How to do Payroll on QuickBooks

Dealing with payroll inaccuracies can lead to serious financial penalties and ruin employee trust. The root of the problem often lies in outdated systems or manual errors, which can skew tax calculations and disrupt compliance.

This is where QuickBooks steps in, as it streamlines payroll processes and makes them more accurate and less time-consuming. In this article, you’ll find a step-by-step guide to setting up an account, adding employees, calculating taxes, reporting, and running your payroll on QuickBooks.

Table of Contents Table of Contents

1. Key Takeaways
2. How to do Payroll on QuickBooks
3. Setting Up Payroll in QuickBooks
4. Reporting and Record-Keeping
5. Handling Payroll Challenges and Troubleshooting
6. Staying Compliant with Regulations
7. Conclusion
8. FAQs

Show Full Guide

Table of Contents

1. Key Takeaways
2. How to do Payroll on QuickBooks
3. Setting Up Payroll in QuickBooks
Show Full Guide
4. Reporting and Record-Keeping
5. Handling Payroll Challenges and Troubleshooting
6. Staying Compliant with Regulations
7. Conclusion
8. FAQs

How to do Payroll on QuickBooks

To do payroll on QuickBooks, you need to first create a QuickBooks account and select a Payroll plan. Once done, you can add essential business, employee, and bank information, which will then be used by QuickBooks to run the payroll for you.

Read our full QuickBooks review.

Setting Up Payroll in QuickBooks

QuickBooks needs to have an accurate record of both the employer’s and the employees’ data. When you add an employee, for example, the employee needs to confirm their details and set up their corresponding QuickBooks account, so they can receive direct deposits from your bank to theirs, in case you want everything to be automated.

Creating a QuickBooks account

QuickBooks offers several subscription options, including a purely payroll plan. A payroll add-on is also available if you already have a QuickBooks Online or Desktop account that you use for accounting and bookkeeping tasks. If you have a small to medium business, you can choose the simplest plan first and then upgrade later as you require more sophisticated features.

To set up your QuickBooks Payroll account, follow these steps:

1. Choose your QuickBooks Payroll plan. You have three different QuickBooks payroll-only plans: Payroll Core, Payroll Premium, and Payroll Elite.

Alternatively, you may also choose a bundle of payroll and bookkeeping features if you wish to maximize the QuickBooks ecosystem.

If you’ve already been using QuickBooks, either the QuickBooks Online or the QuickBooks Desktop version, you may activate the payroll feature right inside the platform or call the QuickBooks customer service hotline to have it added to your account.

2. Create your Intuit account. Suppose you chose the lowest tier, i.e., the Payroll Core plan with no add-ons. You may choose either to buy now & save 50% for 3 months or try the software free for 30 days.

3. Add your card details. Once you create an Intuit account, add your card details, and proceed to checkout, you’ll immediately access QuickBooks Payroll Core.

The initial pop-up window invites you to take a tour around the online app. It’s readily accessible via your browser and you don’t have to download and install a separate software.

4. Follow the Get started guide under the Overview tab. For any first-time user, it always helps to make use of the setup flow made available in the app. For a more intuitive setup experience, click on the Get started button.

5. Indicate any previous employee payments during the year. For the purpose of this guide, let’s say you haven’t paid your employees in 2024 yet.

6. Indicate your Next payday. This will help the QuickBooks Payroll system take care of your corresponding payroll tax for the quarter your payday falls into.

7. Set up your work location.

QuickBooks already has a record of locations. In case you input addresses that don’t match its existing database, it will give you the suggested address with the correct format. It’s best to follow the suggested format.

8. Add your contact person for anything related to payroll setup. This can be your company’s finance officer or yourself, if you’re a sole proprietor.

Adding Employees to QuickBooks

If you had previously used other payroll apps such as Run, Gusto, and Paychex, QuickBooks allows you to transfer records easily. If you had been a Run or Paychex user, QuickBooks can pull your employees’ personal, payment, and tax info, such as their W-4, contributions, and deductions.

For Gusto users, QuickBooks can also pull both your employees’ personal and pay information, including pay rate, schedule, policies, and payment history.

If it’s your first time to use a payroll software other than the good old spreadsheets, you can simply use the Spreadsheets option and then either manually add your employees or select the import option in the succeeding setup page.

This is the sample spreadsheet format. You can follow this or add your employees manually.

Suppose you prefer to add your employees’ details manually. You can take the following steps after clicking the “Add team manually” option.

1. Fill in the name, email, and hire date of each employee.

2. Add the pay type for each employee. You can still edit the employee details when you click on their name. When you see a yellow warning mark, that indicates an incomplete section. In the case below, indicate the Pay types for each employee accordingly.

3. Add the values and other information manually, including the working hours/days. Be sure to check the boxes of the additional pay types under Common pay types.

Once you’re done, the yellow mark should be removed and the salary as well as the other information should show up in the bar.

Processing Payroll in QuickBooks

Here’s the Overview page of the Payroll Center. This is where you find the setup tasks to complete.

You will find the list of employees in the Employees section. This is where you run payrolls and create adjustments.

If you hire contractors, this is where you add them.

This is the Payroll Tax Center where you add your tax payments as well as your other tax information.

The Workers’ comp (compensation) section is a QuickBooks feature that allows you to provide insurance for your employees.

The Benefits section is where you provide your employees with important benefits such as Health Insurance and 401(k) retirement plan.

The HR advisor section is a feature you can use to help your team grow and stay secure. You can talk to a certified HR advisor as needed. Feel free to discover this section and see if the suggested plan fits your company needs.

The last tab is Compliance. This will help keep you in the loop with the latest information and news on anything related to payroll tax compliance.

To add bonuses, commissions, and other special payments, go to the Employees section. In case you need to add another pay type, click on Edit payroll items to start adjusting your existing payrolls.

Click on Pay types to find the type of payments you are looking for.

Click on any of the payments on the dropdown. In this sample, we’re setting up a Commission.

Click on the Assign employee(s) and a side bar with the list of employees will appear. Check the ones you want to add a commission pay to. Once you’re done, you should be able to see the pay types you assigned to each of your employees’ profile.

Once the special payments are set, you can go ahead and click on Run payroll to add the values.

After adding the numbers, make sure to setup the payment method. You can choose between Paper check or Direct deposit via online banking. The second option requires you to finish linking your bank account. If you prefer this method, you need to complete the linking process before running the payroll. You can go back to the Overview page and be sure to follow and complete the setup tasks.

After a thorough review of the changes you made, click Preview payroll.

The total payroll cost will show up. You can always click Back for corrections and hit Submit payroll anytime you’re ready. You may also save the changes you made for later.

This confirmation page will show up after you submit your adjusted payroll.

Calculating and Withholding Taxes

Configuring federal and state tax settings starts with adding your general business information. Enter your registered company name, address, and other necessary information.

The next step is to provide your federal tax information. Be sure that all the data you enter are accurate.

Your California tax information is the last step to complete your tax information setup. If you know your Unemployment Insurance (UI) rate, be sure to enter the percentage on the box.

The next step is the Payroll history. Click Enter on each employee and provide the correct information on their latest payroll.

Here’s a sample payroll history.

Look up the latest updated tax information to make sure that all the values you enter are accurate. Using a calculator, multiply the gross pay by the tax rate and enter the figures on the boxes accordingly.

The page will show a warning if the figures you entered don’t add up correctly. Make the necessary corrections so you can move on to the next step. Here’s a sample view of a filled up payroll history.

Also, edit the tax information by pay date. Click on Edit, enter the correct values, and hit Next when you’re ready.

Once you’re done with all the tax setup, you can proceed to the next step, which is to pay your team.

Issuing Paychecks and Direct Deposits

When generating and printing paychecks, you start at the Employees section.

1. Click on the employee name.

2. Go to the Paycheck list. Click the Print button to get a PDF view of the paycheck.

Here’s a sample PDF view of the paycheck.

If you prefer to send the payment directly via bank transfer or direct deposit, you can set this up when you run the payroll and a choose the option from the dropdown.

You can also make adjustments to the paychecks through the Employees section.

Choose the employee, go to Paycheck list, and adjust the paycheck you are looking for by clicking Edit from the dropdown at the right end of the row.

Even after clicking on Run payroll anywhere on the app, you can still edit the employee’s paycheck, then proceed to Preview payroll.

Here’s how the preview would look like. The boxes are editable so you can adjust the figures before you proceed.

Reporting and Record-Keeping

To generate payroll reports, go to Payroll tax and click on Payment history. This should lead you to the Payroll tax payments page.

You can choose either to export the report to Excel or save it as a PDF file.

To find and keep track of the complete info on your payroll expenses and liabilities, scroll down to the bottom of the Payroll tax page and click on All payment resources.

A side-bar should show up with all the payment resources you need.

To ensure accurate record-keeping for audits and compliance, hit the Compliance resources option. This will lead you to the page with all the information on tax compliance.

Handling Payroll Challenges and Troubleshooting

Even when using a payroll software such as QuickBooks, handling payroll tasks may not always be smooth-sailing. You might encounter common issues like incorrect payroll calculations, direct deposit problems, or tax filing errors. These hiccups can stem from outdated tax tables, incorrect employee information, or human error during data entry.

When troubleshooting payroll errors in QuickBooks, consider the following steps:

• Ensure QuickBooks is updated. Running the latest version is crucial for compliance with tax tables and regulations. QuickBooks Online users automatically have the latest version, while Desktop users need to manually update their software.
• Verify employee details and payroll settings. Check these especially if you find payroll calculation mistakes. Incorrectly entered hours or outdated tax rates are common issues. For direct deposit concerns, confirming bank account details and meeting submission deadlines is essential.
• Use the QuickBooks Help feature. For specific queries, the Help section and QB Assistant offer targeted guides. The Community of QuickBooks users can also be a valuable resource.
• Contact QuickBooks Support. If the guides don’t resolve your issue, use the “Contact Us” option in the Help feature for assistance from an Intuit representative, available via call or chat support.

Staying Compliant with Regulations

Payroll compliance involves adhering to tax laws and labor regulations, including calculating withholdings, submitting timely reports, and following minimum wage and overtime laws. Non-compliance can lead to penalties and damage a business’s reputation.

QuickBooks assists owners in maintaining compliance by automating tax calculations, filings, and direct deposits, minimizing human error and ensuring payrolls are up-to-date. It securely manages employee data, tracking hours and benefits to meet labor laws.

QuickBooks Payroll even simplifies year-end tax forms like W-2s. As tax laws evolve, QuickBooks updates its software and provides resources to keep users informed, making it easier for businesses to stay compliant and avoid penalties.

Conclusion

Setting up QuickBooks is quite straightforward as long as you have your business, bank, and employee information at the ready. Once you’ve added in the essential data, QuickBooks reminds you of payroll deadlines and warns you of any errors in paycheck-related calculations. Overall, using QuickBooks makes running payroll more convenient and accurate.

To learn more about payroll compliance and payroll software, you can visit these related resources:

• How To Calculate Payroll Taxes – A Guide for Business Owners
• In-Depth QuickBooks Online Review: Everything You Need to Know in 2024
• The Best Payroll Software for Small Business Needs: Top 10 Compared for 2024

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