How to Set Up and Run QuickBooks Payroll End-to-End (Full Transcript)

[00:00:00] Speaker 1: Buckle up, because today we're diving deep into QuickBooks Payroll. That means adding employees, approving timesheets, paying taxes, and of course, paying your employees. I'm David, I've partnered with QuickBooks Payroll to get you the latest info, so head to the website below and follow along with me. First, let's pick the right plan for you. Now, all three of these plans have full service payroll. That means paying payroll taxes for you, setting up benefits, time tracking, and the works. Payroll Premium gives you same-day direct deposit and enables time tracking in the mobile app. That enables you to make shift schedules and approve timesheets from anywhere. This also gives you location tracking when employees are clocked in. Looking over at Payroll Elite, that gives you advanced project management features and job progress. It also gives you a nice feature in that you can remind your team to clock in and out when they enter or leave a job site. With Elite, QuickBooks also guarantees up to $25,000 of protection if you get a penalty on your payroll taxes. For this video, we'll choose Payroll Premium as the most popular option. Remember, for all three plans, there's a base monthly fee and a fee per employee. Click Choose Plan With Me to move forward. Next up, you can choose one of the four accounting plans. Check the video in the top right if you wanna learn more about accounting. You can also opt out and click this button, Continue Without Accounting. I'll stick with the plus plan in this video, but you should choose what's best for you. Fill in your email address, password, and phone number, and then click the Create an Intuit Account button, and I'll get you started on the other side. Here we are on the QuickBooks dashboard. Let's first get our bearings. On the left side of the screen, you'll see the navigation bar. This is how you can get to all the different accounting and payroll features in QuickBooks. The main sections of QuickBooks are called apps, and you'll see those in the bottom left-hand corner. You can customize the apps which show up there by clicking on the Customize button in the bottom left. Since this is a payroll tutorial, let's pin the payroll app and then click Save. Now to get started with payroll, move your mouse over to the payroll app and then click on Overview. If this is your first time, you'll see this Get Started button on screen. Go ahead and click that, and if you've done this before, skip ahead to the timestamp you see on screen. This Getting Started wizard walks you through some payroll basics. The first very important question is have you paid employees this year? Most of you watching will probably say yes to this. It's important to let QuickBooks know about it because then it can calculate accurate payroll taxes and end-of-year tax forms. Choose the answer that applies and then click Next. Now you'll set when you need to run payroll for the first time. It defaults to the Friday of the current week, so make a change if that doesn't work for you, then click Next. Then confirm your business name and business address. These do need to be accurate to file payroll taxes. When you're done, click Next. Next, fill in the contact info for your payroll admin. They'll get reminders to run payroll and notifications of any tax forms due. When you're done here, click Next. Okay, you got through the easy stuff. It's time to add your employees. If you're coming from an existing payroll system and you see an Import button from them up top, go ahead and click that. Otherwise, assuming you have more than two or three employees, you're gonna want to import from a spreadsheet. I'll show you that here. To view the proper spreadsheet format, go ahead and click that View an Example link in the text above. Here, you can view the full list of fields you can import. You can scroll right to see all of them, but remember, only first name and last name are required. Also, don't miss the Download This File link. This is an easy way to get started. Now, I've got my spreadsheet ready, so I'm gonna exit out of that window and then click Import From Spreadsheet and click Next. When you're ready, drag that Excel or CSV file into this box to start the upload. Then, click Next. Next, make sure your columns map up correctly. You'll see the QuickBooks Employee field on the left, and then you'll see your spreadsheet headers on the right. Make changes if you see anything that's off, and then click Next. This might take a few minutes to review all of your employees, but we'll come back when it's done. Now, chances are you'll have more details to add, so don't worry about these orange exclamation marks. However, if you've accidentally forgotten an employee, you can always add an employee now by clicking this link. So, for example, we have a guy on our team. His name is Alex Wilber. He was not in the original spreadsheet. When you add employees, whether through the spreadsheet or one at a time like this, you get the chance to let them onboard themselves inside the QuickBooks Workforce app. Here, they can enter their personal contact info, their direct deposit settings, and get access to tax forms. If you have access to the premium plan or higher, employees can also track their hours inside of the Workforce app. We'll cover this later in the video. For now, let's review all of the employee settings. Now, there are a ton of settings on this page, so I strongly encourage you to let your employees fill in some of it using QuickBooks Workforce. That includes this personal information up top as well as tax withholding information on their W-4. The rest of the settings fall on you, so let's go through them one at a time. QuickBooks does have an external partner for background checks, which you can check out by clicking this sign-up link. Next up is payment methods, obviously important for your employees. Let's check out your options by clicking Edit. Now, Alex could have set up direct deposit in the Workforce app, but you can override that. I'm gonna choose paper check in here so I can actually run payroll later. Next up, we need to set how much Alex actually gets paid in the base pay section. For this section, set the employee's primary pay type. You'll have a chance to add additional ones later. Hourly and salary have their own additional fields to set, so hourly has rate per hour and salary has the salary for the year. Fill these in for what the employee earns. Don't worry, you can add overtime later. Scrolling down, you can set default working hours if the employee has a consistent shift schedule. Now, it might be tempting to skip over this account mapping setting, but it's actually important if you plan to use QuickBooks for accounting too. This documents the expense account the employee's pay comes from. You can set it up by clicking on payroll settings. Scroll all the way down until you see the accounting setting and then click the pencil. Then click the pencil icon on the bank account row. Now you'll choose the account you'll pay your employee's paychecks from. If you've linked your checking account to QuickBooks, you can select that here, and that's required if you intend to support direct deposit. For demo purposes, I'll select cash. You only need to set this once and then you can head back to your payroll settings. Then click done one more time. Now you'll see the account mapping is in place. Go ahead and click save. Moving on, you can select additional pay types. Overtime at one and a half times base pay is here by default, but you can always add a new types by clicking that add button. Here you have a lot of different payment types to choose from, including double overtime, holiday pay, and bonuses. With these, you can create your own custom payment schedules and key into them when you run payroll. I'll show you that with this bonus pay type later in the video. Now on to the next complex piece, which is time off policies. Here it's a matter of reflecting your business policies inside of QuickBooks. So chances are you have a default vacation policy for most employees. Under the hours are accrued dropdown, you can select how employees get vacation hours. For example, you can set an unlimited policy or a more traditional policy like accruing a certain amount of hours every pay period. You can also cap the maximum amount of hours that any employee can hold at one time. When you click save, you'll save that policy and set it for this employee. You can also set their current vacation balance here. Setting up PTO, sick pay, and unpaid time off are very similar. Just set those up to reflect your business policies and then click save. Next, you can set up employee deductions, contributions, and garnishments. Typical deductions include health insurance and retirement plans. To add them, click add deduction slash contribution. You can select one from a number of different deduction types in the dropdown. Each deduction type has its own type parameter. So go ahead and set that depending on the deduction that you're adding. Make sure to set the description next. That appears on every employee's paycheck. For the deduction amount, make sure you check with your benefits administrator. In fact, check with your benefits administrator for all of the options here. Now, important note, QuickBooks does not pay these providers automatically. It just tags these funds for you to pay them yourself later. You can click save to add this deduction to this employee and then keep adding more deductions or contributions until you're done. You are also allowed to add garnishments here. Those are court-ordered deductions like child support, alimony, or even loans. Alex doesn't have any of these, so we'll click cancel and then click done here. Finally, you may have state-specific tax requirements. For example, I live in Washington State, so we have worker's comp. If you're unsure on what you need to do here, it's best to talk with a state-specific tax professional. Now, before you click done, scroll up to make sure you've taken care of every error. Sometimes employment details will show new errors, so click edit. It looks like it needed a payment schedule, so I selected bi-weekly, and in the state of Washington, you need an occupational code. Now that the employment details are done, you can click save here and then done. We'll let Alex provide his personal details later, so I'll click do it later. You'll come back to your employees page, and no matter how many issues you have here, you don't have to fix them now. You can just click done. Now let's take a look at Alex's experience inside of the QuickBooks Workforce app. When you add a new employee, they'll get an invite to QuickBooks Workforce in their email that looks like this. When they accept the invite, they'll be prompted to create a QuickBooks account. After signing in, they'll be invited to download the QuickBooks Workforce mobile app. Now, some of your employees might prefer a web experience, so you can direct them to get set up on the web with this link below. For this tutorial, though, we'll look through the mobile app together. So Alex downloads the app, signs in, and he's gotta set up his profile. Alex will fill out his name, his street address, date of birth, gender, social security number, and a profile photo. Next, he can optionally set up an emergency contact, but tax withholding information is required. This is essentially an electronic W-4. Once Alex finishes this, he'll need to electronically sign. He'll review all of his settings first, and then fill in his signature for the W-4. Once he's signed, he can explore the rest of the app. Now, if we had left Alex as direct deposit, he could also set up his bank account info here. Now, we're gonna explore time tracking later, but we've got some payroll to set up, so let's head back to QuickBooks Payroll first. Okay, we are back in our Payroll Overview tab, and you'll see that our wizard has turned into a list of setup tasks. If you need to change anything you've just done, you can always go back to a previous step by clicking the pencil icon next to that step. You can also add, edit, and remove employees by clicking on the Employees button under Payroll. Our next step, though, is to enter our tax information, so let's click the Start button there. One of the big goals of most payroll software is to pay and file your payroll taxes automatically. You need to fill in some tax information, though, so let's walk through that step-by-step by clicking Set Up Auto Tax. It starts off easy. Just confirm your company name, your legal address, and your company type. Most of you watching will fall under Sole Proprietor or Other. Just select the one that applies to you and then click Next. Note, you may need to confirm your address another time. Next, fill in your EIN. This you should have received from the IRS when you registered your corporation. Then fill in the payroll tax form that you file, as well as how often you pay your taxes. Now note, this is not a tax advice video, so if you don't know these answers, definitely consult a tax professional. Next, you'll need to fill in state-specific tax information. Make sure your answers are in sync with what your tax professional advises and then click Done. Next up is to add your payroll history. Now, this only shows up if you've already paid your employees this year. I'm guessing that's most of you, so let's walk through what to do. For any employee that you've paid, click Enter next to their name, answer Yes, you have paid them, and then get their most recent pay stub. Fill in the total number of hours they've worked this quarter, and then use that pay stub to fill in the rest of the year-to-date totals below. And once you've completed those fields, making sure you've filled in all the possible deductions, click the Save button. Repeat that process for the rest of your employees. Unfortunately, this will take a bit of time, but once you're done, click the Next button. Next, you'll need to enter your payroll history. Usually, you can get those as reports from your existing payroll system, so once you've got one, click the Add Paydate button. We'll just go through this first one together. Select the date of your first payroll run first, then once again, fill in the amounts for all of these categories, double-check them, and once you're good, click Save. Repeat this process for your other payroll dates, and then click Done. That's technically enough setup for us to pay our employees, but we haven't connected our bank account yet, so direct deposits won't work. Let's continue our setup. The last task under Get Ready to Pay Your Team is Connect Your Bank. Scroll down to that and click Start. Here, you'll go through a three-step verification process. Step one is to verify your business information, step two is to verify your information, or at least the principal officer's information, and step three is to connect your bank account. After you complete this, chances are you'll be approved very quickly, and you'll be able to pay both payroll and your payroll taxes from your bank account. Now, one important part of payroll is time tracking. You'll see later that you can input your employees' hours by hand, or you can let them do it in the QuickBooks Workforce app. Today, I'll cover the most important time tracking settings, so let's click Start under Setup Time Tracking. Scroll down here and click Let's Go. On the right, you'll see a preview of what your employees see when they clock in or clock out. Your job is to set up the minimum number of fields necessary for tracking purposes. I would uncheck Billable if all tracked hours should be paid. Class may be useful if you need to track by department or location. Services is useful if you wanna see how much time is spent delivering each type of service that you offer. And notes don't harm anything in case your employees need them. Then let's click Next. Next, we'll cover entering those hours on the Workforce app. Note that you can also set up a kiosk, but we won't cover that today. Back in the app, Alex can tap the Track Time tab to record his hours. Note here that the options available to Alex reflect the settings that we just changed. Now, there are two ways to record time. The first is to use the plus button in the bottom right that allows you to add a past set of hours. Alex has been working all this morning, so he can tap Add to record his almost four hours of work. He can also continue his work by tapping the Clock In button. This starts a timer and will record time until Alex clocks out. If he approves permissions for location tracking, you'll also be able to see where he is during this time. Let me stress though that this is not a requirement for time tracking. When Alex is done with a task, he can either switch to a new project using that Switch button or tap Clock Out. He can then view all of his tracked time under the Timesheets tab. If for some reason an employee records a timesheet in error, they can swipe left on the specific timeframe and then tap the trashcan to delete it. Now, this app has a lot more you can do with it, including schedules for shift work, checking pay stubs, and getting your W-2. Drop us a comment below if you wanna see a tutorial dedicated to this app. Back in QuickBooks Payroll, there are two ways you can start payroll. On the Overview tab, you might see this giant Pay My Team button. That's a good start. But if you don't see that because you've gone through all your setup tasks, you can always go to the Employees tab and then click on Run Payroll. Here, you'll see a table of all of your employees and their pay. And it's easy at a glance to pick out the hourly workers like John and Alex versus the salaried workers. Now, if you have hourly employees who have logged timesheets, you can inspect them and approve them by clicking on the Approve Time button. You'll see a summary of the employee's time logs on this page. And if you wanna drill into any one of them, you can click that employee's name. This is the time that we logged earlier and we can approve it by clicking Approve Time once and then once again. Once it's approved, we can click the X to go back to our payroll. Note how that hourly pay now shows up under regular pay. Now, even though employees submit timesheets, you can always override that amount by clicking directly on the row. You can also edit the bonus pay type that we set up earlier in the video. Let's say Alex has really worked 80 hours this pay period. So I can just replace 3.92 with 80. You click outside the row to commit the changes, you'll get a warning that it doesn't match the timesheet. That's okay. Now, some of you may have businesses where you need to track costs per project. If you need to include wages as part of those costs, go ahead and click on Edit Projects. Once you're here, find an employee who worked on a certain project and expand their row. Here, you can allocate a percentage of their pay to a certain project. Now, you must have the ClickBooks Plus or Advanced plan to set these projects. And if you need to split the salary across multiple projects, click the Add Split button. We don't have any projects here, so we'll click the X to go back. Now, once you're done approving hours and gross pay, you can click on Preview Payroll. But before we do that, let's exclude John from this payroll run and then click Preview Payroll. Now, we get to the details where we can see all employee deductions and employer deductions. Besides the numbers, which you'll obviously review, here are a few things to look out for. First, make sure the chart of account matches your checking account that you're paying from. When you connect your bank account, you should see that here. Next, if you need to make any notes for an employee, use the new Memo button. Finally, Preview Payroll Details breaks down each tax and each contribution for each employee. If needed, you can always export this as a PDF. Once you're happy with this, close the payroll details and click Submit Payroll. Now, once you click that, this will start the direct deposit process. But if you pay by check, you can record the check numbers here. You can also print pay stubs if needed, but employees who have access to the Workforce app can access them directly. Now, QuickBooks will also start aggregating money to pay your payroll taxes, so make sure you have that set up ahead of time. Finally, it's a good auditing process to download payroll reports before you finish. This will create an Excel workbook for every type of report you check here. I'm especially partial to the tax liability report to keep track of what I owe external agencies. Here's what that workbook looks like. Feel free to pause the video and zoom into any report that might be of interest. We'll finish up by looking at the reports, which are directly in QuickBooks. Move your mouse to the Reports button in the navigation bar and then click on Standard Reports. Let's first check out your P&L. Now, if you've just run payroll, you might not see your expenses here yet. Change the report period to this year, this quarter, or this month, and you'll see it. Now, we didn't cover accounting in this tutorial, so we haven't tracked any income yet. Hopefully, we can sell some donuts soon to pay our employees. Click back to Standard Reports to head back to the master report list. This time, scroll all the way down until you get to the payroll reports. Now, there are a lot of reports here, and I encourage you to explore them on your own. One that's interesting for me is the payroll tax liability report. You'll see all the money owed to federal and state tax departments here. Another report that's interesting is the payroll deductions and contributions report. Here, you'll see all the deductions and contributions, like for health plans and garnishments. Remember, QuickBooks will not pay these on your behalf. Now, it's up to you to get started. Check out QuickBooks Payroll using the link in the description below. It would really help us out. I'm David, and I'll see you in the next video.