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How to do Payroll Manually in QuickBooks®

Here are some steps you can follow to do payroll without subscribing to the tax table service from QuickBooks. This works for 1 -5 employees. For more employees, it is much easier to subscribe to the tax table service. The method described below also works if your subscription to the tax table service has expired.

Set preferences to manual payroll —>
  1. Make sure the preferences are set correctly.
    1. Choose Edit
    2. Click on Preferences
    3. Click “Payroll & Employees” section
    4. Click the “Company Preferences” tab
    5. Under QuickBooks Payroll Features click “Full Payroll”
    6. Press OK
  1. Set the company file to use manual payroll calculations. When this occurs QuickBooks inserts a zero amount for each payroll item associated with a tax.
    1. The easiest way would be to click on the help section, which is different for each year
      1. For current versions, do a search for "Process payroll manually" in QuickBooks Help. You'll find instructions to switch to manual payroll.
      2. The 2008 and 2009 version under QuickBooks Help, do a search for payroll descriptions and under the topics found, scroll down and it will state “Process payroll manually”. It will bring you to a page where it tells you what they recommend and then the nest paragraph, says “If you prefer to process your payroll manually”, and right under this click the highlighted words that say “manual payroll calculations”. Once you click on this, QuickBooks brings you to a page that asks if you are sure, and you will click on the highlighted words that say “Set my company file to use manual calculations”. After you do this a QuickBooks information box will pop up on the screen letting you know that you must now calculate your payroll manually, and if you currently have a payroll subscription that you should call Intuit to cancel.
      3. The 2006 and 2007 version under QuickBooks Help, in the search area type in a search for “payroll services”, then under “payroll services” click on “description of services”. The left column will give you a list of choices, and scroll down until you read “Set your company file to use the manual payroll calculations setting” right under that title it says “click here” which is highlighted. Click those words, and it will bring you to another page that asks if you are sure that you want to set your company file to use manual calculations, and you will click on the highlighted words that say “Set my company file to use manual calculations”. After you do this a QuickBooks information box will pop up on the screen letting you know that you must now calculate your payroll manually, and if you currently have a payroll subscription that you call Intuit to cancel.
Be sure you have access to the correct tax percentages —>
  1. You will need to contact the IRS, state and local tax agencies or a professional tax advisor to receive the most recent payroll tax information:
    1. Tax tables, including mid-year tax changes that can affect the payroll.
    2. Wage base limits on taxes such as FUTA.
    3. The frequency with which you pay your payroll taxes.
  2. Each pay period you will need to the information that you have gathered to calculate the year-to-date federal, state, and local tax information for each employee.
Calculate payroll —>
  1. These instructions are for recent versions of QuickBooks. Older versions have a different method of getting to the Paycheck Detail window. Please email us if you need those instructions.
  2. Now you are ready to enter in the employee payroll information.
    1. Click the Employees tab at the top of the screen.
    2. Scroll down the list and click Pay Employees.
    3. A warning will pop up and will have ask you if you would like to learn more about QuickBooks Payroll Services, click no.
    4. A box will pop up that reads Enter Payroll Information.
    5. In the Pay Period Ends box make sure the date is the day that your payroll you are doing has ended.
    6. Once entered press Tab and it will take you down to Check Date, which is where you enter the pay date.
    7. Once entered press Tab and it will take you to the Bank Account area where you will confirm that the check is being written from the correct bank account.
    8. At the bottom of the screen you will see a list of all the employees that are active in your system.
    9. Go ahead and click the Check All button, then scroll down the list and uncheck any of the employees that will not be paid this period. Alternatively, you can check the employees who will be paid this period.
    10. Click the Open Paycheck Detail
  3. Once you have an employee’s Paycheck Detail open, it will be labeled Preview Paycheck. You will manually be filling in the taxes and deductions in this section.
    1. You will start off in the Earnings section of the paycheck.
    2. Choose the Item Name (Hourly, Salary, Waitress, etc.).
    3. In the Rate section you will enter the hourly rate that the employee will receive (ex: $8.00), enter the rate and press Tab.     
    4. You will be in the Hours section, at this point you will enter the total amount of hours that the employee worked for that pay period.
    5. At the bottom of the Earnings box, you will see where QuickBooks totals the gross amount and the amount of hours for that employee.
    6. The Rate multiplied by the Hours equals the gross amount.
  4. In the Paycheck Detail, there are tax calculations that must be used to correctly generate an employee paycheck. The tax calculations can be done in the Paycheck Detail, for instance, you can click under the Company Summary in the amounts section and type in the gross pay, the multiplication sign (*), and the decimal equivalent to the percentage.
  5. Click in the Company Summary section where there are four calculations that must take place.
    1. In the Social Security Company row, click in the Amount column enter the gross amount multiplied (*) by .062 Tab (you cannot use percentage symbol).
    2. In the Medicare Company row, enter the gross amount, multiply (*) .0145, Tab.
    3. In the Federal Unemployment Tax row, enter the gross amount, multiply (*) by .008. Futa is capped at $56.00 per employee in 2009. So when the year to date total reaches $56.00, leave this amount 0 in future payrolls. If necessary, you may have to adjust the final amount entered so that the year to date total is exactly $56.00.
    4. The AK-Unemployment Company varies dependent on what the State of Alaska issues for any particular company. For this row in the Amount column, you will enter the gross amount, multiply (*) by the percentage given by the State of Alaska and press Tab.
  6. This will take you to the Employee Summary section where calculations need to be made.
    1. Your last Tap placed your cursor in the first row of the Employee Summary which is the gross pay amount, press Tab.
    2. Now you are in Federal Withholdings section where you will need to refer to each employee by what they entered on their W-4 tax withholding form. You can access the IRS table and find the table that will give your percentages to enter on page 5.
    3. The Social Security Employee is 4.2%, you will need to enter the gross amount multiplied (*) by .042 and press Tab it will do the calculations for you and move you to the entry.
    4. The Medicare Company is 1.45%, now you enter the gross amount multiplied (*) by .0145, press Tab and that will calculate and move you to the next entry.
    5. The AK-Unemployment Employee is .58%, you will enter in the gross pay multiplied (*) by .0058, press Tab and that will take you to “Save and Close” and you can press enter.
  7. The Social Security, Medicare and AK-Unemployment percentages must individually be multiplied by the gross pay, and entered in the Employee Summary section under Amounts.
  8. Make sure these calculation amounts are entered as negative to deduct from the gross pay balance. It should do this automatically.
  9. In the Other Payroll Items section you can list the deductions for CSSD or advances.
    1. These amounts should be recorded negatively, expect QuickBooks to take care of this for you, but double check.
    2. Make sure these amounts are also deducted from the gross pay, depending on how the item was set up, you may need to put a number in the quantity column.
  10. Tips require additional calculations.
  11. Make sure that the calculations done manually are proofed to ensure there are no mathematical errors. One way to double check is that the amounts for Social Security and Medicare are equal in both the employer's and employee's column.
  12. When done working with each employee’s Paycheck Detail, press “Save and Close” to exit.
  13. Once you do this, you can decide whether you would like to print or do handwritten checks.
  14. When you have finished all employees, you can click Create Paychecks.

Warning:
Tax rates can change, be sure that you are using the current rates.

Advice and tips provided on the Fathom Graphics website are not a substitute for advice from your CPA, tax preparer or attorney. We are not CPAs or attorneys and do not provide legal or tax advice.