QuickBooks 2005: The Missing Manual

Entering Historical Payroll

If you start using QuickBooks in the middle of a year, the best approach for record-keeping is to enter all your financial transactions from the beginning of the year. At the end of the year, you and your accountant will be glad you did. But with payroll, it's essential to enter all the payrolls you've processed since the beginning of the year. That's the only way to produce W-2s at the end of the year that show the correct totals for the entire year. In addition, by entering previous payroll data into your company file, the payroll calculations take into account deduction limits. For example, for 2003, Social Security taxes apply to only the first $87,000 of income. Income that an employee earns beyond that is free of Social Security tax.

Note

Employees pay their taxes based on the calendar year, no matter what fiscal year your company uses. Even in QuickBooks, the payroll year is the calendar year.

Entering previous payroll numbers offers an added bonus: You can take a practice run through entering payroll information and verify the values against the payroll reports from your other system.

Step 5 of the Payroll Setup wizard lets you add payroll amounts for the payrolls you ran without QuickBooks payroll services. But the wizard requires that you complete steps 1 through 4 first. In the Payroll Setup wizard, when you see checkmarks in front of steps 1 through 4, you're ready to enter the year-to-date amounts. Gather your manual payroll records for the year ...