Payroll
Processing
Chapter 6
Objectives
• Use the Employee Center to view previous payroll
activity
• Update your Payroll Tax Tables
• Create Paychecks and override default calculations
• Edit, Void, and Delete Paychecks
• Pay Payroll Liabilities
• Adjust Payroll Liabilities
• Create Payroll Reports
• Prepare Payroll Tax Forms 941, 940, W-2s, and reports
to help you prepare your State payroll tax returns
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Payroll Processing Checklists
• Every Payday:
– Review the previous payroll activity in the Employee
Center
– Verify that your tax tables are current and update
them if necessary
– Create, review, and correct (if necessary) paychecks
– Print paychecks and pays stubs
• Every Tax Deposit Due Date:
– Create, review, and correct (if necessary) liability
payments
– Print liability payment checks
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Payroll Processing Checklists
(Cont.)
• Every Quarter:
– Verify the accuracy of all payroll transactions for the
previous quarter
– Create payroll reports for the previous quarter and
year-to-date
– Create payroll tax returns (Federal Form)
• Every January:
– Verify the accuracy of all payroll transactions for the
entire previous year
– Create payroll reports for the previous quarter and
year-to-date
– Create payroll tax returns (Federal Form 941, 940,
and State Quarterly and Yearly Returns)
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Using the Employee Center
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Payroll Tax Table
• Payroll Tax Tables include the tax rates
necessary to calculate an employee’s paycheck
• This calculation affects the amounts of taxes that
are withheld from an employee’s check (e.g.,
Federal and State income tax) as well as the
amounts of taxes the company must pay for the
employee (e.g., Federal and State
Unemployment tax)
• The Payroll Tax Table also includes data that
updates the forms that print directly from
QuickBooks (e.g., 940, 941, and W-2)
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Updating Payroll Tax Tables
• Select the Employees menu, then select Get
Updates, and then select Get Payroll Updates
• If you have a payroll subscription, you can
connect to the Internet and download the tax
tables by clicking Update
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Paying Employees
• Once the payroll setup is complete, and you
have downloaded the latest tax tables, you are
ready to process payroll by using the following:
–
–
–
–
–
Selecting the Employees to Pay
Calculating Paychecks for Hourly Employees
Calculating Paychecks for Salaried Employees
Printing Paychecks
Printing Pay stubs
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Selecting the Employees to Pay
• Select the Employees menu and then select
Pay Employees
• A warning may appear if you have not
processed any payroll or entered Year to date
information for employees yet this year
• If you have not installed the payroll update,
QuickBooks may ask you to update your payroll
subscription
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Paycheck for Hourly Employee
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Calculating Paychecks for
Hourly Employees
• If the employee was set up to Use Time Data to Create
Paychecks QuickBooks will fill in the earnings section of
the paycheck with data entered in the Weekly Timesheet
• To manually allocate an employee’s wages to each of
the jobs and classes that they worked on, enter a
separate line for each combination of Earnings Item,
Rate, Hours, Customer:Job, and Class
• In the Other Payroll Items section, QuickBooks adds the
Additions, Deductions, and Company Contributions as
defined in this employee’s record
• If you are doing manual payroll, you will need to
manually enter the Federal and State taxes in the
Employees Summary and Company Summary section
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Calculating Paychecks for
Salaried Employees
• With salaried employees, QuickBooks calculates the
total gross pay for the period (annual rate divided by the
number of pay periods) and then divides that amount
equally into each of the Earnings Items listed in the
Earnings Section
• To track sick and vacation hours used, enter the number
of hours for each on separate lines in the earnings
section
• QuickBooks pro-rates the total salary amount to each
line according to the number of hours on that line
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Printing Paychecks
• Select the File menu, select Print Forms, and
then select Paychecks
• All the unprinted paychecks show in the Select
Paychecks to Print window
• Select the checks to print and enter the check
number in the First Check Number field
• Select Voucher check style so that QuickBooks
can print the pay stub information on the
voucher portion of the checks
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Printing Paystubs
• If you don’t use voucher checks or if you
don’t print checks from QuickBooks, you
can still print paystubs for your employees
on blank paper
• Select the File menu, then select Print
Forms, and then select Paystubs
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Editing, Voiding and Deleting
Paychecks
• If you find errors on paychecks, you can
edit, void, or delete the paychecks
• However, be careful when you do any of
these actions because changing
transactions may adversely affect your
records
• When in doubt, ask your accountant
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Editing Paychecks
• If you haven’t printed the paycheck, you
can edit the paycheck directly in the
register
• From the Employees menu, select
Edit/Void Paychecks
• Set the from and to dates and then select
the paycheck from the list to edit
• To edit the items on the paycheck, click
Paycheck Detail
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Replacing Lost or Stolen Checks
• Find the check in the Checking account register:
– Double-click to edit the check
– Click the To be printed box in the Paycheck window to deselect it
– Click Save & Close and then Yes to save your change
• Reprint the check and then give it a new check number
• Enter a new check directly in the Checking account
register with the same date, payee, amount, and check
number as the lost check, coding it to the Miscellaneous
Expense account
• Void the new check you just created
• This converts the check into a voided check with the
same date, payee, amount and check number as the lost
or stolen check
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Voiding Paychecks
• If you need to void a paycheck, make sure it’s
the most recent paycheck for this employee
otherwise QuickBooks would not be able to
recreate the check exactly as the original
• Before you edit or void old paychecks, make a
backup of your file
• Select the Employees menu and then select
Edit/Void Paychecks:
– Enter dates
– On the list of paychecks, select the paycheck you
want to void
– Click Void
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Deleting Paychecks
• The only time you should delete a paycheck is
when you created it in error and you haven’t
printed the check, otherwise, you should void the
paycheck so you can keep a record of it
• From the Employees Navigator, select
Edit/Void Paychecks:
– Set the dates
– On the list of paychecks, click the paycheck you want
to delete and then click Edit
– At the top of the QuickBooks Company window,
select the Edit menu and then select Delete
422
Paycheck (or press CTRL+D) and press OK
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Paying Payroll Liabilities
• You must use the Pay Liabilities window to record liability
payments:
– From the Employees menu, select Process Payroll Liabilities,
and then select Pay Liabilities
• The Pay Liabilities window is similar to the Pay Bills
window, but it only shows Payroll Liabilities:
–
–
–
–
Each Payroll Item shows along with the balance due
Set the Check Date field
Select the Payroll Items to be paid
As with bill payments, QuickBooks adds all of the payments to
the same vendor (Payable To column) onto one check
– Click Create
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Editing a Liability Payment
• You can edit an existing liability payment, if you haven’t
yet submitted the payment to the tax agency
• If you have submitted the payment to the tax agency, you
should use the Adjust Liabilities window instead of
editing the payment
• Select the liability payment in the account register and
click Edit Transaction
• The liability payment is displayed as when first created
• Edit any of the fields on the Payroll Liability Check and
then click Save & Close
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Printing Payroll Liability Checks
• Select the File menu, select Print Forms,
and then select Checks
• If you pay your liabilities electronically, for
example with EFTPS (Electronic Federal
Tax Payment System), don’t print those
checks, instead, change the check number
in the register to “EFTPS,” or to the last 11
digits of the approval code given to you by
the EFTPS system
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Adjusting Payroll Liabilities
• If your payroll liabilities need adjusting, you can use the
Liability Adjustment window
• To avoid significant tax penalties, when you adjust
payroll liabilities you must fully understand all the
accounting and tax implications of the adjustment
• Select the Employees menu, then select Process
Payroll Liabilities, and then select Adjust Payroll
Liabilities
• Use positive numbers to increase the balance of
the Payroll Item and negative numbers to reduce
the balance of the Payroll Item
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Creating Payroll Reports
• There are several reports that you can use
to analyze your payroll
– Payroll Summary Report
– Sales Rep Commissions
– Payroll Liabilities Report
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Payroll Summary Report
• The Payroll Summary report shows
columns for each employee, along with
their hours and rates of pay
• Select the Reports menu, then select
Employees & Payroll, and then select
Payroll Summary
• If you want to see more employees on a
page, you can customize this report not to
show the Hours and Rate columns
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Sales Rep Commissions
• If you pay commissions to your employees, you
can create a Sales by Rep Summary or Sales by
Rep Detail report to help calculate the
commissions due
• Select the Reports menu, then select
Employees & Payroll, and then select Sales by
Rep Summary
• This report requires you to first tag each sale
with the employee who gets credit
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Payroll Liabilities Report
• The Payroll Liabilities report is used to track
the status of your payroll liabilities by Payroll
Item
• From the Reports menu, select Employees &
Payroll, and then select Payroll Liability
Balances
• If the Take The Hassle Out Of Payday window
appears, click the Do not display this message
in the future box and click No
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Preparing Payroll Taxes
• If you signed up for one of the QuickBooks Payroll
Services, upgrade your tax tables before processing
Forms 941, 940 or W-2s
• Be sure to use the Pay Liabilities window to create your
tax payments prior to creating your Quarterly and Annual
Payroll Forms:
– The 941 will use these payments for the Deposits made
calculation
– The 940 form computes your Federal Unemployment tax based
on the 940 contributions, your State Unemployment liabilities,
and payments made throughout the year (if applicable)
– All of the payroll tax forms calculate automatically using the
information on Paychecks and Payroll Liability Payments
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Processing Form 941 and
Schedule B
To prepare the Federal quarterly payroll tax return (Form
941), follow these steps:
1. From the Home Page, select Process Payroll Forms
2. Select Federal form radio button
3. Select Quarterly Form 941/Schedule B – Interview for your
Form 941/Schedule B in the Choose a form you want to use:
section
4. Select This Calendar Quarter in the Select Filing Period
section and set the Quarter Ending, click OK
5. QuickBooks opens the Payroll Tax Form window titled Interview
for your Form 941/Schedule B
6. Read the entire instructions and check the boxes that refer to
your own company
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Processing Form 940 or 940-EZ
• QuickBooks prepares Form 940 and Form 940EZ (a simplified version of Form 940) that are
used to report the annual FUTA tax
• Employers who meet certain conditions are able
to use 940-EZ
• The process for creating Form 940 or 940-EZ is
nearly the same as for Form 941
• The IRS requires that you pay Form 940-EZ
taxes separately than the Form 941 taxes
• You’ll also print Form 940-EZ on blank paper
suitable for filing with the IRS
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Processing W-2s
• From the Home Page, select Process Payroll Forms
• Select Annual Form W-2 – Wage Tax Statement in the
Choose a form you want to use: section
• QuickBooks displays the Process W-2s window, select
the Year
• On the Process W-2s window, select all of the
employees you want to review and then click Review
W-2s
• After you reviewing the W-2s, Click Print W-2s on the
Process W-2s window
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Creating Reports for Preparing
State or Local Payroll Taxes
QuickBooks will prepare state tax forms when you
subscribe to their Enhanced Payroll service:
– However, it does not prepare state tax forms for all
states
If you do not subscribe to QuickBooks Enhanced
Payroll service you can create reports such as the
Employee State Payroll Taxes Detail report that
will help you prepare your state payroll tax returns
manually
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State Payroll Detail Report
• The Employee State Taxes Detail report
allows you to see all of the State tax items
summarized by employee
• Select the Reports menu, then select
Employees & Payroll, and then select
Employee State Taxes Detail
• The Income Subject to Tax column is very
important for many state payroll tax
reports
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Summarizing Payroll Information
in Microsoft Excel
• The Summarize Payroll Data in Excel
function allows you to export all payroll
information to an Excel spreadsheet where
you can manipulate it to suit your
company’s unique needs
• Select the Employee Center, click the
Excel drop-down menu and select
Summarize Payroll Data in Excel
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Chapter Review
• Use the Employee Center to view previous payroll
activity
• Update your Payroll Tax Tables
• Create Paychecks and override default calculations
• Edit, Void, and Delete Paychecks
• Pay Payroll Liabilities
• Adjust Payroll Liabilities
• Create Payroll Reports
• Prepare Payroll Tax Forms 941, 940, W-2s, and reports
to help you prepare your State payroll tax returns
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