Everyone wants it. Is your company offering it? How to set up a Payroll Item for health insurance in QuickBooks.
QuickBooks’ Payroll Setup tool does a very good job of walking you through all of the myriad details that must be entered in order to do accurate payroll runs and submit your payroll taxes.
But it’s critical that the information you supply is correct, and entered in the right places. If you’re already doing payroll using another method, you should be fine. If not, you should consider taking a QuickBooks training course.
Health insurance is a complex topic, but there are really only a few questions you need to answer in the QuickBooks setup wizard. To get there, open the Employees menu and select Payroll Setup. Click on Employee Benefits | Insurance Benefits in the menu that appears. Then click the Add New button to open this window:
You’ll need to learn QuickBooks’ approach to setting up employee benefits by using the Payroll Setup wizard.
Click on the box next to Health insurance, then click Next. In the window that opens, click the button next to the statement that best describes who pays for employee health insurance. Here are your choices:
- Company pays all
- Employee pays all, or
- Employee and company each pay a portion.
If employees are expected to pay into their health insurance benefit, you’ll need to indicate whether this deduction occurs before or after taxes. This will depend on whether your plan falls under Section 125 of the IRS code. If it does, you can select Payment is deducted BEFORE taxes. Otherwise, click the button next to the post-tax deduction option. Click Next.
Now you’ll have to tell QuickBooks who your provider is, what your account number is and when you pay your financial obligation to the provider. You can do so on this screen:
Who is your health insurance provider, and when do you submit your payments? Tell QuickBooks here.
Click Finish. This employee benefit record will now appear in the list of Insurance Benefits.
What you’re actually doing here is setting up a Payroll Item, which is any transaction that occurs within your payroll activities – compensation, taxes, deductions, etc. QuickBooks keeps a running tally of all of these items so that you have accurate year-to-date information on each employee. It’s how QuickBooks knows what you owe in payroll taxes, etc., for example.
So you could also set up the health insurance deduction by clicking on the Items list and selecting Payroll Item List. In the window that opens, click the down arrow next to Payroll Item and select New. In the next window, click the button next to EZ Setup and then Next. Select Insurance Benefits in this window:
You can learn about Payroll Items and how to set them up by taking a QuickBooks tutorial.
When you click Next, the Payroll Setup wizard opens, and you can proceed as explained above. In the next article, we’ll explain how to enter the amount to deduct.