Accounting for Seasonal Employees in Your Payroll
If your business has more activity during particular times of the year, you might hire additional employees to get you through a busy season. Just like your year-round employees, you need to pay these seasonal employees, withhold their payroll taxes, and include them in your payroll taxes and filings. Intuit QuickBooks Payroll can help you pay and account for your seasonal employees, and the following tips will get you started:
- Add seasonal employees to QuickBooks Payroll.
- Include seasonal employees in your payroll tax filings and payments.
- Learn how seasonal employees might affect your QuickBooks Payroll subscription fee.
For more information about hiring and paying employees, see The Business Owner's Guide to Hiring and Paying Employees from Intuit.
For more information about your tax responsibilities as an employer, see IRS Publication 15, Circular E, Employer's Tax Guide.
Also refer to the two resources just mentioned and IRS Publication 15-A, Employer's Supplemental Tax Guide, for important information about correctly classifying workers as employees or independent contractors. Whether a worker is an employee or an independent contractor depends on the amount of control the employer has over the worker. If you misclassify a worker, you may be held liable for employment taxes for that worker. In QuickBooks, you pay independent contractors the same way you pay other vendors.
Add Seasonal Employees to QuickBooks Payroll
As new employees—including seasonal employees—join your company, you'll need to add them to QuickBooks.
To add a new employee:
- Click Employee Center. In the Employees tab, click New Employee at the top of the list.
- Complete the Personal, Address and Contact, and Additional Info tabs.
- From the Change tabs drop-down list, choose Employment Info. Fill out the information in the Employment tab.
- From the Change tabs drop-down list, choose Payroll and Compensation Info. Fill out the Payroll Info tab.
- Save the employee's record by doing one of the following:
- Click Next to add another employee.
- Click OK to close the window.
For more information, look in QuickBooks Help. Click the Index tab and type employees.
Include Seasonal Employees in Your Payroll Tax Filings and Payments
The payroll forms and taxes that you file and pay must include your seasonal employees. Be sure to keep your seasonal employees' information in QuickBooks after their employment has ended. You need that information for payroll taxes and filings—including your year-end W-2 and W-3 forms—that cover the time you employed seasonal workers. The solution is to make each seasonal employee inactive after their employment, so that they appear only on reports that cover their time of employment.
To make an employee inactive in QuickBooks, you need to edit the employee record:
- Click Employee Center and then the Employees tab.
- In the Active Employees list, double-click the employee record you want to edit.
- In the Edit Employee window, click the Employee is inactive box.
- Click OK.
Learn How Seasonal Employees Might Affect Your QuickBooks Payroll Subscription Fee
Subscriptions for Intuit QuickBooks Enhanced Payroll and Intuit QuickBooks Basic Payroll are available at two levels: for as many as three employees, and for unlimited employees. If your subscription is for three employees and hiring seasonal employees exceeds that limit, then there are two flexible payroll options for your business.
If the number of employees in your business exceeds three employees, you can either change your subscription to the unlimited version of the offering, or pay a convenience fee of $10 for each month you exceed three employees for all payrolls in that month. You can choose either of these options conveniently within your QuickBooks software.
If your business always hires seasonal employees for several months during the year, you may want to consider subscribing to the unlimited version of the service to give you the most flexibility for your payroll needs. For more information about your subscription options, please visit www.payroll.com.