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Before Payroll Part 6: Setting up Employees in QuickBooks

If you have made it this far with me with Payroll, you know we have gone through Employee Automation,  understanding the Cost of an Employee, Payroll Account Applications, Employee Payroll Documents, and Setting up Payroll Accounts in QuickBooks. This post, Setting up Employees in QuickBooks, is the 6th and final post in the “Before Payroll” series I have put together for you to help you think and work through everything you need before you hire employees and run payroll. Next week we will jump into actually processing payroll. Why so many posts? My goal here is to work with those who have never gone down this road to bring them up to the level of a competent, informed business owner so that they can make the right decisions for themselves, their business, and their employees. So let’s jump in!

QuickBooks Payroll Subscription

In order for you to be able to follow along here, you will need to have purchased a payroll subscription for your QuickBooks file. This can be purchased on Amazon or Intuit, but it is an annual subscription that you purchase to process payroll. It is worth the cost as this is an excellent product, but this is one of the additional costs that you will need to weigh in your decision to process payroll in-house or have your accountant process (my prices are here to help you out with that decision).

Setting up Employees in QuickBooks

First step is to open up the Employee Center by going to Employees –> Employee Center. When you get there, click on the “New Employee” button. The next screen that comes up should look like the following:

Personal Information

This screen is the Personal Information screen for your employee. Take the W-4 and Employee Information forms that your employee filled out and fill in all of the information on this screen. Tab over to the Address and Contact and Additional Info tabs and fill in that information as well.

Payroll and Compensation Info

Click the drop-down menu and go over to Payroll and Compensation as shown below:

Enter the payroll item for the employee (as we set up in the Setting up Payroll Accounts in QuickBooks post). Enter the rate for each item. Enter any additions, deductions, or company contributions as your situation requires. It is also good to set all of your employees up on the appropriate payroll schedule. If you haven’t set up a payroll schedule, click “Add New” from the drop down menu and configure your schedule. This will make sure everyone has the correct pay period and pay date and is helpful. The class is only if you want to assign an employee’s wages to classes you have set up. The three buttons on the bottom-right are Taxes, Sick/Vacation, and Direct Deposit. The following screen is the Taxes screen:

You will want to make sure you have everything on this page set up correctly and with the information provided on the employee’s W-4. The State tab can be filled out with the same information as the Federal tab if your state does not have its own W-4. The Other tab will populate with specific information from your state. QuickBooks may automatically enter information here, so review what is required in your state to know whether to accept or reject QuickBooks’ suggestion. The Other tab also provides fields for any local tax info you may need to include. If you don’t understand what you are doing here, get ahold of your accountant or send me an email and I will give you a hand… you want to make sure this is set up right so that you have the right withholdings. All information for the tax returns is built on this setup here.

The next button is Sick/Vacation as shown above, and is where you enter any sick time or vacation benefits that you provide our employees. Read through this section carefully and you should be fine.

Finally, the Direct Deposit Button will have information for Direct Deposit, so if you need to get this set up for your employee, go ahead and enter that info here.

Wrap it up!

So when you have entered this information, you can either continue to enter more detailed info in the “Employment Info” option for the drop down menu, but this is not necessary. Save and close and you are done! You should see the employee in the Employee Center. Go ahead and repeat these steps for any additional employees.

That is all for today… short and sweet! So now you have all of the information you need before you run payroll in QuickBooks. Let me know if you have any questions or issues with this and I would be happy to help you out.

Keep Reaching!

Mark

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