Congratulations! If you are reading this, then chances are that your business has grown to the point to where you need to hire employees. That’s fantastic!
With payroll comes a whole new set of issues — withholding, FICA, FUTA, 940’s, 941’s…and on and on. Not to worry — I hope I can help you make some sense of all of this!
Luckily, QuickBooks has a payroll setup that really makes it easy. I’m going to run through some of the basic steps for setting up payroll.
Some preliminary stuff first —
- Labor Posters — Make sure that you have posted all of the appropriate labor posters. For access to free labor posters, go to: www.business.gov/business-law/employment/posters
- Workers Comp — You need workers compensation insurance. Laws are different state by state, so make sure that you are up to date on what your state requires. Take a look at www.workerscompensation.com for more information.
- Employee Forms — You will need form W-4 and form I-9 for each employee. Some states have their own forms, so again, you’ll need to check with your state’s Department of Revenue to see what state-specific forms are needed for new employees.
- Employees or Independent Contractors? — Now you need to decide if the people that you are paying are employees or independent contractors. Take a look at our blog post on this, or look at Form SS-8 (pdf) for a helpful questionnaire.
Now you’re ready to setup payroll in QuickBooks! There are basically two steps…
- Select the QuickBooks payroll service
- Go through the payroll setup interview
Selecting the QuickBooks payroll Service
Small business owners, let me speak to you for a bit. Bookkeepers, feel free to forward this to your boss. I have a great deal of respect for entrepreneurs…my father was one, my husband and I own a small little business – it is in my blood. We are the backbone of the United States economy (cue patriotic music in the background)…but, how shall I say it — we sometimes are penny-wise and pound foolish. We can be cheap. This is an instance where we need to overcome that tendency and open up the wallet. I strongly recommend that you look at one of QuickBooks’ payroll options and spend the money for a subscription.
I’m not necessarily saying spring for a payroll option where they do everything for you, although you can do that. But it is so helpful to have all the tax tables* automatically downloaded into QuickBooks. Think of it as a little extra insurace that you are doing your taxes right.
*Most of the taxes will be automatically downloaded, but not all. More than likely you will receive a notice from your state for other taxes, such as unemployment. These vary by state, and vary by employer, so it is impossible for QuickBooks to automatically download these for you. Unless you have a do-it-all payroll service, you’ll need to enter these amounts manually.
I use the Enhanced Payroll with one of my clients. I love it and it is worth every penny. It makes payroll smooth and easy — no looking up tax tables, and QuickBooks will assist me with all of the forms. Please take the time to take a look at the payroll options to see which will work the best for you. I think you’ll find that it’s worth it.
Going through the Payroll Setup Interview
Now you should be ready to setup your payroll in QuickBooks. Go to Employee, then Payroll setup and QuickBooks will lead you through, step by step. Here is a list of things that will be handy to have to answer some of the questions in the interview:
- Company bank information — this is used to setup direct deposit, which is quite common now, and for e-paying taxes, which is required in some cases.
- Types of compensation for employees and their rates — hourly wages, salaries, commissions, etc.
- Benefits that you offer — health plans, 401(k), etc.
- any other additions or deductions — reimbursements, cash advances, etc.
- All W-4 forms
- balances of any sick or vacation days accrued
- employee’s bank info (if you use direct deposit)
- your state’s unemployment rate for your business. You should receive this each year from your state’s Department of Labor
- your ID number for your state
- Any other state specific tax information
- A copy of your most recent federal and state quarterly forms (if I can make a suggestion here — if you have already been running payroll, don’t start a QuickBooks payroll in mid-quarter…it gets a little hairy when it comes time to file the forms. It is better to enter in payroll starting at the beginning of the quarter, or even better, the beginning of the year)
- your deposit schedule for both federal and state
- payroll history for the current year
Once you have gathered your information, the QuickBooks Interview will lead you through the payroll setup process and help you get on your way with payroll.
If you need some help, the Intuit Community has most all the answers you need almost instantly. If you think you would like a little more guidance, please give our firm a a call at 770-478-7424. We can help you whether or not you are in our area.