QuickBooks Online Payroll Year-End Checklist (W-2, 1099 & Payroll Tasks)

December brings the start of the payroll year-end process for businesses. Hence, a checklist must be implemented for QuickBooks Online Payroll products. Such products include QuickBooks Online Payroll Premium, QuickBooks Online Payroll Core, and QuickBooks Online Payroll Elite.

Following December, January and February are considered significant months for businesses handling payroll. During this time, businesses successfully close their year-end payrolls. Additionally, businesses organize tax filings, W-2 forms, and other related work.

The checklist, created during this period, comprises crucial payroll activities and deadlines. These assist in ensuring precise compliance and reporting. The checklist is dedicated solely to payroll processes.

This guide provides comprehensive information on the QuickBooks Online Payroll year-end checklist. This information can assist businesses finish payroll tasks correctly and address year-end requirements.

Why Payroll Year-End Matters in QuickBooks Online?

Year-end accounting is an admin activity in QuickBooks Online. It offers a clear understanding of the financial status of businesses. It helps businesses take informed decisions and organize for the following year. Managing year-end properly guarantees effective financial management.

Year-end accounting works as a financial health check and enables you to:

• Informed Decisions for Business: Precise data helps in hiring, investment, and development plans.
• Tax Preparation: Checking accounts help avoid issues and verify every deduction is recorded.
• Identify Trends and Strategize Growth: Evaluation of the earnings and expenses help in preparing goals and plans for the following year.
• Improve Financial Management: Year-end closing fixes errors, limits fraud risks, and strengthens financial control.

Payroll Year-End Checklist (Month-by-Month)

QuickBooks Online Payroll needs a correct configuration for year-end processing. This configuration offers access to historical payroll, accounting information, and federal plus state agency records.

Here is a Payroll Year-End Checklist (Month-by-Month) for QuickBooks Online Payroll:

• Balance the Checkbook

Verify the checkbook transactions to confirm all cash entries are correct. Ensure that the cash balances align with the bank records. Identify issues or lapses from internal entries or the bank.

• Check Previous Pending Receivables

Monitor pending invoices with an aging column. Organize open invoices by overdue days. Classify the pending payments and evaluate which receivables need follow-up or write-off.

• Determine Inventory Position

Review the inventory frequently to determine the quick-selling products for repurchase. Reduce or remove slow-selling items. Analyze inventory changes to avoid stock shortage or overstock.

• Handle Payroll and Authorize Tax Payments

Stick to the payroll routine for payments to employees. Report, withdraw, deposit income tax, Medicare, Social Security, and disability taxes on schedule. Check the payroll summaries to prevent rectifications. Payroll services streamline work and enhance accuracy.

• Analyze actual Profit and Loss against the Budget and the Previous Years.

Compare the Profit and Loss statements to monitor monthly and YTD financial performance. Analyze actual numbers versus budget and historical data. Identify variances and modify the expenses accordingly.

•  Examine the Month-End Balance Sheet statement.

Determine the financial status by reviewing the previous and current months’ balance sheets. Track the modifications in liabilities and assets. Review major increases or decreases to assess financial status.

Preparing W-2s and 1099s in QuickBooks Online Payroll

QuickBooks Online Payroll enables businesses to submit the 1099 and W-2 forms successfully. On-time payroll submission helps meet regulatory requirements.

Here are the steps to file the W-2s and 1099s in QuickBooks Online:

Filing the W-2s

QuickBooks files W-2 either manually or automatically. Automatic filing sends the W-2s to the IRS directly and provides employees with digital copies. Manual filing requires applicants to issue, print, and submit the W-2s physically.

Automated Filing with Taxes and Forms

Automated filing of W-2s saves time and reduces errors. It sends paper copies to employees who request them.

Here are certain crucial points to consider while filing the W-2 automatically:

• Printing the W-2s manually prevents any additional expenses.
• Mailing the W-2s through QuickBooks includes extra charges.
• In case employees have not asked for paperless delivery, paper copies should be delivered.

Here are the steps to print the W-2s:

1. Head to the Settings option and then click “Payroll Settings“.
2. In the Form W-2 printing segment, choose the “Edit” option.
3. Select the option “I’ll print and mail W-2s to my employees“.
4. Ask the employees to select paperless W-2s (optional).
5. Print the W-2s.

Manual Filing (Automated Taxes OFF)

To file W-2s manually, follow these steps:

1. Log in to QuickBooks Online.
2. Head to the “Taxes” option and then click “Payroll Tax“.
3. Head to the “Taxes” section.
4. Now, click the “Payroll Tax” option.
5. Choose the option “Filings Tab“.
6. Find the option “W-2 Copies A & D (Employer)”.
7. Now, select the “File” option.
8. Notify the employees took part in a retirement scheme.
9. For the records, check and print “Copy D“.

Note: QuickBooks Premium, Online Payroll Core, and Elite file State and federal W-2s automatically.

Filing the 1099s

QuickBooks creates the 1099s with the assistance of contractor and account data. Here are the steps to file the 1099s:

1.    Prepare the 1099s

1. Allow QuickBooks to create 1099s using these steps:
2. Head to the “Payroll” section and choose the “Contractors” option.
3. Select “Prepare 1099s“.
4. Next, select “Let QuickBooks do it“.
5. Check the company data like address, name, email, and tax ID.
6. Choose the option “View Results“.
7. Check 1099s.

By reviewing accounts for service payments, QuickBooks determines contractors qualified for 1099s. It does not include the following from 1099 reporting:

• Payments less than USD 600.
• Refunds.
• Payments through third-party systems or credit/debit cards.
• Payments to organizations.
• Non-U.S. contractors
• Choose the payment amount and confirm correct account mappings for 1099 forms.
• Choose the option “I’ve reviewed and am ready to file” when verified.

2.    Create the 1099s Manually

1. Manual filing
   • Head to the “Payroll” option.
   • Now, choose the “Contractors” option.
   • Choose the option “Prepare 1099s“.
   • Now, click the “I’ll do it myself” option.
   • Verify the company details.
   • Choose and link accounts to the correct 1099-NEC or 1099-MISC form.
   • Monitor contractors qualified for 1099s and confirm the personal details.
   • Check totals and inspect forms.
   • Select the option “Print and Mail” or “E-file“.
2. E-file 1099s
   • Check 1099 details prior to e-filing. Submit state and federal e-filings. Select delivery procedures for contractor copies. Fix the invalid email address in QuickBooks before continuing.
3. Review Filing Status
   • Track the progress of 1099 filings in QuickBooks with the help of the following statuses:
     • Submitted: Form electronically filed with the IRS. Manually changing is possible if required.
     • Not Submitted: Forms that are not e-filed, and modifications are possible.
     • Accepted by the IRS: IRS acquired form; however, processing it may take more time. One week post-IRS acknowledgement, the confirmation email is received.

Common Year-End Payroll Mistakes & Fixes

QuickBooks payroll errors arise quite often due to payment routines, documentation, and tax setup. Comprehending these issues aids businesses in rectifying them properly.

Here are the common year-end payroll mistakes and fixes:

1. Incorrect Routing Number or Employee Account

A wrong employee account or routing number is one of the most common payroll mistakes. Here are the steps to resolve it:

1. Open QuickBooks Desktop.
2. Click the “Employees” menu.
3. Choose the option “Employee Center“.
4. Select the employee to rectify.
5. Click the tab “Payroll Info“.
6. Choose the “Direct Deposit” option.
7. Click the “Use Direct Deposit for“.
8. Select deposit option- one account or two accounts.
9. Input Routing Number, Account Type, Bank Name, and Account Number.
10. Click the “OK” button and add a direct deposit PIN.

Here are the steps to fix an incorrect routing number or employee account in QuickBooks Online:

1. Choose the “Employee” button.
2. Head to the “Payment Method“.
3. Click the “Edit” button.
4. Add updated banking information.
5. Click the “Save” button.

2. Excess Payment to Employee

Often, employee overpayment mistakes occur that disrupt payroll management. Here are the steps to fix it:

1. Open the “Lists” menu.
2. Choose the “Payroll Item List” option.
3. Click the “Payroll Item” option.
4. Now, click the “New” button.
5. Now, click the “Custom Setup” option and then the “Next” button.
6. Select the “Deduction” option and then the “Next” button.
7. Input the payroll item name.
8. Allocate “Liability Account” similar to overpayment cost.
9. Choose tax monitoring type “Compensation“.
10. Click the “Next” button and then the “Finish” button.
11. Include the payroll item in the following paycheck.

3. Direct Deposit Issues

Direct deposit issues in QuickBooks Desktop can be resolved using these steps:

1. Open the “Employees” menu.
2. Choose the “Edit/Void Paychecks” menu.
3. Update pay dates to the desired date.
4. Select the paycheck, then click the option “Void“.
5. Now, click the “Yes” button and then the “Void” button.
6. Acknowledge the terms and exit the window.
7. Head to the “Employees” section and click the option “Send Payroll Data“.
8. Now, click the “Send” button.

4. Timesheet Issues

To rectify inaccurate timesheets in QuickBooks Online, follow these steps:

1. Click the (+) icon.
2. Now, click the “Weekly Timesheet” option.
3. Choose the right employee.
4. Open the dropdown for the Weekly Period.
5. Choose the wrong week.
6. Click the icon “Trash” to erase hours.
7. Hit the “Save and Close” button.
8. Apply to all the impacted employees.

Take a look at these crucial dates and jobs as you organize your year-end payroll work. You can also use the links to understand the steps or get additional information on anything that’s on your mind.

December 30 & 31, 2021

Final Payroll for 2021

• For QuickBooks Online Payroll Core, the final date is December 30th at 5:00 PM PT
• For QuickBooks Online Payroll Elite and QuickBooks Online Payroll Premium, the final date is December 31st at 7:00 AM PT

Points to Ensure

• Ensure the wages and the benefits for the employees are right and precise
• In case you use direct deposit, ensure that you send the pay employee bonuses and final paychecks for the year prior to 5:00 pm PST
• Report all the paychecks of the employee like commission, handwritten, termination, and bonus checks
• Add the last fringe benefits of the year to the paychecks
• Add all the commissions earned by the employees
• Donate to your employee’s retirement

Order Year-end Supplies

• Subscribe to the labor law compliance posters. It will help you to be aware of the changes in the law.

Prior to the First Payroll 2022

Summon your employees to see the W-2s online. You need to invite your employees to the QuickBooks Workforce since it will help them to view their pay stubs along with their W-2s online.

Analyze and then Upgrade the Employee Details

• Request employees to check and upgrade the state and W-4 withholding forms
• Upgrade the employee details like legal names, SSNs, and the addresses
• Authenticate that your employees can send their W-2 in the Turbo Tax account directly
• Analyze and upgrade any alterations to your filing schedule and federal deposit
• Analyze the vacation hours that comprise unused and used time

Analyze and Upgrade Company Details

• Run the report for the year-end: payroll details, employee details, taxes, wage summary, etc.
• If you received any tax notices, send them to us

Look out for any State and Federal Tax Changes

• Analyze and upgrade your state unemployment insurance rate for the year
• Analyze and upgrade the tax deposit schedules

January 13th 2022

• W-2 forms begin to become present in your product.

However, it is important to note QuickBooks Online Payroll Core, Elite, or Premium will generate and process your Employee and Employer W-2s automatically, only if they have been opted by you. In case you are not sure about it, view the automatic tax payment and form filing status at the beginning. In case you have opted out, the W-2 forms will be available for you. You can print it and then file January 1.

January 20, 2022

• W-2 forms are usually mailed to the address of the employee by the USPS between Jan 20 to Feb 1. However, it is important to note QuickBooks Online Payroll Core, Elite, or Premium will generate and process your Employee and Employer W-2s automatically, only if they have been opted by you. In case you are not sure about it, view the automatic tax payment and form filing status at the beginning. In case you have opted out, you should print and then postmark your W-2 forms to your employees within January 31.

January 27, 2022

• E-file your 1099s forms on January 27 2022 on it or before it but not after 5:00 pm PT. This will help them to be processed and then postmarked to your particular contractors within January 31st 2022
• QuickBooks Online Payroll Elite, Premium, and Core who have stepped out of the automatic form filling and tax payment,
  • Access our e-file service. You should E-file your respective W-2s prior to 5:pm PT since it will help them to get processed within January 31st 2022
  • Review and then file the federal forms and then do the tax payments like Forms 940, 941/944
  • Analyze and then file the state forms and do the tax payments.

January 31, 2022

• If you use the e-file service by Jan 27th 2022, all the 1099 forms will be sent to the contractors at the address mentioned in the profile of the contractor, by Jan 31st 2022. In case the e-file is not availed, 1099s should be sent to the contractors within this date
• In case you have not filed yet, e-file the 1099-NEC forms prior to 5:00 PM PT for submission to the particular IRS on time
• QuickBooks Online Premium, Core, and Elite who have chosen the automatic form filling and tax payment:
  • W-2 forms will be sent to the employees at the location/address shown in the employee profile within Jan 31st 2022
  • Analyze the Tax forms and the payments in QuickBooks Online
• QuickBooks Online Payroll Premium and Core who have selected/chosen to opt for the automatic form filing and tax payment must mail the W-2s to the employees

February 28 and March 31, 2022

• If the e-file service is used, e-file your 1099 MISC by March 29th, 2022. This will help them to get processed within Mar. 31, 2022
• In case the e-file is not used, 1099-MISC should be sent to the particular IRS within Feb 28, 2022

We hope that this article has conveyed all the details you may require in the year-end checklist for QuickBooks Online payroll.

In this guide, complete information on the year-end checklist for QuickBooks Online payroll has been shared. Still, if there are queries or doubts, feel free to reach out to us.

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FAQs: QuickBooks Online Payroll Year-End Closing