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Archive for the 'Payroll' Category

How to Set Up Bank Accounts for Payroll in QuickBooks QuickTip

Tuesday, September 4th, 2012

Selecting Payroll Checks and Payroll Liabilities Accounts in QuickBooks

If you do payroll in-house, you must tell QuickBooks which bank account to use for payroll checks and which bank account to use for remitting payroll liabilities. To set the QuickBooks default accounts to use for these payroll tasks:

  1. Choose Edit | Preferences from the QuickBooks menu bar.
  2. Click the Checking icon on the left pane to open the QuickBooks Checking preferences, and click the Company Preferences tab.
  3. In the Select Default Accounts To Use section, click the Open The Create Paychecks checkbox.
  4. Choose which bank account to set for payroll checks by using the drop-down list.
  5. Next, click the Open The Pay Payroll Liabilities checkbox, and choose which bank account to set for paying payroll liabilities by using the drop-down list.
  6. Click OK to save these settings.

How to Calculate Company Contributions Based on Employee Hours in QuickBooks

Wednesday, April 4th, 2012

Using QuickBooks for Company Contributions to Employees 

Some companies (especially those with union employees) have to make company contributions based on hours worked. For example, the union contract may require you to contribute a certain amount to a health and welfare fund for each hour worked.

Create a QuickBooks payroll item of the type "Company Contribution" (these are not deduction type items). Specify the liability and expense accounts to track the contributions (we prefer to create separate liability/expense subaccounts for each payroll item.) Configure Tax Tracking as None, and make sure no checkmarks appear on the list of taxes affected. Step through the QuickBooks payroll item wizard to list the hours upon which the contribution is based. Assign the payroll item to the appropriate employees to have the contribution appear automatically in paychecks. The amount owed appears in the QuickBooks Pay Liabilities report.

 

Re-issuing a Lost Paycheck in QuickBooks

Wednesday, February 29th, 2012

How to Re-issue a Lost QuickBooks Paycheck

A bookkeeper wrote to tell us that an employee accidentally destroyed a paycheck. To make it more complicated, the paycheck was the last paycheck for the quarter, and the liabilities for the month and quarter had already been paid. The bookkeeper voided the original paycheck in QuickBooks, and created a new one for the original date. Now, the liabilities are showing up again, awaiting payment.

You can't manage the replacement of paychecks in QuickBooks the same way you manage the replacement of lost or destroyed vendor checks. It's more complicated than that, but if you follow these step- by-step instructions, it's easy to accomplish this task.

  1. Don't void the original QuickBooks paycheck.
  2. Create the employee as an Other Name. You have to use a variation of the name in the Name field, because QuickBooks won't allow duplicate names in your company file.
  3. Use the QuickBooks Write Checks function to write a check for the NET amount to the Other Name entry. Post the check to any expense account (e.g. Misc expenses).
  4. Print the check, write down the check number, and give it to the employee.
  5. Open the bank register and find the original check (the one that was lost). Write down the check number. Edit that original check so it has the same check number as the one you just issued. When QuickBooks asks if it's OK to have duplicate check numbers, say Yes.
  6. Edit the check you just wrote to the Other Name. Change its number to the old check number (the check that was lost or destroyed).
  7. Now that the new check has the old number, void it.

Your records account for the used check number in the voided check, the correct check number for the check that the employee will deposit, your liabilities haven't changed, the W-2 will be correct, the Other Name listing and the expense account you used does not show a balance for this transaction in QuickBooks.

 

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QuickBooks Payroll Liabilities Payment Got Lost

Monday, January 30th, 2012

How to Handle a Lost Payment for QuickBooks Payroll Liabilities

A reader wrote, "I made a 941 payment through EFTPS (using an electronic payment). The transaction didn't clear and then we received a notice that the payment was never received. I went to EFTPS and made the payment again. How do I void the original payment, which was made more than a month ago, and enter the new payment? Everything I try messes up my payroll liability totals in QuickBooks."

You don't have to do anything in QuickBooks; the new payment will clear the bank (hopefully). If this had been a check that got lost in the mail and you had to re-issue a check, the easiest way to handle that would be to stop payment on the first check, and then change the check number of the first check to the check number you used for the replacement check. Trying to void and re-enter payroll liabilities is a maze that's difficult to exit.

If your late payment included penalties and/or interest, enter a check in QuickBooks (with no number) to cover those amounts, and post them to an expense account that tracks them (such as Other Expenses). When you reconcile your bank account, the second payment (the one that cleared) will be larger than the check entered in your register; to clear the payment select both the payment check and the penalties/interest check – the total will equal the new check.

Paycheck Mistakenly Issued to Subcontractor in QuickBooks

Monday, January 2nd, 2012

How to Correct an Erroneously Issued QuickBooks Paycheck

A reader wrote to ask for help. A new subcontractor was inadvertently set up as an employee in QuickBooks, and a paycheck was issued. The subcontractor cashed the check and then called to say that the amount was too low (because of the withholding). The reader wanted to know how to fix the situation.

This requires a few steps. First, you must create the subcontractor as a QuickBooks vendor, but the name already exists as an employee. Edit the employee record so the employee name is different (e.g. add the letter X to the beginning of the name), and make the employee inactive. Now you can create the subcontractor as a vendor (and set up the vendor record for 1099 reporting, if applicable).

Void the paycheck in QuickBooks, which also removes the liabilities attached to the paycheck. Then create a check to the vendor for the same amount (since the check was cashed). Finally, create another check for the additional money you owe the vendor.