Year End FAQs: Payroll

Here at QuickBooks, we know you are gearing up for the end of the year, and so are we! With so many tasks to check off your list, our goal is to give you the help you need to make this as stress-free as possible. Today we’re taking an in-depth look at the most common Payroll questions.

Because this is an in-depth article, we are providing you with jump links to get you the info you‘re interested in faster. 

• Getting your employees paid - setting up and paying your employees
• Your Plan B when Plan A doesn’t work - changing direct deposit and paper checks
• The hot spot for your employee’s needs - all about QuickBooks Workforce
• Checks, bonuses, and gross ups - some common check related questions or issues

Getting your employees paid

Paying your employees is one of the most important parts of your business, and we like to give you options. When you add a new employee to your account, you can choose one of these payment methods:

QuickBooks Online

• Pay by direct deposit
• Get Started with QuickBooks Online Payroll
• Set up your company payroll for direct deposit
• Set up direct deposit for employees and contractors
• Pay by printing paychecks on preprinted check stock
• How to print paychecks
• Configure your print settings for printing checks and fix print alignment issues

QuickBooks Desktop

• Pay by direct deposit
• Activate QuickBooks Desktop Payroll  
• Connect your bank and Set up direct deposit for employees and contractors

• Pay by printing checks on preprinted check stock
• Create, modify, and print checks

Your Plan B when Plan A doesn’t work

There may be a time where you need to take a direct deposit employee and write them a personal or company check instead. You may do this when you need to create a paper check for one payroll, like for a bonus or commission. 

1. Go to Payroll on the left menu, then select Employees.
2. Click on Run Payroll.
3. Select the Direct deposit icon next to the employee's name.
4. Choose Paper check.
5. Preview and submit the rest of your payroll as usual.

To officially change your employee from direct deposit to checks, go to the employee’s profile setting and edit the pay method.

1. Go to the Payroll menu, then select Employees.
2. Select the edit (pencil) icon beside the employee’s name.
3. Under the Payment Method section, select the pencil.
4. In the drop-down, select a new payment method. Note: If you are changing to direct deposit, you will need the employee's (or contractor's) bank routing number, bank account number, and the type of account (checking or savings).

The hot spot for your employees needs

Employees may need a copy of their paychecks for a variety of reasons, but if you have direct deposit set up, you may be wondering where they can get those paystubs. Your employee’s best friend is going to be QuickBooks WorkForce. 

Not only does WorkForce give your employees access to pay stubs, they can also view and print their own W-2s for tax season. If you have QuickBooks Online Payroll, follow these steps for new employees:

1. Select Payroll, then Employees.
2. Choose Add an employee.
3. Add your employee's info, including their email address. This will automatically invite your employee to see their pay stubs and W-2s. They'll get an email with instructions to set up their Workforce account.
4. If you want your new employee to add their personal info, select the Ask this employee to enter their personal, tax, and banking info with the QuickBooks Workforce checkbox.
5. Select Done.

Already have your employee set up? Not a problem. Here’s how to invite existing employees. Note: You can invite multiple employees at once, or an individual employee.

1. Select Payroll, then Employees.
2. Click on Invite to Workforce.
3. Check the boxes next to the names of the employees you want to invite and enter their email addresses.
4. When finished, select Send invitations.

Don’t worry, I’m not forgetting about our QuickBooks Desktop customers! Here are the steps for you:
Invite existing employees:

1. Sign in to QuickBooks as the QuickBooks Administrator. 
2. From the Employees menu, select Manage Payroll Cloud Services.
   (If you don’t see Manage Payroll Cloud Services, update QuickBooks).
3. Under QuickBooks Workforce, make sure the status is ON, then select Invite Employees.
4. Sign in with your Intuit Account. Note: This should be the person who owns the QuickBooks Payroll license.
5. In your employee list, choose the employees to add to Workforce, then add their email addresses. 
6. Click Send Invite. Once sent, you should see Invited in the Status column.

Invite a new employee:

1. Select Employees, then Employee Center.
2. Select Add New and add your new employee.
3. Then go to the instructions above to invite your new employee.

Note: You’ll need to upload paychecks after each payroll so your employees can access them in QuickBooks Workforce. At the end of the year, you also may need to upload your W-2s.  

Once your employees are set up in Workforce Now, QB Online customers can send pay stub notifications to alert employees when a pay stub is available. Desktop users have the ability to email their pay stubs to them so they have a copy of their own. 

Checks, bonuses, and gross ups

Now that we have covered the most common Payroll issues that come up around year-end, we also wanted to leave you with some information on some of the less common but still important questions that might come up. It may feel like a practice of the past (when’s the last time you saw someone pull out a checkbook?), but checks can be a convenient method for business owners.

First, I want to talk about a zero net paycheck. There are three reasons you might want to create a paycheck that has a net pay amount of zero:

• Put an entire paycheck into a retirement plan
• Designate an entire paycheck for income tax
• Record a gift made to an employee. Such as cash or a gift card

Both Desktop and Online users can check out this article with the steps to create this paycheck within their account: Create a zero net paycheck.

Many employers take the opportunity to thank their employees at the end of the year. The most popular way to do this is to give them a bonus. Here’s how to add this to a regular paycheck in QuickBooks Online

First, you’ll want to create a Bonus pay type in the employee’s profile.

1. Select Payroll, then select Employees.
2. Choose the employee's name.
3. Scroll down and select the pencil icon next to Pay Types.
4. Look under the Common pay types section and select Bonus.
5. Select Save.

1. Select Payroll, then choose Employees.
2. Click Run Payroll.
3. Select the employee and enter the amount in the Bonus field.
4. Preview and submit payroll.

You can also create a separate check for the bonus as well. 

For Desktop users, go here for the steps to set up a payroll item for a bonus. Then, follow these steps to add the bonus to your employee’s paycheck:

1. Begin creating payroll as you normally would.
2. In the Earnings box of the Preview Paycheck window, click in the Item Name column under the regular salary or hourly item to get a drop-down menu, select a bonus item.
3. In the Rate column, enter the gross amount of the bonus.
4. Adjust federal and/or state withholding taxes as needed.
5. Click Save and Close or Save and Next to continue creating paychecks.

Note: Since a bonus is considered supplemental pay, it's subject to the supplemental tax rates.

If you want their paycheck to have a specific net amount (including their bonus) you may decide you want to gross up their check. This means your company can pay the employee portion of the taxes on that bonus. In QuickBooks Desktop:

1. Go to Employees, then select Pay employees. 
2. In the Enter Payroll Information window, put a check next to the employee whose paycheck you want to gross up.
3. Select Open Paycheck Detail.
4. In the Preview Paycheck window, enter a salary or bonus payroll item with no rate in the Earnings section. Make sure to remove any other payroll items listed since using any other type of item doesn't work.
5. Check the box next to Enter net/Calculate gross. Although QuickBooks calculates and deducts the appropriate taxes, selecting Enter net/Calculate gross allows you to give employees the entire amount as their net pay.
6. Select Save & Close, then continue your normal steps to pay employees.

In QuickBooks Online, take a look at this article to find out how to calculate this on your end: Calculate gross wages. 

As life would have it, sometimes your employee goes to another company or they are terminated. Let's go over how you enter their final paycheck. In QuickBooks Online as a scheduled payroll:

1. Go to the Payroll menu and select Employees.
2. Choose Run Payroll and click on your payroll schedule (if you have it). 
3. Click the bank account you use for this type of payroll transaction. Review the pay period and pay date.
4. Select the employee you want to pay.
5. Enter their hours, compensation, memos, or any other necessary paycheck info.
6. Under Pay Method for each employee, choose a paper or direct deposit paycheck.
7. Click on Preview payroll.
8. Choose Preview payroll details to review. Then select Save for later or Submit payroll.
9. When you're ready, choose Finish Payroll.

For non-scheduled payroll and the steps for changing your employee’s status, check this article: Create Finals Paychecks for terminated employees.

In QuickBooks Desktop:

1. From the Employees menu, select Pay Employees and then Termination Check. 
2. Review the Pay Period Ends date, Check date, and the Bank Account the payment comes from. Note: To avoid a late fee, date the check for today or a future date.
3. Put a checkmark next to the employees you need to give a termination paycheck to.

Next, create a termination check:

1. Under the Release Date column, select the Calendar icon. Then select or enter the employee's release date. 
2. Enter and review the hours or salary.
3. Select Open Paycheck Detail to review the paycheck details.
4. If you want to send the check as a direct deposit, select and check the Use Direct Deposit checkbox. If you don't want the paycheck to be a direct deposit, uncheck that option.
5. Select the Do Not Accrue Sick/Vac checkbox if applicable.
6. When you're done, select Save & Next to create a check for another employee. Or select Save & Close to go back to the Enter Payroll Information window.