Payroll Setup

Preview · from QuickBooks® Online Step-by-Step

In this chapter, you will learn how to set up QuickBooks® Online to track your Payroll. You must properly set up your Payroll subscription, policies, employees, and if necessary, year-to-date payroll history.

In this chapter

• Intuit’s Workforce Subscriptions
• Security Settings
• Getting Help With Payroll
• Checklist for Setting Up Payroll
• The Accounting Behind the Scenes
• Payroll Accounts
• Payroll Items
• Setting Up Payroll In Your Student File
• Setting up Payroll
• Adding Employees
• Creating Pay Schedules
• Creating Pay Types
• Setting Up Direct Deposit
• Entering Tax Withholding Information
• Medical Insurance
• Retirement Plans
• Garnishments
• Assigning Time Off Policies
• Employee Documents
• Customizing the Payroll Settings
• Specify the Payroll Accounting Mapping
• The Payroll Overview
• Do It Yourself: Payroll Setup

Chapter review: Payroll subscriptions, Payroll Items, employee setup & Auto Payroll

14 practice questions. The answers are in the book.

1. An easy and convenient way to process payroll in QuickBooks® Online for employees on different payroll schedules would be to:

   • Move all employees onto a single schedule.
   • Use the Payroll Schedule function.
   • Outsource payroll.
   • Convert some employees to independent contractors.

2. Which of the following payroll periods is not an option in QuickBooks® Online?

   • Every week.
   • Every other week.
   • Twice a month.
   • Quarterly.

3. Which Payroll Item cannot be created during setup?

   • Commissions.
   • Bonuses.
   • Medical Insurance Deductions.
   • You can create all these options.

4. Which one of these is not an option when setting the accrual period for sick and vacation time?

   • At Beginning of Year.
   • Every Month.
   • Each Pay Period.
   • Per Hour Worked.

5. QuickBooks® Payroll will NOT allow you to:

   • Create multiple wages for the same employee.
   • Set up deduction and withholding items.
   • Set the pay rate for an employee.
   • Add two employees with exactly the same name.

6. You enter the Federal ID for your company:

   • In the Payroll Settings under the Settings gear.
   • In the Payroll Overview.
   • In QBO’s Account and Settings.
   • A and C above.

7. Use a Payroll Deduction item to track medical insurance costs when:

   • The employees pay part (or all) of the cost.
   • Costs exceed $100 per month for the employee.
   • The employer pays the total cost.
   • You do not track medical insurance costs as a Payroll Deduction item.

8. Which of the following does QuickBooks® Online exclude from taxable earnings when calculating federal withholding?

   • Vacation salary.
   • Sick leave salary.
   • Overtime earnings.
   • Employee contributions to a 401(k).

9. Why are there two Health Insurance and two Retirement categories in the Accounting Preferences?

   • Different tax rates apply to employee and employer portions.
   • You use separate accounts because you must write separate checks for employee and employer portions.
   • QuickBooks® Online manages the employee and employer portions separately.
   • You maintain separate ledger accounts for the two portions of each tax.

10. Which of the following is not a feature of QuickBooks® Online Workforce Payroll?

    • Calculates gross pay by hours worked or salaries.
    • Prints paychecks on standard checks or pays by Direct Deposit.
    • Support agents set up payroll for you and guarantee accuracy.
    • Calculates and electronically remits federal payroll tax liabilities.

11. QuickBooks® Online uses Payroll Items to:

    • Accumulate payroll liabilities.
    • Track each different kind of compensation.
    • Define the relationship between items you put on paychecks and the Chart of Accounts.
    • All of the above.

12. If you no longer want an employee to show in the Employees list:

    • Stop paying the employee.
    • Deselect the employee for payments.
    • Change their employment Status.
    • Remove all wage items from the employee’s record.

13. Which is not true about Auto Payroll?

    • It takes payroll out of your control.
    • It repeats the previous payroll on a set schedule.
    • You can set default hours for each employee.
    • It notifies you a few days before so that you can confirm.

14. Sick leave, vacation leave, and PTO are:

    • Standardized for all businesses in the US.
    • Optional for all businesses in the US.
    • Only accrued by the number of hours worked.
    • Completely flexible according to your company’s policies.