the way if you have questions: Refer to the blue links for questions, or the question mark (?) in the top, right-hand corner of the page.
- QuickBook’s first question is, “Have you paid any W-2 employees this year?” You can select “Yes” or “No.” There is also an option to learn the difference between a W-2 and a 1099 form via a blue link.
- The next question is, “Do you have W-4 forms filled out by your employees?” If not, the option exists to download a W-4 form for employees to fill out. QuickBooks encourages business owners to have employees complete W-4 forms before continuing to the next section, adding employees.
- Add employees by clicking on the left side of the page.
- Enter an employee’s details: first and last name, withholdings, pay amount, deductions and payment method.
- For withholdings: Click “Enter W-4” to add these details in an electronic format. Enter the address, Social Security number, marital status, number of allowances claimed and other W-4 specific information. Click “Done” when you finish.
- How often is this particular employee paid? Answer via a drop-down menu. Select the correct option and use the information to set up a pay schedule for the employee.
- How much does this employee get paid? Choose between salary and hourly. If there are alternate forms of payment, such as overtime, click the blue link to list.
- Does this employee have deductions (i.e. retirement, healthcare)? Enter them here. (Also note that QuickBooks generates a check with this information so you can see the taxes and net pay.)
- How will this person be paid? Note whether this person will be paid through paper check or direct deposit. When you’re finished, click “OK.”
- You’ve entered the first employee. Enter the rest of your employees and you’ll be ready to run payroll.
At this point, you’ll need specifics, such as how many hours employees worked and if they were regular or overtime hours, if applicable. Here’s what to do next:
- Type in the number of employee hours for each column, one for regular hours (“Regular Pay Hrs”) and another for overtime (“OT Hours”).
- Click “Add employee,” and continue this process until you’ve entered all employees into the system.
- Review payroll information by clicking the “Preview payroll” box at the bottom right.
- Make any necessary changes. When everything is accurate, submit the information.
- The next page will provide guidance on how to print payment information. Choose the preferred printing option: handwritten checks, print from QuickBooks or print only the paystubs (because the amount will be disbursed through direct deposit.)
- Enter the assigned check number in the “Check Number” column.
- Click “Finish payroll.”
When you’re finished, if you want to look at the different reports you can run using the information you entered, go back to the QuickBooks homepage. For a summary report, click “Reports” on the left-hand side, then access a summary of this information from here. Note: These steps are for the online version of QuickBooks Payroll.
The benefit of QuickBooks Payroll is that you can enter information and process it through this payroll service instead of using the accounting software to record payroll information and sending it to a third-party.
“To avoid having to make journal entries, you can subscribe to a payroll service through QuickBooks, which will allow you to do your payroll in the software and QuickBooks creates the journal entries for you,” Bennett said.
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Quick tips for QuickBooks Payroll
- Be knowledgeable about payroll legalities. “If you’re not familiar with payroll tax laws and reporting, you’re better off outsourcing,” Bennett said. If your information is incorrect, the federal and state government can penalize a business owner, Bennett said. Consider seeking training through a local Small Business Development Center if you’re not familiar with the laws.
- Prepare the necessary paperwork for employees in advance. Whether an employee should fill out a W-2 form or a 1099 form, preparing the paperwork will allow you to input necessary information from these forms. In addition, employees should also fill out W-4 forms so you can input that information into the system.
- Use support. QuickBooks provides different ways to ask for assistance. You can click on the question mark at the top of the service’s browser page, call the company, or chat online. QuickBooks Community also includes other business owners’ advice, which might relate to your issue.
- Choose the tier level that is best for your business. QuickBooks provides various options based on what a business owner needs. If you would like to do payroll yourself, there are self-service options for online and desktop. If you’d like another business task off your plate, however, U.S.-based experts will take care of Payroll while you delegate that time gained to another task.
One main difference of note between the online version and the desktop version of QuickBooks Payroll is that the online version charges an additional $2 per employee per payroll. If you have a lot of employees, it can add up, Bennett said.
The bottom line
QuickBooks Payroll can simplify the process of paying employees and store vital employee and payroll information in one place. And, if you use it, you’ll have one fewer thing to keep track of because QuickBooks does it for you.
Identify what your payroll needs are and whether you want to complete the task yourself or have someone complete it for you. Determine whether you will need the online or desktop version, and choose the QuickBooks Payroll tier level that best suits your needs.
There are still great products on the market that can do payroll for non-QuickBooks users, but for business owners who already use QuickBooks, QuickBooks Payroll might be the simplest way to complete your business’ payroll.