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QuickBooks Payroll Setup: An Overview

QuickBooks Payroll Setup requires a lot of time and information; a QuickBooks training course may be in order.

Payroll setup is arguably the most difficult, time-consuming part of preparing to use QuickBooks. But it’s absolutely critical that you get everything exactly right, for three reasons primarily:

  • You have to deal with taxing agencies and benefits providers, both of whom require precise, timely data.
  • You’re responsible for your employees’ livelihoods, and mistakes can cause hardship for them.
  • If you make errors in payroll, other areas of the program will be affected.

QuickBooks offers a very thorough, easy-to-complete setup tool. But it’s only easy if you understand the questions being asked, and you know the answers. So before you get started, gather up all of the written and computer-based information you have about your employees, your payroll and your benefits.

A Welcome Wizard

QuickBooks uses a wizard-like tool to walk you through all of the elements required to establish a foundation for your payroll runs. As you go through each screen, you’ll be asked to supply information in several ways: checklists, blank fields, drop-down lists, etc. You’ll be able to add new entries, edit them and delete them.

To find the wizard, open the Employees menu and click Payroll Setup. QuickBooks opens a new window dedicated to this task. Its opening menu outlines the steps needed:

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The QuickBooks Payroll Setup opening menu. Looks simple, but there are many complicated screens to complete for each topic.

QuickBooks Payroll Setup is broken down into five main categories:

Company Setup. Contains questions about both Compensation and Employee Benefits. You’ll describe every type of compensation available, like salary and hourly, overtime, piecework and mileage reimbursement. You’ll also have to provide information about benefits like:

  • Workers Compensation
  • Health, dental and life insurance
  • Medical savings accounts
  • Retirement plans
  • Vacation and sick time, and
  • Miscellaneous additions and deductions.

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QuickBooks Payroll Setup wants all of your benefits information in excruciating detail.

Employee Setup. Here, you’ll create thorough records for all of your employees. You’ll be asked for contact information and provide a lot of other details, like employee type and hire date, compensation amount and payroll frequency, benefits eligibility and payment method.

Taxes. Before you even begin, assemble information you have about tax IDs, rates and payment schedules for federal, state and local taxes. You’ll be asked about all of these things, and more. You’ll also need to know about the required payment schedule for each.

Year-to-Date Payrolls. This could be a real bear if it’s October and you’ve been running payroll all year. You’ll have to enter all of the data related to paychecks, taxes, deductions and contributions that you’ve paid out.

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QuickBooks helps you with Payroll Setup where it can.

Not only will you have to supply all of this information accurately, but you’ll also have to make sure that the correct QuickBooks accounts are applied. This is one reason why it would be a good idea to enroll in a QuickBooks class that deals with payroll: so it’s easier to learn how to use QuickBooks Payroll Setup. The more you understand about the basics, the less chance that you’ll make an egregious error.

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