How to do payroll on QuickBooks Desktop?
Managing payroll can be one of the most challenging tasks for businesses, but QuickBooks Desktop simplifies the process by offering robust payroll features. This guide will walk you through the steps to set up and process payroll in QuickBooks Desktop, ensuring that your employees are paid accurately and on time. We’ll also cover common issues you may encounter and provide solutions.
Step 1: Set Up Payroll in QuickBooks Desktop
Before you can run payroll, you need to set up your payroll system in QuickBooks Desktop.
1. Choose Your Payroll Service
QuickBooks Desktop offers several payroll options:
Basic Payroll: Calculates payroll and prints checks.
Enhanced Payroll: Includes tax forms and filing.
Full-Service Payroll: Intuit handles payroll processing and tax filing.
Select the service that best meets the needs of your business.
2. Activate Payroll in QuickBooks
Step 1: Go to the “Employees” menu in QuickBooks Desktop and select “Payroll Setup.”
Step 2: Follow the on-screen prompts to activate your payroll service. You’ll need to enter your business information, such as your EIN (Employer Identification Number) and bank account details.
Step 3: Set up employee information, including pay rates, deductions, and tax information.
3. Set Up Payroll Items
Payroll items include things like hourly rates, salaries, taxes, and deductions.
Step 1: Press the "Lists" menu button and choose "Payroll Item List."
Step 2: Use the “Payroll Item” button to add, edit, or delete payroll items as needed.
Step 3: Ensure all necessary payroll items, such as federal and state taxes, are set up correctly.
4. Add Employees
Step 1: Go to the “Employees” menu and select “Employee Center.”
Step 2: Click the “New Employee” button to add a new employee. Fill in the required information, including contact details, tax withholdings, and payment methods.
Step 3: Save the employee information.
Step 4: Process Payroll in QuickBooks Desktop
You can begin processing payroll as soon as your payroll is configured.
1. Create Paychecks
Step 1: Go to the “Employees” menu and select “Pay Employees.”
Step 2: Choose the payroll schedule you want to run (e.g., weekly, bi-weekly).
Step 3: QuickBooks will list all employees scheduled for that payroll. Verify the hours worked, pay rates, and other payroll items.
Step 4: Click “Continue” and then “Create Paychecks” to generate the paychecks.
2. Review Payroll Details
Step 1: Review the summary of the payroll, including gross pay, deductions, and net pay.
Step 2: If everything looks correct, click “Create Paychecks.”
Step 3: Print or distribute the paychecks as needed.
3. Pay Payroll Taxes
QuickBooks Desktop also helps you manage payroll taxes.
Step 1: Choose "Payroll Center" from the "Employees" menu.
Step 2: Click on the “Pay Liabilities” tab to see the payroll taxes that are due.
Step 3: Select the taxes you want to pay and click “View/Pay” to process the payment.
4. File Payroll Tax Forms
Step 1: From the “Employees” menu, select “Payroll Center” and then click on the “File Forms” tab.
Step 2: Select the tax form you need to file (e.g., 941, 940, W-2).
Step 3: QuickBooks will guide you through completing and filing the form electronically or by mail.
Common Payroll Issues and Solutions
Issue 1: Payroll Liabilities Are Not Calculating Correctly
Solution: Check that all payroll items are set up correctly. Go to the “Payroll Item List” and ensure the correct rates and tax settings are applied.
Issue 2: Employee Hours Are Incorrect
Solution: Verify the hours entered for each employee before processing payroll. If using a time tracking system, ensure it is syncing correctly with QuickBooks Desktop.
Issue 3: Direct Deposit Issues
Solution: Ensure that the direct deposit feature is activated and that bank account information for both the business and employees is correct. Verify that payroll is submitted before the cutoff time to avoid delays.
FAQs
Can I use QuickBooks Desktop Payroll without an internet connection?
Yes, you can process payroll without an internet connection, but certain features, such as tax form filing and direct deposit, require internet access.
How do I handle payroll for an employee who has left the company?
You can mark the employee as inactive in the “Employee Center” and process their final paycheck separately. Be sure to handle any final deductions, such as 401(k) or health insurance.
What should I do if I made a mistake on a paycheck?
If the paycheck hasn’t been printed or sent, you can void it and create a new one. If the paycheck has already been issued, you may need to issue an adjustment on the next payroll run.
How often should I update my payroll tax table?
It’s recommended to update your payroll tax table every time you run payroll to ensure that you’re using the latest tax rates and rules.
Conclusion
Processing payroll in QuickBooks Desktop is a straightforward process when you have everything set up correctly. By following the steps outlined in this guide, you can ensure that your payroll is accurate and compliant with tax regulations. Regularly updating your payroll items and tax tables, and carefully reviewing each payroll run, will help avoid common issues and keep your business running smoothly.
