Using Quicken to Track Payroll Expenses

(Quicken Deluxe 2014)

Damona Doye, Extension Economist, and Lori Shipman, Extension Associate

December 2013

In the past, Quicken users who needed payroll software could use a program offered by Intuit, the

maker of Quicken. Intuit dropped this software and now offers subscription services that work with

QuickBooks. Quicken users can however track their payroll expenses with Quicken, but must subscribe

to a service or otherwise make the calculations and keep up-to-date with the tax withholding tables.

Quicken does not provide a platform for printing the Forms W-2 or 1099s. However, you can create a

report to get the information needed to fill in the correct form.

We highly recommend contacting your accountant or tax preparer to fully understand obligations

related to payroll as it is a complicated part of a business. Whether a small business and/or agricultural

business, legal obligations of the employer include determining the status of a worker to as to whether

they are independent contractors or employees. Additional regulations apply based on the business entity

and size, number of employees and the amount of payroll paid during the year. It is the employer’s

responsibility to complete the required paperwork, meet deadlines for tax collections and payments, etc.

The instructions that follow are generic and should not be considered complete as your situation may vary

from the basics that we will cover. Discuss payroll issues with an accountant and/or tax preparer to

determine the needs of your particular operation and applicable tax rules.

Tax Publications and Information Resources

The following IRS publications offer guidance in hiring workers as well as developing employee

payrolls. These publications describe forms the employee must complete and include tax payment

deadlines and tax tables for calculating withholding. This list is not all inclusive and should be reviewed

with a tax accountant.

Form I-9- “Employee Eligibility Verification”

Form W-2 “Employee wage and tax reporting form”

Form W-4 – “Employee's Withholding Allowance Certificate”

Form 943 – “Employer’s Annual Federal Tax Return for Agricultural Employees”

Form 1099 – “Wages to non-employees”

Publication 15 – (Circular E) “Employers Tax Guide”

Publication 15a – “Employer’s Supplemental Tax Guide”

Publication 15b – “Employer’s Tax Guide to Fringe Benefits”

Publication 225- “Farmer’s Tax Guide”

Publication 51- (Circular A) – “Agricultural Employer’s Tax Guide”

Publication 509 – “Tax Calendar”

Be sure to stay current by contacting a tax specialist or the Internal Revenue Service website. The most

current publications are available at the IRS website: http://www.irs.gov/

Determine the Employee Status

The status of a worker needs to be determined to furnish the correct forms and determine how to

pay and withhold taxes. Determinations are made based on type of work, how hired, number of

employees employed by the business, job(s) performed, and relationship (spouse or dependent) to the

employer. Immigrant labor brings in another layer of regulation and responsibility.

Payroll Responsibilities

As an employer, you are responsible for requesting the appropriate identification and paperwork to

establish an employee. If you choose to do the payroll activities, responsibilities include recording work

hours, calculating the gross pay, determining and calculating the required tax withholdings and place

them in a holding account. You are also responsible for timely payment of taxes to the IRS and state

taxation department. In some situations, workers’ compensation insurance may be required. If you offer

employee benefits, special handling is required. We will not cover these situations in this publication.

Develop a paper form or spreadsheet to make the appropriate payroll calculations using the

appropriate tax tables. Quicken tracks the expenses and records the payments of payroll and payroll

taxes. Use the following instructions to record the payroll payments, withholdings, and expenses.

Add Payroll Categories and Subcategories

With your Quicken file open, add the categories and subcategories needed. We use a main Payroll

category to group the associated expenses and then add subcategories to identify the particular expenses.

Go to Tools, Category List to open the category list window. Click on Add Category. Enter

information as shown below.

Next, select the Tax Reporting tab. Check Tax related category and choose Extended line item list,

Schedule F: Labor hired as shown below.

Now, add the appropriate items for gross pay and tax withholdings paid by the company. Click on Add

Category in the Category List window. Complete the Set up Category screen as follows:

Remember that Quicken considers anything that is not associated with Schedule C to be Personal

Expenses. Next, select the Tax Reporting tab. Check Tax related category and choose Extended line

item list. Select Schedule F: Labor hired from the drop down Tax Line item menu as shown below.

Add the following for the FICA (Social Security) paid by the farm operation (this needs to be

designated separate from the employee contribution for tax purposes):

Add Category

Category Name: Comp FICA

Description: Company FICA Contribution

Type: ●Subcategory of: Payroll

Tax: ●Extended line item list

Tax line item: Schedule F: Taxes

Group: Farm Expense

√ Tax-related

In most cases, add the following subcategory of Payroll to record the necessary withholding taxes:

Add Category

Category Name: Comp Medicare

Description: Company Medicare Contribution

Type: ●Subcategory of: Payroll

Tax: ●Extended line item list

Tax line item: Schedule F: Taxes

Group: Farm Expense

√ Tax-related

Close the Category List window.

Adding the Tax Liability Accounts

We need to set up a liability account to act as a holding account for the tax withholdings (employer

and employee) until paid. To add an account, go to:

Tools

Account List

Click on the Add an Account button at the bottom right.

Select ●Other Liability

Name account/Nickname:Payroll-FICA

Date to start tracking: 01/01/2014

Liability Amount: 0.00

Is there a loan on this liability?

●No

Finish

The Payroll-FICA account appears in the Account List under Liability.

In the same manner, add the following liability accounts.

Type

Name Account

Date to start

tracking

Liability

amount

Loan

Liability

Debt

Payroll-Medicare

01/01/14

0.00

Debt

Payroll-FedWithholding

01/01/14

0.00

Debt

Payroll-StateWithholding

01/01/14

0.00

Debt

Payroll-FedUnemployment

01/01/14

0.00

Debt

Payroll-State Unemployment

01/01/14

0.00

Federal unemployment may not be required for agricultural workers in some situations. Some

states may require payment of state unemployment or workers compensation.

Enter Payroll Transactions

A simple payroll transaction for Howard Hiredman who typically helps with the cow/calf operation

might be as follows. From the Checking account register, enter:

Date: 01/10/14

Num: 2129

Payee: Howard Hiredman

Payment: 840.85

Now click on the Split button and enter: Pay close attention to the plus and minus signs.

Note: An account (Payroll-FICA, for example) used as a category shows a transfer of cash from one

account to another and appears in brackets. The liability account tracks either the employee withholding

or both the employer and employee share. Employee tax withholding amounts are not expensed as the

expense has been taken by the employer as gross pay and the employee amounts are subtracted from the

employee gross pay.

OK to close the Split Transaction screen.

Enter to record the transaction.

Memorize Transaction

Since this is a transaction likely to be used more than once, you may want to memorize the

transaction without specific amounts so that it will be easy to record similar information in the future.

Since Howard is our only employee we will keep him as payee. Select the Howard Hiredman transaction.

From the main menu line, choose Edit, Transaction, Memorize Payee, Memorize split payees as

percentages? No

OK.

Next, go to Tools, Memorized Payee List. Find the Howard Hiredman transaction then click on Edit.

Click on Split. We will enter placeholder numbers, either a zero or a negative 0.01 for those items

that are entered with a negative sign. We may remove the Tag since Howard helps with other parts of the

farm operation and it may vary from paycheck to paycheck.

Click Adjust

Review the Payee List. The transaction is shown as locked so it comes up in this format the next time you

start to type Howard’s name.

Click on the X in the upper right corner to close the Memorized Transaction list.

Pay the Tax

The payroll taxes are generally due monthly or quarterly. A tax consultant or the IRS publications

can provide the due dates. If no other payroll transactions were incurred during the month, the payment

entry in our example would be as follows.

From the Checking account:

Date: 01/30/14

Num: 2140 (check number or EFT, Electronic Funds Transfer as appropriate)

Payee: IRS

Payment: 218.05

Memo: 1

Monthly Federal tax payments

Click on Split

Save

When these payments are recorded, they reduce the balance of the checking account and the

corresponding liability account. You can view this by selecting the recorded transaction and opening the

Split screen by clicking on the √ then click on Edit, Go to Transfer.

To view the other accounts go back to the Checking account and follow the instructions given above

selecting another payroll liability entry.

The state withholding is due quarterly so the payment will be made by April 15. (We are assuming no

other payroll has been made during the quarter).

From the Checking account:

Date: 04/11/14

Num: 2160 (or Electronic Funds Transfer)

Payee: State Taxation Commission

Payment: 18.00

Category: [Payroll-StateWH]

Memo: 1

Quarterly State Tax Payment

Save

Print Reports

You may want to review a variety of reports. For each payroll, you may want a printed report to file

and you may wish to export the report into a spreadsheet to track each employee’s records for the year.

At the end of the year, you will want to create a report to get the information you need for W-2s. Some

examples follow.

To create a detailed payroll report that includes all of the split transactions, select Reports from the

main menu. We have two employees for this example payroll.

Banking

Transaction

Click on the Customize button.

These are the items changed to get the screen above:

Customize the Date range for the pay period: 01/01/14-4/11/14

Give the report a Title: April 11, 2014 Payroll Report

Subtotal by: Payee

Sort by: Account/Date

Organization: Income & Expenses

Show: √Cents

√Show splits

Now, select the Categories tab.

Click on the Clear All button.

Enter Payroll in the Type category name to search list. Now select the Payroll categories and also the

Payroll liability accounts at the bottom of the list.

To print a copy for your records, click on the Print icon.

To export information for each individual employee to a spreadsheet, customize the report for each

employee separately by clicking on the Payees tab and complete the screen.

Export Data

Report to Excel compatible format

Open

Now, switch to the spreadsheet program:

File

Open

Files of Type: Text Files

Highlight the file name and click on Open

Click on √Delimited, Next, √Tab, Finish

The data is divided by columns and can be manipulated as desired. Save the spreadsheet in

the spreadsheet file format.

W-2 Report

Quicken doesn’t have a built in W-2 Report, so you will either need to print a report as shown below

and/or use the spreadsheet you have created to get the totals needed to fill in a W-2.

Reports

Banking

Banking Summary

Click on the Customize icon. Fill out the Dates, Title, Row, and Column fields as shown below.

Click on the Categories tab

Select the Payroll Expenses and the Federal and State Withholding liability accounts.

The report is income and expense, so the numbers for the payroll expenses appear as a negative. To

complete the W-2, the numbers are positive. The company expenses for FICA and Medicare are the same

amounts as the employee paid in, so they can be used for the appropriate boxes on the W-2. The liability

account numbers are positive and stay positive for recording.

Note: You can QuickZoom (place the magnifying glass cursor over an entry and double click to

bring up the transaction(s) in the register that are part(s) of the total shown.

Print or Export Data to keep a copy.

You can save the report format by clicking on the Save icon.

Forms 941and 943

Forms 941 and 943 are to report wages paid taxes for Social Security, Medicare and Federal

Withholding. Form 941 is filed Quarterly and Form 943 annually. Any under payment or overpayment

may be corrected using the Forms 941-X or 943-X. See the instructions for these forms to determine your

filing status.

Write a Payroll Check Using Quicken

The Write a Check feature of Quicken allows you to create the check and, if desired, a check stub

to give to employees. From the Farm Checking account register click on Tools, Write and Print

Checks. Fill in the check as you would if you were writing a check by hand. Click on the Split box to

enter the needed amounts.

Note: Only the first 16 lines of the split category will appear on a voucher check and you may only

want the employee items to appear on those lines.

Click Record Check

Click on Print

If you wish to print the Split, choose a voucher check to print.

Forms 1099-MISC

Persons who work for you and are not employees, but rather are independent contractors should be

given a Form 1099-MISC for amounts of $600 or more for the year. Veterinarians, hoof trimmers,

sprayers, etc could potentially warrant a Form 1099-MISC. You can track payments made to such

individuals or companies by typing 1099 in the memo field. Then you can create a customized cash flow

report which filters transactions with Matching: 1099 in the memo field, subtotaling by payee, and

custom dates for the year. See the main tutorial for more complete instructions.