QuickBooks Guide: Setting up Payroll

Qbooks payroll setup

As an employer, you have specific payroll responsibilities that are required by government agencies. These agencies can be federal, state, or local. Some of these responsibilities include, but are not limited to, withholding amounts from your employees’ compensation to cover income tax, Social Security, Medicare, and other payments.


Choosing a Payroll Service 

To use Quickbooks to manage your payroll, you first need to subscribe to a Quickbooks payroll service. Quickbooks’ flexible options ensure that you get the payroll service that is right for you. Quickbooks also includes payroll features that don’t require a payroll service subscription. Refer to the in-product Help for more information about using payroll without a payroll service.

To learn about and sign up for a Payroll Service:

  1. Go to the Employees menu and click Payroll.
  2. Click Learn About Payroll Options.

Or, if you are not sure which payroll service is right for you, contact one of Quickbooks experts at (866) 820-6382 to learn more.

Important Note: If you choose to sign up for a payroll service, you will be prompted to complete the activation process for your service. After you complete your activation, you can set up payroll for your business as described in the next section.


Setting Up Payroll

Quickbooks Payroll includes an easy-to-use Payroll Setup interview that guides you through setting up payroll for your business. Payroll Setup helps you set up your employees, set up compensation and benefit information, and enter any year-to-date payroll data. The Payroll Setup interview also guides you through setting up scheduled payments for your payroll tax and non-tax liabilities (such as health insurance and 401(k)). Scheduled payments help you manage your payroll more efficiently.

Before you begin setting up payroll, Quickbooks recommends you gather all of the information in the Payroll Setup Checklist on page 49. You can find this information in your own records, from your accountant or Quickbooks Professional Advisor, or from federal and/or state agencies.


To set up payroll for your business:

  • Go to the Employees menu and choose Payroll Setup.
  • Follow the onscreen instructions.

Tip: If you need to leave the Payroll Setup interview at any time before completing all of your payroll setup tasks, click the Finish Later button. When you reopen the Payroll Setup interview, you can continue where you left off. To ensure accurate payroll calculations, complete your setup before using Payroll.

Payroll Setup has been grouped into the following categories:

  • Company Setup – Enter information about the types of compensation and benefits you provide.
  • Employee Setup – Enter employee personal information, pay information, and tax withholding information.
  • Taxes – Quickbooks Payroll automatically sets up your state and federal taxes. However, you must still enter employer-specific tax rates as well as any local taxes that may apply.
  • Year-to-date Payroll – If you have issued paychecks to W-2 employees during this calendar year prior to using Quickbooks Payroll, you must provide year-to-date payroll history to accurately generate tax payments and filings.

Note: After your initial payroll setup, you might need to add new employees or edit employees payroll information. You do not need to use the Payroll Setup wizard for these quick tasks. Instead, follow the instructions for adding and editing employee information.

Item Examples
Company Information ·         Pay period frequency or frequencies

·         Date you started or will start using payroll in Quickbooks

Compensation, Benefits, & Miscellaneous Additions & Deductions ·         Compensation you pay employees and officers

·         Insurance benefits offered, such as health, dental, vision

·         Retirement benefits offered, such as 401(k)

·         Additional deductions from net pay that you withhold, such as union dues, repayments of employee advances or loans

·         Additions you add to a paycheck, such as bonuses, travel reimbursements, employee advances, or loans & tips

Tax Information ·         Federal forms you’ll need to file (such as 941, 943, or 944) and your federal tax ID number (FEIN)

·         Payroll bank accounts and the deposit frequency for these taxes

·         State or states for which you file payroll taxes

·         Your state employer tax ID number

·         Payees and account numbers for each state and locality

·         Tax rates for any local or other taxes

Employees ·         Employee names, addresses, and social security numbers from your employees’ social security cards or W-4s

·         Employee withholdings or allowances, which can also be found on the W-4 form

·         Current employee wages/salaries, additions, deductions, and company contributions

·         Sick & vacation time policies and hours accrued

Liability Payment Information ·         Quarterly and pay period summaries of payroll liability payments from the beginning of this year or start date

·         Copies of payroll liability checks from the first day of the current quarter until present day

·         Payment and filing methods

·         Deposit frequencies

Year-to-Date History ·         Quarterly and pay period summaries of employee payroll amounts from the beginning of this calendar year to the beginning of the current quarter

·         Paycheck information from the beginning of the current quarter to present day

Note:   You need to enter year-to-date amounts only if you start using Quickbooks Payroll after January 1 of the calendar year and if you have already run payroll at least once since January 1.

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