Name__________________________________
Date_______________________________
QuickBooks Accountant 2012
Chapter 10—Payroll Setup
Remember—the QB files you will use throughout this textbook have already been restored from a portable
file to a working data file. Please ignore the textbook directions to restore a portable file throughout the book;
you will open the appropriate company file located in your “My QB Restored Files” folder.
Open PRSetup-12.QBW to use throughout Chapter 10, complete the questions, and do each Computer
Practice as you come to them in the chapter.
Term
W-4
Compensation
Gross Wages (AKA: Gross
Pay or Total Earnings)
Deductions
Net Pay
Payroll Liabilities
Payroll Expenses
Employee Benefits
401 K
Definition
IRS form that each of your employees must complete when you hire them. IRS
requires employees provide you with their name, address, social security
number, and withholding information on the W-4.
something given or received as an equivalent for your service
The total amount of money earned by an employee each pay period. This is an
expense to the company.
Money taken out of the employee’s gross wages each pay period. Examples:
Employee Federal Income Taxes, employee’s share of FICA Taxes, Insurances,
union dues, retirement plans, etc.
Employees take-home-pay after all deductions.
Each deduction taken from an employees pay check becomes a liability of the
company. Examples: Employee Federal Income Taxes, employee’s share of
FICA Taxes, Insurances, union dues, retirement plans, etc.
Expenses for the company that are directly related to payroll. Examples:
employer’s share of Payroll taxes, benefits paid by the company for the
employees, Gross Wages, etc.
Indirect and non-cash compensation paid to an employee. Some benefits are
mandated by law (such as social security, unemployment compensation, and
workers compensation), others vary from firm to firm or industry to industry
(such as health insurance, life insurance, medical plan, paid vacation, pension,
gratuity).
A contribution plan offered by a corporation to its employees, which allows
employees to set aside tax-deferred income for retirement purposes, and in
some cases employers will match their contribution dollar-for-dollar.
Five options for using QB to track your Payroll:
1. Manual Payroll—prepares your own Payroll manually in QB without the use of any tax tables (not
recommended for most users). Manual payroll is also used if you use an outside payroll service
other than Intuit. You will be required to re-enter Payroll details into QB.
2. Basic Payroll—prepare your own Payroll using QB Standard Payroll which uses up-to-date tax
tables that automatically calculate Employee deductions, and fills out the company’s federal tax
forms. Recommended for users that want a cost effective way to maintain control and flexibility of
their Payroll process.
Name__________________________________
Date_______________________________
3. Enhanced Payroll—uses all the features of QB Standard Payroll plus additional features like state
Payroll forms, workers’ compensation tracking, and one-step net-to-gross calculations.
Recommended for user who need a comprehensive in-house Payroll process.
4. Online Payroll—Intuit Online Payroll offers many of the same features as Enhanced, including state
Payroll forms, workers’ compensation tracking, and tax tables. The Payroll option is available
online and doesn’t require QB software and can be accessed from anywhere because its online.
5. Assisted Payroll—recommended for users who want all the flexibility of processing their own
Payroll found in Enhanced Payroll, but would like Intuit to complete all of their tax filings, deposits,
and W-2s.
To learn more about these five options, select the Employees Menu, select Payroll, and select Lear About
Payroll Options.
Checklist for Setting up Payroll
Review Table 10-1—Payroll Setup Checklist:
Payroll Accounts
1. The accounts associated with processing payroll are set-up in the
___________________________________.
2. List the main liability account associated with processing payroll
___________________________________.
3. List the payroll liability subaccounts associated with processing payroll.
__________________________,_______________________________,________________________________
4. List the main expense account associated with processing payroll
__________________________________________.
5. List the payroll expense subaccounts associated with processing payroll.
________________________________________,__________________________________________,
________________________________________,__________________________________________
6. If you are not sure which accounts to use for payroll, ask your ______________________________.
Payroll Items
7. Payroll Items include
________________________________________________________________________________
Name__________________________________
Date_______________________________
_________________________________________________________________________________________.
8. Payroll Items are connected to ______________________________________ so the accounting can happen
behind the scenes as paychecks are processed.
The Payroll Setup Interview
9.
The Payroll Setup Interview walks
_______________________________________________________________________.
10. To open the Payroll Setup Interview (AKA Wizard), click the _ ____________________________, and
select _____________________________________________.
Do ALL of the Computer Practice, Pages 302-313. You will be required to print something so do not skip
the Computer Practices.
 Employee benefits are indirect and non-cash compensation paid to an employee. Some benefits are
mandated by law (such as social security, unemployment compensation, and workers compensation), others
vary from firm to firm or industry to industry (such as health insurance, life insurance, medical plan, paid
vacation, pension, gratuity).
401 K--A contribution plan offered by a corporation to its employees, which allows employees to set aside
tax-deferred income for retirement purposes, and in some cases employers will match their contribution dollarfor-dollar.
If employees are paid for time off you can set up Items to track and pay vacation or sick pay.
Setting up Employees
Do ALL of the Computer Practice, Pages 313-317.
11. The Employee name fields used in QB are _______________________________,
____________________, and ______________________________. If two employees have exactly the
same name, you must _don’t use their exact names in the Employee list; add or omit a middle initial to
distinguish between different
employees______________________________________________________________________________
______.
12. What information is entered in the Employee hiring information window?
__________________________________________________________________________________________
Payroll Tax Item Setup
Do ALL of the Computer Practice, Pages 317-318.
Name__________________________________
Date_______________________________
Employers are required by law to deducted Federal Income, Social Security, and Medicare taxes from the
employee’s total earnings (gross pay) each pay period. The employee’s share of taxes are sent to the
government by the employer.
The company pays unemployment taxes for all of its employees.
The unemployment tax is paid on the first
$7,000 each employee earns each calendar year.
Scheduling Your Tax Payment
This is where you set up your vendor name for the payee on payroll taxes and schedule the payment of
payroll taxes.
Do the Computer Practice, Pages 318-321.
Setting up Year-to-Date Payroll Amounts
If you start to use QB for payroll midway through the year, you would need to enter employee earnings since
January 1 of the current year for end-of-the-year tax forms like the employee’s W-2.
Do the Computer Practice, Page 321.
Setting up Employee Defaults
13. Employee default enables you to ________________________________________________________
___________________________________________________________________________________
14. The Payroll Schedule function allows_______________________________________________________.
Standard pay periods used are weekly, bi-weekly (every 2 weeks), semi-monthly (twice per month), and
monthly. A company will chose the pay period that works best for the company.
Do the Computer Practice, Pages 322-327.
The Employee Contact List Report
15. How would you print an Employee Contact List? Click _ _________________________ Select
______________________ and then select _________________________________.
Do the Computer Practice, Pages 327. Type you name in a header on the report. Print the Employee Contact
list to turn in this the study guide.
Review Questions
1. An easy and convenient way to process Payroll in QuickBooks for Employees on different Payroll
schedules would be to:
A. Move all Employees onto a single schedule
B. Use the Payroll Schedule function in QuickBooks
Name__________________________________
2.
3.
4.
5.
Date_______________________________
C. Outsource Payroll
D. Make all Employees independent contractors
Which of the following Payroll periods is not an option in QuickBooks?
A. Quarterly
B. Biweekly
C. Daily
D. Semiannually
Which Payroll Item cannot be created in the Payroll Setup Interview:
A. Commissions
B. Bonus
C. Medical Insurance Deduction
D. You can create all Items above during the Payroll Setup Interview
Which is not an option when setting the accrual period for sick and vacation time?
A. Beginning of year
B. Every month
C. Every paycheck
D. Every hour on paycheck
The Payroll Setup Interview will not allow you to:
A. Edit the default name for Payroll Items
B. Associate deduction and withholding Items with Vendors
C. Set the pay rate for an Employee
D. Add two Employees with exactly the same name
Open a new company file--PRSetup-12Problem1, and complete the problem on pages 328331. Type your name on all printouts before printing to earn credit for your work. Attach all printouts
in problem order to this study guide. Printouts without names will not be accepted for credit.