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 has a payroll feature. There’s a monthly subscription with multiple levels of service you can choose from. Keep in mind that only with the full service subscription does QuickBooks takes care of paying taxes and filing tax forms for you. If you use the basic or enhanced subscription, you still need to take care of these steps.
Handling payroll starts with setting up employees. Go to the Employee center and click New Employee and click through the different tabs.
- Personal tab: fill in the employee’s name, Social Security Number, and date of birth.
- Payroll tab: choose the payroll frequency and schedule for this employee, and select the employee’s payroll item and hourly or annual rate.
- Taxes button (within the payroll tab): put W-4 information on the Federal tab and, on the State tab, enter information about which state to withhold taxes in. If applicable, enter any local taxes that your city or county requires you to withhold.
- Address and Contact tab: put in the home address, phone number, etc., as well as emergency contacts.
- Additional Info tab: you can put in custom fields if there is additional information you want to track.
When the pay date comes, go to the Employee center, select Pay Employees, and Scheduled Payroll. There will be a dropdown box for which payroll you want to run. Enter the check date and which bank you want to draw the payroll checks from. Check the list of active employees to make sure you’re paying the correct people; you can click on employees’ names to add or remove them from the list. Click Continue, then Print Paychecks and Print Paychecks again. Enter the first check number to print and click OK. Paychecks will print net of tax withholdings and other items if appropriate, e.g. the employee share of insurance premiums and other benefits.
While it’s always possible to process payroll manually, using an outside provider is typically advisable. If you handle everything yourself, make sure you stay on top of filing taxes with the federal, state, and local governments, as well as the filings that each requires. If you withhold the wrong amount, or miss a filing or payment, you open yourself up to fines and interest. An outside processor, including the full service version of QuickBooks’ payroll subscription, would take care of these steps for you, including calculating how much to withhold. Payroll providers also typically take on the risks of fines. You pay a fee for the service, but reduce your risk and workload in the process.