Month: February 2018

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Getting Ready for Payroll in QuickBooks Online

Getting Ready for Payroll in QuickBooks Online
Taking on your company’s payroll with QuickBooks Online? Knowing what you’re up against ahead of time will make your setup tasks much easier
Payroll is probably the most complex element of small business accounting. Not only are you directly responsible to your employees, but you also have to make sure you’re handling everything related to benefits and payroll taxes correctly.
Whether you’re switching from a manual system to QuickBooks Online, or you’ve just hired your first employee, you’ll soon discover that the site can make your payroll-related tasks much more organized and accurate – speeding up the process tremendously.
But before you start getting ready for your first payroll run, you have a lot of setup work to be done. Be sure to leave yourself time before those first paychecks are expected.
Our Purpose Here
 
We’ll provide some step-by-step instruction, but initially, we just want you to see what information you’ll need to have available and how QuickBooks Online handles it. This is not meant to be a payroll setup tutorial.
Building a Backbone
 
There’s no particular order set in stone for your payroll preparation tasks, although you will need to provide some background information about your company and its policies before you can start creating employee records.
QuickBooks Online doesn’t walk you through the steps required. It does though display a page with links to all of the data you’ll have to enter. Click the gear icon in the upper right, and then click Payroll Settings. You’ll see this screen:

 

 

 

QuickBooks Online’s 

Payroll Settings screen displays links to the pages where you’ll manage your setup tasks.

 

 

 
You would have entered information about your Contact Information and Work Locations (under the Business Information heading) when you first signed on to QuickBooks Online. At the same time, you would have been exposed to the Chart of Accounts, which already has accounts designated for payroll. You can see them by clicking Preferences | Accounting, but please do not customize these. If modifications are needed, we’ll do them for you.
Payroll Policies
 
How often will you pay your employees? Go up to the Payroll heading in the upper left and click on Pay Schedules. Click Create and open the drop-down list next to Pay Period to select the frequency desired. Then enter the date for the first payroll you’ll run in QuickBooks Online and the end date for the period that it covers. Click the box below if you want this to be the default setting for all employees. Then click OK to return to the previous page.
Open the Vacation and Sick Leave Policies window. If you don’t yet have accrual rules for these paid days off, let us help you here. It’s complicated. When you’re done, click the back arrow to return to the Pay Policies window and select Deductions/Contributions. Are you offering benefits like health insurance? You’ll need to have your paperwork and information handy before you start completing this section.

 

 

Before you can pay employees, you’ll need to have entered information about the benefits you offer so you can withhold dollars for them.
Click the plus sign (+) in front of Add a New Deduction/Contribution and complete the fields here, then click OK. You’ll assign these deductions to employees on their individual records in QuickBooks Online. If there are any Employee Garnishments needed (like child support), click the down arrow next to Add Garnishment for and select the worker from the list. You’ll provide details for these in the window that opens. This information was most likely provided to you by the agency requesting it. When you’re done, click OK.
Taxes and More
 
If you’re new to payroll and have never dealt with payroll taxes before, you’re going to need our help getting this complicated element set up correctly. Even if you have, we’d recommend that you let us work with you. QuickBooks Online does a good job of providing guidance here, but failure to submit payroll taxes (or pay them incorrectly) can lead to penalties and fines – or worse.
There are other setup tasks you’ll need to complete, like:
  • Connecting your payroll bank account to QuickBooks Online.
  • Creating employee records.
  • Setting payroll production preferences.
Setup is by far the most challenging part of processing payroll in QuickBooks Online. Once that’s done, you’ll just be entering hours and making modifications. Please do connect with us if you’re planning to take this on, and we’ll make sure you get a good start.
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Customize QuickBooks Online Using Settings

 Customize QuickBooks Online Using Settings

You can start using QuickBooks Online the first time you sign in. However, your tasks will be easier and faster, if you customize it for your company.

 
QuickBooks Online was designed to be used by a variety of business types; that’s one reason why it’s such a popular small business accounting website. It was built to be versatile. That is, whether you sell hard drives or you service HVAC systems, you can customize it to “fit’ your company.
 
This is why your first order of business when you start using QuickBooks Online should be to click on the small gear icon in the upper right corner. The window that opens displays links to all of the site’s options – a collection of choices that’s called “Preferences” in desktop QuickBooks.

When you click on the small gear icon in the upper right corner of QuickBooks Online, this window containing the site’s many options will open.

 
Global Settings
 
The first screen you should visit is Account and Settings. This page is divided into five sections, accessible by clicking on one of the tabs below:
 
Company -Your company’s name and contact information appears here, as well as identifying details like the tax form you file, as well as your industry.
 
Sales -You can do a lot of customizing here that will affect your company’s selling activities. For example, you can specify preferred invoice terms and delivery method, and indicate whether to turn on features like:
  • Shipping
  • Custom fields and transaction numbers
  • Discounts
  • Quantity and price/rate
  • Inventory quantity on hand
You can also access the site’s tools for customizing the design and layout of your sales forms (invoices, receipts, etc.).
 
Expenses -You’ll toggle expense-related tools on and off here. You can choose to, for example, track expenses and items by customer and make them billable. Will you be using purchase orders? What will your default bill payment terms be?
 
Payments -Here, you’ll be able to set up a merchant account so you can accept credit cards and bank transfers from customers through QuickBooks Online. If you already have a merchant account, you can connect it here.
 
Advanced -There’s a good reason why this section is named “Advanced.” You may not be familiar with some of the concepts here, like “closing books” and specifying default accounts for items like Markup. We can go over these things with you and help you make decisions.
 
Other entries in this list are easier to complete, though you may still want some guidance. Will you support multiple currencies? Automatically apply credits and invoice unbilled activity? Make individually-tracked time activities billable to customers?
 
Other Preferences
 
There are many other areas in this window that you’ll want to explore before you start processing a lot of transactions in QuickBooks Online. If more than one person will have access to the site (we’ll assume you’re the Administrator), you must click on Manage Users. Here, you can set limits of what other employees can access. Click New on the screen that opens to launch this mini-interview, and follow its instructions:

 

You can restrict users to specific areas of QuickBooks Online.

Other preferences you should look at include:
  • Chart of Accounts – only to familiarize yourself with the accounts that make up the backbone of your accounting data. You’ll use these in transactions. Please do not make any changes here without talking to us.
  • All Lists – to see what’s available here, like Classes, Recurring Transactions, and Payment Methods.
  • Products and Services – to start building records for the items and services you sell. If you carry inventory and have never worked with a website that helps you manage it, please let us go over these concepts with you.
  • Budgeting – if you plan to create a budget. QuickBooks Online contains a tool that will accommodate this critical task.
  • Audit Log – if multiple people will be using QuickBooks Online. It tracks all activity by date and user.
QuickBooks Online is easy to use, but there’s a lot to learn upfront about customizing it to meet your company’s accounting needs. It’s natural to feel a bit overwhelmed at first. Let us help you get through those early days of use.  Connect with us, so we can walk you through the basics.