QuickBooks Step Through Self-Directed Payroll Year End

QuickBooks Payroll for Standard, Enhanced & Basic

Let us help you through the busy year-end. Use this information to help prepare your tax forms, including your employees' W-2s, your federal Form 941, and state year-end forms and reports. Use this handy guide, along with the detailed how-to instructions within QuickBooks, to perform year-end closing in QuickBooks.

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Collapse Step 1: Verify employee dataStep 1: Verify employee data
Collapse Ensure that data that appears on your employees W-2's is correct.Ensure that data that appears on your employees W-2's is correct.
Names and social security numbers
Retirement plan eligibility
Collapse If any of the W-2 information for your employee is incorrect:If any of the W-2 information for your employee is incorrect:
Go to the Employee Center
Click the Employees tab
Double-click on the name of the employee to access the Personal Info tab
Edit the name, address or social security number, as appropriate
Click OK to save your changes
Collapse If you use QuickBooks to do your tax forms.If you use QuickBooks to do your tax forms.
Re-run the form to see the changes.
Collapse Review employee data in QuickBooksReview employee data in QuickBooks
The end of the year is a good time to review employee information that can affect W-2 forms and, possibly, paychecks issued in the next tax year.
Names, address, and social security numbers
Retirement plan eligibility
To review employee data in QuickBooks:
1. Go to the Employee Center. Make sure that the Employees tab is selected.
2. Click the arrow button next to the View drop-down list.
3. Review the names and social security numbers for any errors and omissions.
4. If you need to review additional details in your employee records, double-click the name of the employee and review the address and other personal information.
5. From the Change tabs drop-down list, click Payroll and Compensation Info.
If the Employee is covered by a qualified pension plan checkbox is checked in the employee record then, when you run W-2 forms for your employee, the same checkbox is marked on the W-2 form. You can also select or clear the checkbox directly on the W-2 form.
Note: If your company provides a retirement plan such as a 401(k), 403(b), Simplified Employee Pension (SEP), or SIMPLE plan, your employees are considered covered by the plan even if they are not active participants in it. If you use QuickBooks to do your tax forms, run the W-2 form to see any changes you made.
Collapse FAQsFAQs
When will my form W-2 be ready?
How do I ensure that the Forms W-2 are correct?
Federal Form W-2 and W-3
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Collapse Step 2: Verify wage and benefit informationStep 2: Verify wage and benefit information
Collapse Review benefit information for your employees.Review benefit information for your employees.
Before you create paychecks in the new tax year, confirm that all compensation and benefit types are correct, and that the rates for each is correct:
Deferred compensation
Group term life insurance
Third party sick Pay
To review benefit information:
1. Go to the Lists menu and click Payroll Item List..
2. Locate the payroll items set up for deferred compensation, group term life insurance, and third party sick pay. For example, if you need to change the annual limit for 401(k), double-click the payroll item, navigate to the Default Rates and Limits window and edit the limit field.
3. Review the tax tracking type and the rate and annual limit for each benefit.
4. If a benefit needs to be modified because, for example, the annual limit is increased, double-click the payroll item in the list, navigate through the interview to the appropriate window, and then edit the item. Also be sure to review any customized benefits that have been added to the employee defaults or to an individual employee record.
To do so:
1. Go to the Employee Center. Make sure that the Employees tab is selected.
2. Double-click the employee name.
3. From the Change tabs drop-down list, click Payroll and Compensation Info.
4. Review the information in the Additions, Deductions, and Company Contributions section. If you need to edit the information, click in the field and make the edit and then click OK.
Any future paychecks created for that employee will include the new information.
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Collapse Step 3: Perform any year-end calculations.Step 3: Perform any year-end calculations.
Collapse BonusesBonuses
To write a bonus check for an employee
1. Go to the Payroll Center.
2. In the Pay Employees section, click Pay Employees (or Unscheduled Payroll, if you haven’t set up payroll schedules).
3. In the Enter Payroll Information window, select the employee to whom you’re giving a bonus.
4. Clear any earnings or benefits for the selected employee by clicking in each field that has a rate or number and pressing the Backspace or Delete key.
5. Enter the amount of the bonus in the Bonus field.
6. Calculate the federal and state withholding amounts for the bonus, and enter them manually. Make sure that the Do not accrue Sick/Vac checkbox is checked.
7. If you want to give the employee the entire bonus amount, click to check the Enter net/Calculate gross checkbox.
Although QuickBooks calculates and deducts the appropriate taxes, checking Enter net/Calculate gross allows you to give employees the entire bonus amount as their net pay. This feature is available only to subscribers of the QuickBooks Enhanced Payroll service.
8. Click Save & Close to close the Preview Paycheck window.
9. Make sure that the entries that appear in the Payroll Information section of the Enter Payroll Information window are accurate and click Continue.
10. Click Create Paychecks.
Collapse Review sick and vacation settingsReview sick and vacation settings
To review sick and vacation hours for an employee:
1. Go to the Employee Center. Make sure that the Employees tab is selected.
2. Double-click on the name of the employee to access the employee record.
3. In the Change tabs drop-down list, click Payroll and Compensation Info and verify the information.
4. Click the Sick/Vacation button.
5. In the Sick and Vacation sections, review the sick and vacation settings. For example, if your company sick or vacation policy indicates that the hours reset every January 1st, then make sure that the Reset hours each new year checkbox is checked.
6. Click OK to save any changes and close the Sick and Vacation window.
7. Click OK to close the Edit Employee window.
Collapse Confirm entry of any manual checks and update systemConfirm entry of any manual checks and update system
Collapse Make Sure voided checks are recorded correctlyMake Sure voided checks are recorded correctly
Important! You should rarely need to void a paycheck. Remember that voiding a paycheck is not like voiding other kinds of checks; paychecks have associated tax and other liability calculations and payments that need to be taken into consideration.
However, if you have voided any paychecks, make sure they’re recorded correctly in QuickBooks.
1. Go to the Employee Center and click the Transactions tab.
2. Make sure that the Date field contains the correct dates and click an item from the list on the left.
3. Review the entries and make sure that any voided checks are reflected in the transaction list. Voided checks display VOID in the memo field.
You can also use the QuickBooks Find feature to locate a particular check in your company file. To access the QuickBooks Find feature, go to the Edit menu and click Find.
Collapse Click OK to save your changesClick OK to save your changes
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Collapse Step 4: Order year-end suppliesStep 4: Order year-end supplies
Collapse You can order your year-end supplies from Intuit. To do so:You can order your year-end supplies from Intuit. To do so:
Order your year-end supplies online from the QuickBooks Checks, Forms, and Supplies Web site:
http://intuitmarket.intuit.com/fsg/dept.asp?dept_id=11&brand=1&track=9388
Or
Order by phone: 1-800-548-0289
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Collapse Step 5: Check data from last yearStep 5: Check data from last year
Collapse Terminated EmployeesTerminated Employees
Make sure that terminated employees are released correctly in QuickBooks. You should have found any discrepancies in your data during your last payroll of the year and should correct or adjust them before you run your first payroll of the new year.
Regardless of the current employee status, any employee who received a paycheck during the year will receive a W-2 form for that year.
To verify that terminated (released) employees are set up correctly in QuickBooks:
1. Go to the Payroll Center.
2. Click the name of the released employee.
3. Review the transactions in the transaction list.
4. Double-click the termination (typically the last) paycheck created for the employee to ensure that all vacation and sick time is paid out. To see the paycheck detail, click Paycheck Detail.
5. Return to the Employee Center and double-click on the name of the released employee to access the employee record.
6. In the Change tabs drop-down list, click Employment Info.
7. Verify that all information is current and that the release date is correct.
8. Click OK to close the Edit Employee window.
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Collapse Step 6: Review employee wages and benefitsStep 6: Review employee wages and benefits
Collapse Review wages and benefit levelsReview wages and benefit levels
Before your first payroll of the New Year, you may want to take the time to review wages and benefits for all active employees.
To do so:
1. Go to the Employee Center. Make sure that the Employees tab is selected.
2. Double-click on the name of an employee to access the employee record.
3. In the Change tabs drop-down list, click Payroll and Compensation Info and verify the wages and benefits for the employee.
4. Review the current wages and benefits in the Earnings and Additions, Deductions and Company Contributions sections.
5. Click OK to close the Edit Employee window.
Collapse Run a Payroll Liability Balances report and ensure that the liability payments match the amounts reported on the W-2 forms filedRun a Payroll Liability Balances report and ensure that the liability payments match the amounts reported on the W-2 forms filed
To run a Payroll Liability Balances report:
1. Go to the Reports menu, choose Employees & Payroll, and click Payroll Liability Balances.
2. Enter the correct date range in the Date field.
3. Review the payroll liability payment totals and compare with the totals reported on the W-2 forms.
Collapse Update state unemployment and state disability insurance rates (where applicable)Update state unemployment and state disability insurance rates (where applicable)
To update your SUI and SDI rates in QuickBooks:
1. Verify the current SUI and SDI rates for your state.
2. In QuickBooks, go to the Lists menu and click Payroll Item List.
3. Select your state disability insurance or your state unemployment insurance payroll item.
If your state disability insurance is collected by a private agency, the associated payroll item may be set up as other tax, not state disability.
4. Click the Payroll Item button and then click Edit Payroll Item.
5. Click Next in the Edit Payroll Item wizard until you find the tax rate window.
6. Enter the new rate in the Company rate or Employee rate field. (You must wait till January 1st of the new tax year to enter your new rate.)
7. Click Next and then click Finish to record your changes.
Collapse Reconcile reported payroll taxes paid to total tax deposits made (Form W-3 to Form 941)Reconcile reported payroll taxes paid to total tax deposits made (Form W-3 to Form 941)
To reconcile the amounts you reported on payroll tax form with the payroll liability payments, you can create a Payroll Liability Balance report and compare the amounts reported on Form W-3 and Form 941 that you filed.
1. Get a printed copy of the 941 forms you filed and compare with the payment coupons.
2. Go to the Reports menu, click Employees & Payroll, and then click Payroll Liability Balances.
3. Click Modify Report and then click the Filters tab.
4. Select Transaction Type from the Filter scroll box.
5. Click the Transaction Type drop-down menu and click Payroll Liability Check.
6. Click OK to apply the changes to the report and close the Modify Report window.
7. Use the report information to reconcile the amounts on Form W-3 and Form 941.
Collapse Check contributions to Section 125Check contributions to Section 125
To review and reconcile the contributions made to Section 125 (cafeteria plans) and medical care reimbursements, run a Payroll Liability Balances report and review the totals for Section 125 plans and medical care payroll items.
To reconcile the amounts you reported on payroll tax form with the payroll liability payments, you can create a Payroll Liability Balance report and compare the amounts reported on Form W-3 and Form 941 that you filed.
1. Go to the Reports menu, choose Employees & Payroll.
2. Click Payroll Liability Balances report.
3. Enter the correct date range in the Date field.
4. Review the totals for payroll items set up for Section 125, child and medical care reimbursement.
5. Compare the total amounts with payments made to the Section 125, child and medical care plans.
Collapse Review and reconcile contributions to 401(k), 403(b) and SIMPLE plansReview and reconcile contributions to 401(k), 403(b) and SIMPLE plans
To review the contributions made to 401(k), 403(b) and SIMPLE plans, run a Payroll Liability Balances report and review the totals for the 401(k), 403(b) and SIMPLE plan payroll items.
1. Go to the Reports menu, choose Employees & Payroll.
2. Click Payroll Liability Balances report.
3. Enter the correct date range in the Date field.
4. Review the totals for payroll items set up for 401(k), 403(b) and SIMPLE plans.
5. Compare the total amounts with payments made to the 401(k), 403(b), and/or SIMPLE plans.

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