QuickBooks is one of the most popular accounting tools for business owners. Payroll is important since you have to comply with your local, state and federal employment laws when calculating earnings and withholding money for taxes and preparing tax returns. Since there are so many options with QuickBooks payroll, it is possible to get confused about what to do next.
Here are some simple steps that help you become more efficient when calculating the payroll for your business.
1. Verify you have the correct tax information for your employees.
First you need to make sure that you have the right information about your employees. Ask them to verify their full name, social security number, date of birth, marital status, address and the number of dependents they claim.
It is possible that they could have legally changed their name due to a recent marriage or divorce. If you still have doubts that you have the incorrect social security number for an employee, ask the Social Security Administration to compare their name and numbers to see if they match. Are you limited on time or don’t want to physically go to their office? Use their online Social Security business services.
2. Carefully evaluate which QuickBooks payroll option is right for your business.
QuickBooks payroll comes with a range of options that are suitable for different types of businesses. Depending on the type of business that you have, and the number of people you employ, you should choose the best payroll method that makes sense for your company.
- Do you prefer to do your payroll entirely online? You can use the Intuit Online Payroll to manage your financial data completely online without using your QuickBooks software on your desktop.
- You would also be able to easily pay your federal and state taxes electronically. If you choose to use the QuickBooks basic payroll, you have to manage all your financial data in your QuickBooks software.
- Another option is using QuickBooks assisted payroll which integrates your accounting information with your payroll data.
3. Keep an accurate record of your payroll items.
Next you need to organize the different payroll item categories for your business. Normally you can complete this when you are registering your QuickBooks software and entering your company’s information.
- You should include items for hourly and salary wages, bonuses, state and local taxes, commissions, Medicare, social security and miscellaneous fees.
- Once you have these categories set up, remember to update the information periodically so that you will not be overwhelmed during tax season.
4. Create a list of accounts for your business.
Now that you have your payroll items correctly categorized, you will have to create accounts in QuickBooks for any entity that receives compensation or taxes on your employees’ wages and other compensation.
- Identify which local, state and federal government agencies need to be listed as an account for your business.
- Identify the percentage or amount that they should be paid. Remember, your business may be fined and penalized for late payments or if you miss the payments entirely. If you are a business owner it is your responsibility to accurately report payroll data to authorities.
While you are preparing your payroll with QuickBooks you should review the Internal Revenue Service codes to make sure that you are complying with their employment tax requirements. Make sure that you understand which federal taxes apply to your business or industry, and that the correct amount is withheld from employment taxes. If you do not have a background in accounting and are concerned about making an error, consider hiring an accountant that has extensive experience with documenting and calculating business payroll.