Setting up and paying payroll tax payments in QuickBooks is a crucial aspect of managing your business finances. QuickBooks, a popular accounting software, offers an efficient process for handling payroll taxes, by calculating, withholding, and paying payroll taxes making sure that you comply with tax regulations and keep your financial records accurate. Employers bear the responsibility of both covering their employment taxes—Social Security, Medicare, and unemployment—and managing payroll taxes for their workforce. QuickBooks Payroll simplifies this process across its three plans: Core, Premium, and Elite.
In this article, we’ll explore the steps to set up and pay payroll taxes using QuickBooks, making the complex task of payroll tax management simple for small business owners and accounting professionals. Let’s dive into the easy-to-follow steps to ensure your business stays on top of its tax obligations.
Steps to Set Up Payroll Tax Payments in QuickBooks
To set up payroll tax payments in QuickBooks, follow these nine steps:
Step 1: Payroll Taxes Checklist – Essential Information for Kickstarting the Process
1. Begin with the Payroll Taxes Checklist, ensuring you have the necessary information to initiate the process. This includes details such as birth dates and hire dates for each employee, your business contact information (legal name and mailing address), company type (LLC, Sole Proprietorship, Corporation), Federal Employer Identification Number (FEIN), and the specific payroll tax form you are required to file (941 or 944).
2. Provide QuickBooks with essential details, such as your payment or deposit schedule for federal tax payments, Employment Training Tax (ETT) or other state rates, and your bank account number (#) and routing number (#) for e-pay.
3. Online user ID and password used to access your bank account, streamlining the electronic payment process.
4. If applicable, provide details for state-related items, including your payment/deposit schedule for state tax payments, state account number, and State Unemployment Insurance (SUI) Rate.*
| Note: The last set of items (marked with *) is relevant only if your state imposes income and/or unemployment tax. Ensure you have this information on hand to complete the setup accurately. |
Step 2: Access Profile/Settings
After successfully configuring your employee details, the next step is to either continue the setup process or proceed with payroll payment. Opt for “Continue setup” to input the necessary information for payroll tax processing.
To resume the payroll setup after a prior employee configuration, locate the gear button in the far upper right corner. Click on “Payroll Settings.
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Step 3: Establish Payroll Tax & Compliance Information
Setting up payroll tax and compliance in QuickBooks involves:
- Business Name: Input the legal name used for all tax return filings.
- Business Address: The address initially entered during payroll setup will auto-fill; if using a different address, uncheck and provide the accurate details.
- First Payroll Date: Specify the date for your inaugural payroll run, crucial for tracking tax payments, with options based on the current month and year.
- First Employee Hire Date: Indicate whether you hired your first employee within the last six months.
- New or Existing Business: Choose ‘yes‘ if the business was purchased from a previous owner; otherwise, select ‘no.’
- Company Type: Select the appropriate company structure (e.g., Sole Proprietorship, Corporation, LLC).
- Principal Officer Title: Enter the name of the person responsible for communication with your bank and federal tax agencies.
- Workers’ Comp: If required by your state, receive a notice for workers’ compensation insurance; choose ‘no‘ if you already have a plan or proceed for a quote from AP Intego.
Step 4: Configure New Employer Settings
QuickBooks Payroll manages your setup with a valuable feature – configuring tax rates to default percentages based on the latest information from federal and state tax agencies. This eliminates the need for you to manually determine the current tax rates and includes relevant deposit schedules for your convenience.
To input details on the new employer settings screen, gather the birth date and hire date for each employee. Retrieve this information from the I-9 form or other new hire paperwork completed by your employees.
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Step 5: Input Federal Tax Details
1. EIN (Employer Identification Number):
Input your federal tax ID into this field. Opt for “No” if you haven’t received it yet or if it’s not readily available. If considering workers’ comp for the first time or exploring cost-effective alternatives, check the box to share information with Intuit workers’ comp partners.
While payroll can run without a federal tax ID #, submitting tax payments to the IRS requires one. This ensures your business receives proper credit for all tax payments made.
2. Payroll Tax Form:
Choose the payroll tax form mandated for filing with the IRS – Form 941 (quarterly) or Form 944 (annually).
3. Federal Tax Payments:
Select the frequency for paying federal payroll taxes from the dropdown – options include semiweekly, monthly, or quarterly. For assistance determining the appropriate filing frequency, contact the IRS.
4. Nonprofit Status:
If your business is a 501(c)(3) nonprofit exempt from paying FUTA, choose “Yes“; otherwise, select “No.”
Step 6: Input State Tax Details
Entering state tax details on QuickBooks:
1. State Employer Account Number:
A unique number issued by the state to employers for tracking payroll tax payments. Obtain this number from your state’s Employment Development Department (EDD) if you don’t have one. Filing taxes without it risks non-credit payments.
Avoid filing returns without this number to ensure proper identification by the EDD.
2. State Withholding Number:
Used on state forms for reporting state income taxes withheld from employee paychecks.
3. State Unemployment Insurance (SUI) Rate:
Annually received from the EDD around November or December, it determines your business’s SUI rate for the upcoming year. Contact the EDD if you haven’t received this information.
To guarantee accurate calculation of your payroll taxes, it’s crucial to have the right State Unemployment Insurance (SUI) rate before running your initial payroll. Typically, the average rate for new employers is around 2.7%. If there’s uncertainty about whether you might be subject to a higher percentage, you can opt for a conservative estimate, such as 5.4%, for the time being. This can be adjusted later when you have more precise information.
4. Administrative Assessment Rate:
Unique to Georgia, this fee is 0.06% for employers with an unemployment rate between 0.04% and 8.1%. If your unemployment rate falls within the range of 0.04% to 8.1%, the administrative assessment rate will be 0%. This means that if your unemployment rate aligns with either the minimum or maximum rate, you won’t incur any administrative assessment charges.
5. Deposit Schedule:
Based on your payroll taxes, the state mandates monthly, semiweekly, or quarterly tax payments. Obtain this information from the EDD if your employer account number is not included.
Once your payroll taxes and forms are set, all QuickBooks Payroll plans offer e-file and e-pay features. Receive immediate confirmation of your tax forms or payments. For seamless e-filing and e-payment, provide your bank information by clicking “Start” beside “Connect Your Bank.”
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Important Note
| If you ever face problems with the receipt, don’t worry. You can use the confirmation with the date and time stamp as proof that you filed and paid on time. |
Note: Living in one of the fortunate nine states without a state income tax (AK, FL, NH, NV, SD, TN, TX, WA, and WY) means that when setting up your account, you won’t find a section to input your state withholding account number. However, it’s important to note that you may still be asked about your state unemployment insurance rate during the setup process.
Step 7: Input Bank Account Details
Now, it’s time to finalize your setup by adding your bank account details. Review the business and principal officer information you provided earlier in the setup process. Once you’re ready to proceed, click “Review” next to “Bank account,” and then select the plus sign adjacent to “Add new bank account” to input your business checking account details.
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You’ll encounter a list of various banking institutions. If you don’t find yours in the list, use the search box, to locate yours. Input your bank’s name and select the corresponding result to seamlessly integrate your business checking account details for easy transactions.
Step 8: Input Your Online Bank Credentials
Provide your online banking account credentials, including the username and password you use for logging in. This establishes a secure connection between QuickBooks Payroll and your bank, ensuring proper authorization to access and utilize your account.
1. Entering online bank credentials:
Once the connection is successfully established, a comprehensive list of all bank accounts linked to your online banking ID will appear. Choose the specific account intended for payroll transactions, encompassing employee paychecks and taxes.
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Next, you’ll return to the summary screen displaying your business, principal officer, and bank account information. If all necessary details have been accurately entered, you can proceed by selecting the green “Accept and Submit” button located in the bottom right corner.
2. Business principal officer and bank account information summary on QuickBooks:
With your bank account seamlessly connected and poised for payroll tax transactions, the final step involves providing your e-signature. This legalizes QuickBooks Payroll’s ability to file your payroll tax forms securely and efficiently.
Step 9: Confirm Your Signature & Authorize Submission
- Select “Let’s go” to begin.
- The Principal Officer’s first and last name, entered earlier in the setup, will automatically display. Select “Verify” to confirm contact information.
- Enter your mobile phone number and proceed by selecting “Continue.”
- Upon receiving a six-digit confirmation code via text message, enter it to proceed with e-signing your authorization forms. Check the designated box to grant QuickBooks Payroll permission to handle payroll services on your business’s behalf. Then, select “Done.”
Congratulations! Your payroll account is now primed to efficiently e-file and e-pay your payroll tax payments.
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How to Modify or Review Payroll Taxes & Forms
Once you’ve mastered the setup of payroll tax payments, there may arise occasions when adjustments are necessary or when you simply want to review previously filed tax forms. Access the Gear icon in the upper right-hand corner of the home page and choose “Payroll Settings.”
The Payroll Settings interface will appear. Let’s delve into the details of the information available here.
Display of payroll settings on QuickBooks
1. General tax info: You can make alterations to your company name, filing name, and filing address.
2. Federal tax info: Edit details related to your FEIN, state account number, required tax forms, and payment (deposit) schedule.
3. Email notifications: Choose to receive tax payment reminders and notifications via email by keeping it on the default “Send to You” setting. Alternatively, you can turn it off.
4. Shared data: Decide whether to permit employees to import their W-2 tax information into TurboTax. This benefits employees during tax filing, eliminating the need for manual data entry.
Explore sections allowing changes to bank account information, direct deposit funding time, paycheck printing preferences, and designated payroll general ledger accounts. Keep your payroll settings tailored to your evolving business needs effortlessly.
Conclusion
With the help of this article, you’ll be able to set up and pay payroll tax payments in QuickBooks easily to manage your taxes efficiently. By following the user-friendly steps within QuickBooks, businesses can ensure accurate calculations, timely payments, and overall compliance with payroll tax obligations. This approach in QuickBooks simplifies the complex task of managing payroll taxes, providing a reliable solution for small businesses and accounting professionals.
With the seamless setup of payroll tax payments using QuickBooks Payroll, you’re all set to initiate your first payroll run! In case you have any related queries, feel free to reach our QuickBooks Payroll experts at our Toll-Free number at +1-855-875-1223.
Frequently Asked Questions
To pay payroll in QuickBooks, follow these steps:
1. Navigate to the “Employees” menu.
2. Select “Run Payroll” and enter the necessary details like pay period and employee hours.
3. Review the preview and click “Submit Payroll” to process payments.
4. Choose the payment method – either direct deposit or print checks.
5. Confirm and complete the process to pay your employees through QuickBooks.
To record payroll payments in QuickBooks:
1. Go to the “Banking” menu and select “Write Checks.”
2. Fill in the necessary details, including the employee’s name and payment amount.
3. Choose the appropriate expense account for wages.
4. Save the check, and QuickBooks will automatically update your accounts and records.
To record payroll remittance in QuickBooks Desktop:
1. Access the “Employees” menu and choose “Payroll Center.”
2. Click on the “Pay Liabilities” tab.
3. Select the liability check you want to pay and click “View/Pay.”
4. Enter the payment details and choose the payment method.
5. Click “Finish” to record the payroll remittance in QuickBooks Desktop.
To set up payroll deductions in QuickBooks Desktop:
1. Navigate to the “Lists” menu and choose “Payroll Item List.”
2. Click on the “Payroll Item” button and select “New.”
3. Choose “Deduction” and click “Next.”
4. Follow the on-screen instructions to set up the deduction, specifying details like calculation method and agency for remittance.
5. Save the payroll deduction item, and it will be available for use in employee profiles.
