Things to Consider Before Setting Up Payroll in QuickBooks
After a business is setup in QuickBooks the very next step is to add the most valuable resource of any business, its â€śEmployeesâ€ť. QuickBooks payroll can be the most powerful tool to pay your employees and to manage withholding amounts. Sometimes setting up payroll in QuickBooks can be little confusing if the following points are not considered.
Step 1 :
Payroll is a separate service
For new users it is to be understood first that Payroll is not an integral part of QuickBooks software. It is a subscription based service provided by Intuit.
Step 2 :
Payroll for QuickBooks usually comes in multiple forms such as Standard, Enhanced and Assisted. What subscription needs to be purchased it completely depends on the amount of money you would like to spend on the payroll subscription and what all facilities you are looking for.
Step 3 :
Employer Identification Number (EIN)
Every employer needs an EIN number for federal tax reporting and state tax payments. You can get an EIN number for your business for free from IRS by applying online on their website. To change your EIN in QuickBooks go to Company> My Company and in the Federal Employer Identification Number field, enter the new EIN and click OK, when prompted to save the new EIN, click Yes. Once EIN is changed in QuickBooks do the following steps to complete the process
- Choose Employees > My Payroll Service
- Select Change Payroll Service Options
- Click Add to My Subscription and follow the onscreen instructions for adding a new EIN to your payroll subscription
Step 4 :
As we know Payroll from Inuit is a subscription based service, so service charges and fee are also involved and must be paid by one who wants to render it. After purchasing a payroll service from the web or phone, you need to activate the service in QuickBooks by entering a service key that you get upon purchasing. After purchasing your payroll service, you will receive an email with your service key. You need to enter the service key in your QuickBooks to activate the service.
A payroll activation window looks like:
Step 5 :
Downloading the latest tax table:
Latest tax tables are going to ensure that your Payroll tax calculations are correct. In order to update your tax tables within QuickBooks, you must have an active payroll subscription. Intuit recommends that you download your tax table every time you pay your employees, or at least every 45 days.
Step 6 :
Employee’s YTD amounts:
It is important to know that how much money you already spent on payroll in the current payroll year so that the Year To Date amounts can be entered as a summery. Once you have entered YTD amounts as of a certain date, post that date you can start creating paychecks in QuickBooks.