Payroll is a central part of running your organization and will likely be your largest expense. Due to the complexity of tax law, state and federal withholding, and reporting, many companies outsource the function to a payroll processor, such as ADP or Paychex. This can make your work easier, and reduce the risk of withholding the wrong amount in taxes, or not properly filing quarterly or annual reports. If you choose to handle payroll in-house, QuickBooks Online has a payroll feature. There’s a monthly subscription with 2 levels of service you can choose from. You can see the differences between them on this page.
Handling payroll starts with setting up new employees. Go to the Workers tab on the left-side menu and select Employees. Click Add an Employee and enter the required information:
- The employee’s name.
- Click on Enter W-4 Form to put in tax withholding information.
- How often the employee is paid.
- How to pay the employee (salary, hourly, commission) and how much. You can add multiple pay types if the employee has multiple hourly rates, or other types of pay, like overtime or sick pay.
- Add deductions for things like retirement account contributions, health insurance premiums, or HSA plans.
- Select whether the employee will be paid by check or direct deposit. If the latter, put in his or her bank information.
When the pay date comes, go to the Workers tab and select Employees again. In the upper right corner is a button to Run Payroll. Check the boxes on the left side for the employees you want to pay, and put in their hours and other pay amounts if appropriate. Click Preview Payroll, then Submit Payroll. You’ll have a chance to print paychecks and print pay stubs. Finally, click Finish Payroll.
If you use the self-service version of QuickBooks Payroll, make sure you stay on top of submitting taxes to the IRS and state, filing the related forms, and handling W-2s at the end of the year. For submitting taxes, go to the Taxes menu on the left side of QuickBooks and select Payroll Tax. There will be a green button for Pay Taxes, then Create Payment, and E-Pay. To file reports, go to the Taxes menu and select Payroll Taxes. Under Forms, select Quarterly Forms or Annual forms, and select the form you want to file. Click View and review the form, then click Submit.
To file W-2s in January, go to your Dashboard on the left-side menu in QuickBooks and under Tasks, click Show More to view all the forms that are due.
- Choose File Now for W-2 Copies A & D.
- Select Annual Forms, and W-2 Copies A & D.
- On the Employer Copies: Form W-2 page, click View, review the W-2s, and print copy D (the employer copy). Keep this in your payroll files.
- Click Submit to have QuickBooks file them electronically.
Make sure you also give W-2s to your employees, specifically copies B and C.
- In the Taxes menu, select Payroll Tax.
- Under Forms, select Annual Forms.
- Choose All Employees, or a specific employee from the drop down menu.
- Select W-2, Copies B, C & 2.
- Choose the time period from the dropdown menu.
- Select View, then the print icon on the Reader toolbar, and click Print again.