QBO - Certified QuickBooks ProAdvisor Payroll Setup and Management Questions and Answers 1 — Questions and Answers
Question 1: A client is hiring their first employee and needs to set them up in QuickBooks Online Payroll. Which two forms are essential for the client to have the employee complete to ensure federal tax compliance and employment eligibility verification before running the first payroll?
- W-9 and a voided check for direct deposit
- Form I-9 and Form W-4 (Correct answer)
- Direct Deposit authorization and an employment contract
- State new hire reporting form and a background check consent
Correct answer: Form I-9 and Form W-4
Form W-4, Employee's Withholding Certificate, is required by the IRS for the employer to withhold the correct amount of federal income tax from the employee's pay. Form I-9, Employment Eligibility Verification, is required by U.S. Citizenship and Immigration Services to verify the identity and employment authorization of all new hires. Both forms are mandatory for federal compliance.
Question 2: A business owner wants to use QuickBooks Online Payroll but prefers a "do-it-yourself" approach where they are responsible for making their own payroll tax payments and filing the associated forms manually outside of the system. Which QuickBooks Online Payroll subscription is designed for this purpose?
- Premium
- Elite
- Core (Correct answer)
- Standalone Payroll
Correct answer: Core
QuickBooks Online Payroll Core is the base subscription that handles payroll calculations and paycheck creation. While it calculates tax liabilities, the user is ultimately responsible for making the tax payments and filing the forms themselves. The Premium and Elite plans include automated tax payments and filings.
Question 3: Which of the following best describes the process for handling federal and state payroll tax liabilities in QuickBooks Online Payroll Premium and Elite subscriptions?
- QuickBooks calculates the amounts, but the user must manually initiate a bank transfer on each tax agency's website.
- QuickBooks reminds the user of due dates, and the user must print and mail paper checks and forms.
- QuickBooks automatically debits the necessary funds from the client's bank account and electronically pays the agencies and files the forms on their behalf. (Correct answer)
- QuickBooks generates a report of amounts due, which must be given to a third-party payroll service for actual payment and filing.
Correct answer: QuickBooks automatically debits the necessary funds from the client's bank account and electronically pays the agencies and files the forms on their behalf.
A key feature of the QuickBooks Online Payroll Premium and Elite subscriptions is the automation of tax payments and form filings. Once properly set up, QuickBooks withdraws the tax money from the designated business bank account and handles the electronic payments and filings with the federal and state agencies, ensuring compliance.
Question 4: A client runs a marketing agency and frequently uses freelance graphic designers. To ensure proper tracking for 1099-NEC forms at year-end, what is the correct way to set up these individuals in QuickBooks Online?
- Add them as employees but mark them as "statutory" and exempt from withholdings.
- Add them in the 'Vendors' list and collect a Form W-9. (Correct answer)
- Create a journal entry for each payment made to the designers.
- Set them up under the 'Projects' feature without adding them as a vendor.
Correct answer: Add them in the 'Vendors' list and collect a Form W-9.
Independent contractors must be set up as Vendors in QuickBooks Online. It is crucial to collect a Form W-9 from them to get their Taxpayer Identification Number (TIN) and other necessary details. Within the vendor's profile, the user must check the box to 'Track payments for 1099' to enable QBO to properly report the payments at year-end.
Question 5: When an administrator navigates to Payroll Settings to create a new pay schedule, they must define how often employees will be paid. What key pieces of information are required to complete the initial setup of a new schedule?
- The pay schedule's name, the pay frequency, and the pay date for the first payroll. (Correct answer)
- The pay schedule's name, the pay frequency, and the bank account for payroll processing.
- The pay schedule's name, the pay frequency, and the daily overtime policy.
- The pay schedule's name, the pay frequency, and the list of employees to be included.
Correct answer: The pay schedule's name, the pay frequency, and the pay date for the first payroll.
To create a pay schedule, QuickBooks requires a unique name for the schedule (e.g., 'Weekly Salaried'), the pay frequency (e.g., weekly, bi-weekly, monthly), and the pay date of the first payroll run on that schedule. This information allows the system to correctly calculate all future pay periods and pay dates.
Question 6: A user successfully ran and submitted payroll for the week. The next day, they realize they forgot to include a $100 bonus for one employee. The direct deposit has already been processed and sent. Which of the following is the most appropriate action to take within QuickBooks Online Payroll to pay the employee the missing amount?
- Delete the entire payroll run and create a new one with the correct amounts.
- Manually write a check to the employee and record it as a regular expense, bypassing the payroll module.
- Run an "Unscheduled" or "Off-cycle" payroll for only the one employee and the bonus amount. (Correct answer)
- Adjust the employee's next regular paycheck to include the $100 bonus from the previous period.
Correct answer: Run an "Unscheduled" or "Off-cycle" payroll for only the one employee and the bonus amount.
Once a payroll with direct deposit has been processed, it cannot be deleted or edited. The proper method to pay an additional amount for the same pay period is to run an off-cycle or unscheduled payroll. This ensures the bonus is taxed correctly for the period it was earned and that all payroll reports remain accurate. While adding it to the next check is a possible workaround, it is not the most accurate method for tax and reporting purposes.
QBO - Certified QuickBooks ProAdvisor Payroll Setup and Management Questions and Answers 1
A client is hiring their first employee and needs to set them up in QuickBooks Online Payroll.
Which two forms are essential for the client to have the employee complete to ensure federal tax compliance and employment eligibility verification before running the first payroll?