Several steps are involved in setting up payroll in QuickBooks. For your Chapter 6 tutorial, the QuickBooks payroll feature has already been set up.

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1 Accounting System Applications Lesson 6 Comments and Processing Notes Note: These comments do not replace the material in the chapter. They are intended to reinforce and highlight important data from the text as well as to review relevant accounting principles. You should always thoroughly read your text while completing the tutorial steps. Lesson 6 Comments Chapter 6 deals with employees and payroll. Your company may choose to use the QuickBooks payroll feature, or may engage an outside payroll service. If QB is used to prepare paychecks, the QuickBooks Payroll Service must be used to calculate payroll taxes or the company must manually calculate payroll taxes and enter them in when paychecks are run (see Chapter 11). Several steps are involved in setting up payroll in QuickBooks. For your Chapter 6 tutorial, the QuickBooks payroll feature has already been set up. Employees The Employee List is used to enter information about employees. This information includes employee data such as name and address as well as payroll information such as salary, pay period, and deductions. Employee time worked is entered in the QB Timesheet. QB uses the information entered here along with information from the Employee List and data given to the Payroll Service (if used) to calculate each employee s paycheck. The owner of a sole proprietorship is not considered an employee of the company and is not paid using the Pay Employees option. Payments to owners of sole proprietorships are considered withdrawals and are recorded with the Write Checks option in the Banking Navigator. The same is true of partnerships with multiple owners. Payroll Liabilities Any amounts withheld from an employee s pay are liabilities of the business and must be remitted to the appropriate vendor. QB will automatically generate the necessary transactions to pay payroll tax liabilities. Account Review Account Name Account Type Normal Balance Salary or Wages Expense Expense Debit FICA Payable Liability Credit FIT Withholding Payable Liability Credit FUTA Payable Liability Credit SUTA Payable Liability Credit In addition to these accounts, you will have liabilities for employee benefits such as 401(K) contributions and health insurance premiums.

2 Lesson 6 Processing Notes Several steps are involved in creating paychecks in QuickBooks. Follow the instructions carefully. Tutorial Page 6.8, Step 2 The Preference options are in alphabetical order on the scroll bar. Page 6.10, Step 1 You may need to click the Home button in the Navigation bar to redisplay the Home page. Page 6.10 Remember the button for each Center can also be reached by clicking the vertical button on the left side of the Flowchart. Page 6.12, Step 3 Click the checkbox beside Use time data to create paychecks to set this option to Yes. Page 6.12, Deductions Health Insurance is set up as an item in the drop-down box for Deductions. Be sure to enter the amounts with negatives as shown in the text. Page 6.13, Step 4 After setting the allowances for federal taxes, click the State tab to set the allowances for state taxes. Page 6.15, Step 2 To find your name, scroll in the drop-down list until you see Employee listed in the right column. Page 6.16, Time Tracking Step 4 To leave the Stopwatch open while you continue working through the Tutorial, click the Home button on the Navigation Bar. Page 6.16, Timesheet Step 3 You may want to maximize the Timesheet window to see the columns more clearly. To see the drop-down arrows, click in a column. Page 6.17, Step 6 - when you enter the hours worked each day, it looks like you are entering a time (i.e. 6:00). Do not be bothered by this, you are actually entering hours. Your Timesheet should look something like this when complete: Page 6.18, Step 3 Be sure to click on Sunroom so that the job (not just the customer is selected in this field. Page 6.19, Step 2 When you reset the dates in the Select Timesheets to Print window, only two employees will appear in the list. Page 6.26, Step 5 Click in the column to select the employee to pay.

3 Exercises Exercise 6.1, Task 2 The time worked for Dan Miller and Gregg Schneider is found on page Be sure to set the appropriate dates and select the applicable jobs. Exercise 6.1, Task 3 Be sure to select the Voucher checks. This prints details of deductions for each employee. Exercise 6.3, Task 3 If you get a warning that your form is incomplete, print anyway. Also note that you have an option to create a PDF form for your records. You can use this option to create the file you will upload for this lesson. Exercise 6.3, Task 4 Again, you can use the Save as PDF option to create the file you will upload for this lesson. If you get a warning that your form is incomplete, proceed anyway.

4 ACCOUNTING SYSTEM APPLICATIONS QUICKBOOKS CHAPTER 6 Review Questions The following questions are for your benefit only. They are not submitted for a grade but will be helpful in preparing for exams. 1. Use the window when paying employees. (6.3) 2. Use the window when paying subcontractors. (6.3) 3. If the business is a sole proprietorship or partnership, payments to owners should be made using the window. (6.3) 4. What type of information is maintained in the Employee List? (6.10) 5. Describe the time tracking feature in QuickBooks Pro. ( ) 6. Describe how an employee s time worked is transferred to a customer. ( )

5 7. List some payroll tax liabilities. (6.28) 8. What are some of the Payroll Tax Forms that QuickBooks can help an employer prepare? ( )