What Are Payroll Items in QuickBooks?

If you plan to process your own payroll using QuickBooks, you need to understand how payroll items work.

Considering processing your own payroll in QuickBooks? Whether you’re moving from a payroll service or getting ready to pay your first employee, you’re taking on a complex set of tasks that requires a great deal of setup and absolute precision. But the reward is complete control over your compensation records and transactions, and constant access to your payroll data.

If you have no experience dealing with paychecks, deductions, and payroll taxes, we strongly recommend that you let us help you get started. QuickBooks simplifies the actual mechanics of setting up and running payroll, but there’s still a lot you need to know.

It goes without saying that accuracy is critical here. You’re responsible for your employees’ livelihoods and for maintaining any benefits they’ll receive. Federal, state, and local taxing agencies will count on you to submit the proper payroll taxes and filings on time; failure to do so can result in stiff penalties and worse.

A Look Around Payroll Items

That said, we’ll give you a brief preview of how QuickBooks Payroll Items work. You must first make sure that payroll is turned on. Open the Edit menu and click Preferences, then click Payroll & Employees | Company Preferences.

The Company Preferences screen in Payroll & Employees Preferences

Under QUICKBOOKS PAYROLL FEATURES, make sure the button in front of Full Payroll is filled in by clicking on it. If you’re interested in exploring Intuit’s online payroll service, we can tell you about that, as well as advise you on the other options displayed here.

This element of your accounting is complicated enough that QuickBooks has a separate setup tool to guide you through the myriad details you’ll need to provide. You find this tool by going to Employees | Payroll Setup. This is a multi-screen, wizard-like tool that walks you through the process of providing information about employees, compensation, benefits and other additions/deductions, and taxes. Each page poses questions, and you provide answers by entering data and selecting options from drop-down lists. In doing so, you’re creating Payroll Items.

This is a time- and labor-intensive process, one that will send you scrambling for all of the minutiae that make up your payroll system. Once you have your payroll framework established, though, as we said earlier, everything will be in one place and easily accessible.

A Useful List

The information you entered in Payroll Setup is likely to change and need modification. Maybe you forgot to account for something while you were working in the wizard, or perhaps you just want to look up a bit of payroll data. To do any of these, open the Lists menu and click on Payroll Item List.

You can access this menu from the bottom of the Payroll Item List screen.

The window that opens contains a list of the Payroll Items you created. It looks like a checkbook register, with one line devoted to each item. You’ll be able to view, for example, its Type, any Limit imposed, the Payable To name, and Tax Tracking designations. At the bottom of this list, you’ll see three drop-down menus: Payroll Item, Activities, and Reports. When you click on the down arrow next to Payroll Item, you’ll see the menu displayed in the above image.

Warning: There are many options in this menu for altering Payroll Item definitions. QuickBooks allows you to do this, but we would caution you here. If it involves an action that we have not gone over with you, please ask us about it.

This is fairly self-explanatory. To Edit or Delete a Payroll Item or make it Inactive, highlight it in the list and click on the correct option. You can also Customize Columns in the table and perform other related tasks. When you click on New Item and select EZ Setup on the next page, this window opens:

You can add Payroll Items by working your way through this wizard-like progression of screens.

QuickBooks will help you here by asking questions and building a Payroll Item based on your responses.

There’s much more to know about working with Payroll Items and assigning them to employees. We’re ready to help introduce you to payroll processing in QuickBooks – once you’re ready to take it on.

Better Budgeting Using QuickBooks Online Plus

Better Budgeting Using QuickBooks Online Plus

Everyone groans when budget time rolls around. QuickBooks Online Plus offers tools that simplify the process.

Budget. The word evokes a sense of dread in most small business managers’ minds. Large corporations have entire teams of accountants that work on this critical element of financial planning. You, on the other hand, must go it alone – or with the help of other staff if your company is big enough.

Why is this chore so difficult? Several reasons. The biggest stumbling block is probably the sense of uncertainty. How do you know what your income and expenses will be for the coming year?

QuickBooks Online Plus can’t tell you how to plan the next year in terms of numbers, but its tools can make the mechanics of building a budget easier.

Your Fiscal Year Start

Finding the start of your fiscal year in QuickBooks Online Plus

Do you know exactly when your fiscal year starts? You’ll need this information before you can get started on your budget. Click the gear icon in the upper right next to your company name, and then select Account and Settings | Advanced. The first entry here tells you what the First month of fiscal year is.

Creating a Framework

To get started building your budget, click the gear icon again and select Tools | Budgeting. Click New Budget to open the mini-interview wizard (if it didn’t open automatically). QuickBooks Online Plus creates what are called Profit and Loss Budgets. This kind of budget tracks the numbers in your income and expense accounts.

There are three ways to create one, as you’ll see when you click Next on the first page of the interview. You can:

• Work from historical amounts by copying last year’s data into the spreadsheet,
• Start from scratch, or
• Copy data from an existing budget.

You can choose from these three options to create your budget in QuickBooks Online Plus.

Click in the button in front of No amounts. Create budget from scratch, and then click Next. QuickBooks Online Plus’s budgets consist of a table divided into months (columns) and accounts (rows). You can break this down into even greater detail by subdividing your budget and tracking accounts separated by Territories, Classes, or Customers if this kind of information is important to you. For now, click the button in front of Don’t subdivide.

When you click Next, you’ll be asked to select the fiscal year for your budget. Click the down arrow to the right of Select fiscal year and choose the appropriate year. Type an easy-to-remember name for your budget in the box below and click Finish. The mini-interview will close, and your budget spreadsheet will open.

Entering the Numbers

QuickBooks Online Plus defaults to a monthly view when you first open it, but you can change this at any time to Quarter or Year by clicking the arrow in the field next to View by in the upper right corner.

If you had copied income and expense data from the previous year, or from an existing budget, those numbers would appear in the corresponding cells and could be changed to create a new budget. You opted to start from scratch, so the table is empty. You can just start entering individual numbers – not within the spreadsheet cells themselves, though.

Look down to the bottom left corner of the screen. If you’ve highlighted Discounts given, for example, by clicking on that label in the spreadsheet column, you’ll see a line directly below that last row that reads Edit – Discounts given.

This area is where you’ll do your actual data entry. If the drop-down list to the right of Enter by is set to Month, you’ll see 12 boxes below labeled with the months of the year. If you anticipate that every month will contain a different figure, enter the numbers in the correct boxes and click Save & Next. QuickBooks Online Plus will copy your numbers into the actual budget spreadsheet.

If the number will remain the same for each month, you can enter it in the Jan box and click Copy Across, then Save & Next (click this button after every row change). Your cells for that account will be automatically populated.

Entering quarterly budget data

If you think more in terms of quarterly income and expenses, you can highlight the correct account and select Quarter from the drop-down box next to Enter by (see above image). Fill in your quarterly totals, and QuickBooks Online Plus will divide those evenly between each set of three-month periods. The result would look like this:

QuickBooks Online Plus can divide quarterly totals into monthly budget numbers.

And of course, if you select Enter by: Year, you’ll only enter one number that QuickBooks Online Plus will divide evenly into 12 months.

When you’re done with your budget, click Finish.

This is a lot of information to absorb all at once, and we imagine you may have some questions on budget projections and on the actual mechanics of creating a budget using QuickBooks Online Plus. As always, we’re happy to hear from you.

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