QuickBooks Pro 2003

 

 

Suggested Solution for Payroll Setup in Bermuda

 

As we learned before US or North American version of QuickBooks Payroll feature is available only in US and Canada. When we say QuickBooks Payroll feature we primarily mean automatic payroll as oppose to manual. Automatic Payroll is a service provided by Intuit, publisher of QuickBooks. With automatic payroll we subscribe for a payroll service with Intuit for an annual fee. After we sign up for payroll tax table and deductions are calculated and updated automatically as they change. And they change very often in US. In Bermuda we do not have income taxes and not as many deductions as is the case in most countries. There is no such thing as tax table and payroll setup is relatively easy.

 

In this exercise we assume we have a company called Long Boat Cruises. We have a boat called Long Boat that can accommodate approximately 50 passengers. We usually offer charter cruises for parties and sightseeing. Boat could be used for other services however we concentrate on those two leisure cruises

 

We have several employees, a captain and a few crewmembers. All of them are employed full time and we pay them on hourly basis and we will setup QuickBooks manual payroll to demonstrate how to pay them.
Setting Up New QuickBooks Company

 

  1. Open QuickBooks if is not already open
  2. Click on File, Click New Company
  3. At the EasyStep Interview Welcome window click Next
  4. Keep clicking Next eight times until you come to the “Your company name” screen
  5. In the Company Name field type Long Boat Cruises and press Tab. QuickBooks automatically populates Legal Name field
  6. Click Next
  7. Enter the following information

 

Your Screen should match the following.

 

 

  1. Click Next, leave Federal Tax ID blank
  2. Leave the first month of Fiscal Year January, click Next
  3. Your company income tax form, leave Other/None, click Next, click OK at the Tax Form pop-up window
  4. Select your type of business, Service Business, click Next three times
  5. In the Save As window make sure that Save in is your QBtrain folder. Accept the default file name “Long Boat Cruises” and click Save.
  6. Click Next
  7. In the Your income and expense accounts window under Do you want to use these accounts leave Yes selected and click Next
  8. In the Accessing your company window, leave the number of people who needs to have access to the company file 0 and click Next three times.
  9. Answer the following questions as follows:

 

Does your company maintain inventory?

No

Do you collect sales tax from your customers?

No

Your invoice format

Service

Do you want to use QuickBooks to help you with your payroll?

No

Do you prepare written or verbal estimates for your customers?

Yes

Do you ever issue more than one invoice for one estimate

Yes

Would you like to track time…

Yes

Do you want to use classes?

No

Two ways to handle bills and payments

Enter the bills first…

Reminders list

At start up

Accrual or cash-based reporting

Accrual-based

 

  1. Click Next four times until you arrive to Choose your QuickBooks start date. Type 1/1 and press Tab.
  2. Click Next four times to arrive to Income Accounts. Leave Yes at “Do you want to add an income account now?” Click Next
  3. Account Name: Boat Income
  4. Click Next. Add another income account: No
  5. Click Next two times. Under Expense Accounts leave More Details and click Next three times
  6. Under “Do you want to add an expense account now?” click No and click Next four times
  7. Receipt of payment, leave Sometimes, click Next
  8. Statement charges, No. Click Next three times
  9. “Do you want to setup a service item…?”, No
  10. Non-inventory part No
  11. Other Charges, No. Next three times
  12. Income Details: Inventory, leave Skip inventory items. Next five times.
  13. “Do you have any customers who owed you money…?” No. Next two times
  14. “Do you have any vendors whom you owed money…?” No. Next three times
  15. Next four questions as follows:

 

 

Credit card accounts

No

Lines of credit

No

Loans and Notes Payable

No

Bank Accounts

Yes

 

  1. Name Checking, click Next
  2. Statement Ending Date 1/1 and press Tab
  3. Statement Ending Balance 5000, click Next
  4. Another bank account, No. Next twice
  5. Asset accounts, No
  6. Click Next, Click Leave
  7. Close Getting Started, Company Navigator and Reminders if opened

 

 

Turning Payroll feature ON

 

  1. Click on Edit menu, click Preferences
  2. Click Payroll & Employees, click Company Preferences tab and click Full payroll radio button. Click OK
  3. Click Employees menu, Payroll Item List
  4. You are not currently signed up…Would you like to learn more? Click No
  5. Click on Social Security Employee or Advanced Earned Income Credit in the Payroll Item List window, click on Payroll Item button and click on Make Inactive
  6. Repeat previous step for all other items one at a time

 

After deactivating all of them your screen should look like the following.

 

 

Setting up Payroll Deductions

 

PAYROLL TAX

  1. Click on Payroll Item button and click New, select Custom Setup and click Next
  2. Select Other Tax, click Next
  3. Leave User-Defined Tax and Tax is paid by the employee, click Next
  4. Name Payroll Tax, click Next
  5. Agency, type Accountant General and press Tab. At the pop-up dialog box click Quick Add
    • Number, leave blank                                
    • Liability account, leave Payroll Liabilities
    • Click Next
  6. Tax tracking type, leave None, click Next
  7. Calculate based on quantity, leave as is, click Next
  8. Default rate, type 4.75% (including % sign), Annual Limit, leave blank. Click Next
  9. Click Default, Click Yes, Click Finish

 

MEDICAL INSURANCE

 

Paid by the Employee

  1. Click on Payroll Item button and click New, select Custom Setup and click Next
  2. Select Deduction (Union Dues, …..), click Next
  3. Name Medicare Emp, click Next
  4. Agency, type Argus and press Tab. At the pop-up dialog box click Quick Add
    • Number, leave blank
    • Liability account, leave Payroll Liabilities
    • Click Next
  5. Tax tracking type, leave None, click Next
  6. Taxes. This item is deducted………Do not select any, Click Next
  7. Calculate based on quantity, leave as is, click Next
  8. Leave gross pay selected, click Next
  9. Default rate, type 30, Annual Limit, leave blank. Click Finish

 

Paid by the Company

  1. Click on Payroll Item button and click New, select Custom Setup and click Next
  2. Select Company Contribution, click Next
  3. Name Medicare Comp, click Next
  4. Agency, type ar, press tab, Argus comes automatically

·        Number, leave blank

·        Liability account, leave Payroll Liabilities

·        Expense account, leave Payroll Expenses

·        Click Next

  1. Tax tracking type, leave None, click Next
  2. Taxes. This company contribution………Do not select any, Click Next
  3. Calculate based on quantity, leave as is, click Next
  4. Default rate, type 30, Annual Limit, leave blank. Click Finish

 

GOVERNMENT PENSION

 

Paid by the Employee

  1. Click on Payroll Item button and click New, select Custom Setup and click Next
  2. Select Deduction (Union Dues, …..), click Next
  3. Name Government Pension Emp, click Next
  4. Agency, type a, press Tab, QuickBooks enters the rest for Accountant General

·        Number, leave blank

·        Liability account, leave Payroll Liabilities

·        Click Next

  1. Tax tracking type, leave None, click Next
  2. Taxes. This item is deducted………Do not select any, Click Next
  3. Calculate based on quantity, leave as is, click Next
  4. Leave gross pay selected, click Next
  5. Default rate, type 24.19, Annual Limit, leave blank. Click Finish

 

Paid by the Company

  1. Click on Payroll Item button and click New, select Custom Setup and click Next
  2. Select Company Contribution, click Next
  3. Name Government Pension Comp, click Next
  4. Agency, type a, press Tab, QuickBooks enters the rest for Accountant General

·        Number, leave blank

·        Liability account, leave Payroll Liabilities

·        Expense account, leave Payroll Expenses

·        Click Next

  1. Tax tracking type, leave None, click Next
  2. Taxes. This company contribution ………Do not select any, Click Next
  3. Calculate based on quantity, leave as is, click Next
  4. Default rate, type 24.19, Annual Limit, leave blank. Click Finish

 

EMPLOYER’S PENSION

 

Paid by the Employee

  1. Click on Payroll Item button and click New, select Custom Setup and click Next
  2. Select Deduction (Union Dues, …..), click Next
  3. Name Employer’s Pension Emp, click Next
  4. Agency, type Employer’s Pension Fund, and press Tab. At the pop-up dialog box click Quick Add

·        Number, leave blank                                

·        Liability account, leave Payroll Liabilities

·        Click Next

  1. Tax tracking type, leave None, click Next
  2. Taxes. This item is deducted………Do not select any, Click Next
  3. Calculate based on quantity, leave as is, click Next
  4. Leave gross pay selected, click Next
  5. Default rate, type 3.3% (including % sign), Annual Limit, leave blank. Click Finish

 

Paid by the Company

  1. Click on Payroll Item button and click New, select Custom Setup and click Next
  2. Select Company Contribution, click Next
  3. Name Employer’s Pension Comp, click Next
  4. Agency, type e, and press Tab. QuickBooks populates the rest for Employer’s Pension Fund

·        Number, leave blank                                

·        Liability account, leave Payroll Liabilities

·        Expense account, leave Payroll Expenses

·        Click Next

  1. Tax tracking type, leave None, click Next
  2. Taxes. This company contribution ………Do not select any, Click Next
  3. Calculate based on quantity, leave as is, click Next
  4. Default rate, type 3.3%, Annual Limit, leave blank. Click Finish

 

 

Setting up Wages

 

Captain

  1. Click on Payroll Item button and click New, select Custom Setup and click Next
  2. Select Wage (Hourly,…), click Next
  3. Select Hourly Wages, click Next
  4. Select Regular Pay, click Next
  5. Enter name Regular Pay Captain, click Next
  6. Leave Payroll Expense, click Finish

 

Crew

  1. Click on Payroll Item button and click New, select Custom Setup and click Next
  2. Select Wage (Hourly,…), click Next
  3. Select Hourly Wages, click Next
  4. Select Regular Pay, click Next
  5. Enter name Regular Pay Crew, click Next
  6. Leave Payroll Expense, click Finish

 

Your screen should look like the screenshot below.

 

 

 

 

Setting up Employees, Employee Default

 

  1. Click Employees menu, Employee List
  2. Would you like to learn more? Click No
  3. Click Employee button and click Employee Defaults
  4. Click in Pay Period and select Weekly
  5. Click on the first line in the Item Name in the Earnings section and select Regular Pay Crew, press Tab, type 20, select Regular Pay Captain, press Tab and type 30, press Tab,

 

 

  1. Click Taxes button, Filing Status, select Don’t Withhold, deselect everything on Federal tab.

 

 

  1. Click Other tab
  2. Click on the first line in Item Name field and select Payroll Tax

 

 

  1. Click OK to close Taxes Defaults
  2. Click on the first line in the Item Name in the Additions, Deductions and Company Contributions section
  3. Click on down pointing arrow and select the first item Employer’s Pension Emp
  4. Click right below Employer’s Pension Emp (next blank line) and select Government Pension Emp
  5. Repeat previous steps to select all remaining items.
  6. Once all items are added click OK to close Employee Defaults window

 

 

 

 

 

ADDING NEW EMPLOYEES

 

  1. Click Employee button and click New
  2. Enter information as follows:

First Name: Bill

Last Name: Gates

Gender: Male

  1. Click OK, click Leave As Is

 

  1. Click Employee button and click New
  2. Enter information as follows:

First Name: George

Last Name: Bush

Gender: Male

  1. Click OK, click Leave As Is

 

  1. Click Employee button and click New
  2. Enter information as follows:

First Name: Collin

Last Name: Powel

Gender: Male

  1. Click OK, click Leave As Is

 

  1. Click Employee button and click New
  2. Enter information as follows:

First Name: Osama

Last Name: Bin Laden

Gender: Male

  1. Click OK, click Leave As Is

                                             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACTIVATING PAYROLL

  1. Click Employees menu, Pay Employees…, click OK
  2. Click Continue
  3. Do not select any of the Payroll options, click on the hyperlink Learn More located at the end of the line after the Complete Payroll option

 

 

  1. On the next screen click long blue button I choose to manually calculate payroll taxes. If you don’t see this button scroll down

 

 

  1. Click Finish Later

 

Paying Employees

To pay an employee:

  1. Click on Employees, Pay Employees
  2. Would you like to learn more? No
  3. Pay Employees You have not entered any YTD adjustments… click OK
  4. Select Bill Gates and click Create
  5. At Payroll Subscription warning click Continue
  6. Type 10 in the Hours field on the second line for Regular Pay Captain and press Tab
  7. Click Create

 

Note:

This setup will apply automatically to new employees only, those that we add after the payroll setup. For all existing employees, that were in QuickBooks before payroll setup we need to add all deductions manually for every employee, one at a time.

 

To accomplish that:

  1. Click on Employees on the menu bar, Employee List
  2. Select the employee you want to edit
  3. Click Employee button and click Edit
  4. Click in Change Tabs field and click Payroll and Compensation Info

 

 

If you have any questions or comments regarding these instructions send them  to ilija@ilija.net