QuickBooks Employee and Payroll Setup

Payroll Items

You can perform payroll in-house or select an outside payroll company to perform this function. If you choose to setup payroll in QuickBooks for your franchise perform the steps in the following categories of Payroll Items and Enter Employees.

You must create a separate payroll item for each payroll deduction from gross or net pay. In addition, you must have a payroll item for each pay type. Examples of payroll

deductions include loan repayments, employee-paid insurance, and employee contributions to a pension. or 401(k) plan. You can also set up deductions that are based on something other than gross wages (such as, number of hours). If you need to add new payroll items:

1. Display the Payroll Item list.

2. From the Payroll Item menu button, choose New.

3. Click Deduction, and click Next.

4. Follow the onscreen instructions.

If you need to go back to a previous screen, click Previous

One of the deductions, which are included in the standard Case setup, is labor burden. QuickBooks will be able to allocate burden to your jobs based upon a percentage. It is necessary to edit this payroll item and add your burden rate. You can also change the information for existing payroll items at any time. You may want to change a payroll item for any of the following reasons:

  • The annual limit for a deduction changes
  • Your health insurance rates increase
  • Your accountant wants you to assign an item to a different account

What the changes affect:

1. Display the Payroll Item list.

2. Select the item you want to change.

3. From the Payroll Item menu button, choose Edit.

4. Click Next in the Edit Payroll Item wizard to find the screen where you want to

make changes. You cannot change the type of the item.

5. Click Finish to record your changes.

When setting up or editing payroll items make sure that you indicate the proper general ledger account where the expense or liability should be posted.

Payroll Set Up

There are several key set up issues that must be completed to integrate Quickbooks payroll data with Red House. They include using payroll service items and adding labor burden to HRS set up. As you add a new employee be sure to do the following for each HRS (this does not apply to office staff or sales consultants.)

In the Payroll and Compensation Info set up of a new HRS employee be sure to do the following:

1)Check the box ‘Use time data to create paychecks’ (See image below under the earnings section.)

2)Add ‘Labor Burden’ in the Additions, Deductions and Company Contributions section (See image below in the second white below.)

Entering Payroll Data

It is important when you enter payroll hours that you make sure a ‘Customer:Job’ and ‘Service Item’ are selected for each Direct Labor Payroll Item. Indirect Labor, Sales Compensation, Office Salary, and other overhead payroll items should not have either a Customer:Job or Service Item selected.

Payroll Item Selection Customer:Job Service Item

Enter Employees

Before running payroll you need to enter information about your employees. To add a new employee:

1. Display the Employee list.

2.From the Employee menu button, choose New.

3. Complete the Address info tab.

4. On the Additional Info tab, enter any information you want to store for this employee. Fill in any custom fields, or click Define Fields to add custom fields that track employee information, such as a birthday or spouse name.

Note: You cannot write online paychecks using online payment. To direct deposit employee paychecks, subscribe to one of the QuickBooks Payroll Services and add the direct deposit feature.

5. If you are using QuickBooks payroll, complete the Payroll Info tab.

Enter the following information about the employee on the Payroll Info tab:

Earnings (Hourly employees only)

In the Earnings section, enter an hourly wage payroll item for each type of hourly wages the employee receives:

Enter the payroll item for regular wages first. Choose the name of the payroll item from the Name drop-down list and enter the employee's hourly rate in the Hour/Annual Rate column. You can enter up to eight payroll items for hourly wages.

Earnings (Salaried employees only)

In the Earnings section, enter a salary payroll item for the employee:

Pay period

If the pay period is incorrect, enter the proper one from the drop down list.

Use time data to create paychecks

Select this checkbox if: You use QuickBooks to track your employees' time. and you want QuickBooks to use the hours you enter to calculate wages for paychecks. We suggest using time data to create paychecks as an easy way to get labor costs posted to your jobs.

Additions, deductions, and company contributions

Regardless of how you have set up your employee defaults, you can customize benefits and adjustments to gross or net pay for each employee. These benefits and adjustments can include the following:

  • Deductions such as health insurance
  • Payments toa retirement plan
  • Company-paid benefits such as labor burden
  • Additions such as bonuses, reimbursed travel expenses, or advances against salary
  • Commissions

Note: Do not add anything that you rarely include on this employee's paycheck, such as a once-a-year bonus. The items you include in the employee record will automatically pre-fill on the employee's paycheck. As an alternative, you can add items to a paycheck as needed.

Taxes

Click this button to enter federal, state, or local tax information that applies to the employee. For example, you need to enter the employee's filing status and number of exemptions for federal withholding tax.

1. In the filing status, allowances, and extra withholding from the information on the employee's Form W-4.

2. Under "Subject to," be sure that the federal taxes that apply to this employee

(including taxes that you owe on the employee's behalf) are selected.

3. Click either the State or the other tab to continue entering tax information.

4. From the State drop-down list, choose the state where the employee works.

Depending on the state you selected, QuickBooks displays the Subject to SUI and Subject to SDI checkboxes.

5. If the employee is subject to state unemployment insurance, either company-paid or withheld, select the Subject to SUI checkbox. If the employee is subject to state disability insurance, select the Subject to SDI checkbox.

6. From the State drop-down list, choose the state where the employee lives and/or is subject to state withholding.

7. Enter the filing status and other information from the state withholding form the employee has given you.

If you have no more tax information to enter, click OK to return to the New or Edit Employee window.

Sick/Vacation

Regardless of how you have set up your employee defaults, you can further customize the sick and vacation time information for each employee.QuickBooks then uses this information when you write a paycheck for the employee.

1. Display the Employee List.

2. From the Employee menu button, choose New.

If the employee is already on the list; select the employee's name and choose Edit from the Employee menu button.

3. Click the Payroll Info tab to bring it to the top.

4. Click the Sick/Vacation button.

5. In the "Hours available as of ..." fields, check the number of sick and vacation hours that are available to this employee. If either number is incorrect, change it.

When should you adjust the hours?

6. Click OK to record your changes.

Direct Deposit

Before you can set up employees to direct deposit their paychecks, you need to apply for direct deposit. Once you are enrolled, QuickBooks automatically creates a new payroll item for direct deposit which appears in the Payroll Item list and the Employee Summary area of the Preview Paycheck window.

Note: Employees must give written approval for direct deposit of their paychecks. A sample form is included in the Welcome Packet.

1. Display the Employee List.

2. Select the employee you want to set up for direct deposit, and choose Edit from the Employee menu button.

3. Click the Payroll Info tab to bring it to the top.

4. Click the Direct Deposit button.

5. Select the checkbox to use direct deposit for this employee.

6. Select whether to deposit the paycheck into one or two accounts.

7. Enter the employee's financial institution information.

If you choose to deposit to two accounts, enter the amount to be deposited in each account. Click OK in the Direct Deposit and Edit Employee windows.

Record the information you entered by doing one of the following:

8. Click Next to add another employee to the list OR 9. Click OK to close the window.

After you set up your employee defaults, you still need to customize each employee's payroll record. If you have already been using QuickBooks and have set up your Employee list, all you need to do is enter the appropriate payroll information for each employee. If you haven't set up your Employee list yet, you'll need to add each employee to the list.

Company pension plan

If your company provides a retirement plan such as a 401(k), 493(b), Simplified Employee Pension (SEP), or SIMPLE plan, your employees are considered covered by the plan even if they are not active participants in it.

There are only a few cases when anemployee is not covered by-a-company pens-ion plan (as in the case of an employee or employee's spouse not covered for part of the year, social security or railroad retirement, reservists, volunteer firefighters). Check with your accountant or refer to IRS Publication 590, Individual Retirement Arrangements (IRAs) for more information.