Set up a payroll item for Washington's Labor and Industries (L&I) tax
PrintOverview
Washington's Labor and Industries (L&I) tax is a payroll tax generally paid by both the company and employee. It is based on hours worked with different rates for different occupations. In QuickBooks, two items are available to calculate the L&I payroll tax: one item for the company contribution and one item for the employee deduction. This article explains how to set them up.
Expected Outcome
You will set up QuickBooks to calculate, track and remit Washington L&I tax.
Details
You will set up QuickBooks to calculate, track and remit Washington L&I tax.
Starting August 2013, the state requires that L & I be electronically filed and paid. Employers who would like to opt out of this mandate will need to contact the state agency directly.
For more information about Washington L & I payments and rates contact the state or see the following state website Washington State Department of Labor & Industries.
To set up an company contribution item for Washington L&I tax:
Add a new payroll item.
- QuickBooks: Choose Lists > Payroll Item List. Click Payroll Item on the lower left and select New, then Custom setup.
- Simple Start: Click Payroll at the top to enter the Payroll Center. Click the Setup and Maintain drop-down arrow and select View / Edit Payroll Items. Click Add a new Payroll Item, New, then Custom setup.
Choose Company Contribution and click Next.
Name the payroll item and click Next.
Enter the agency name and account number. Select the accounts you want to affect in your Chart of Accounts. Click Next.
Select the Tax Tracking Type as None. Click Next.
In the Taxes window, be sure no taxes are selected. Click Next.
In the Calculate based on Quantity window, select Calculate the item based on hours and click Next.
Enter the company-paid rate per hour for your company.
Click Finish.
Set up a payment schedule for Washington L&I tax.
To set up an employee deduction item for Washington L&I tax:
Add a new payroll item.
- QuickBooks: Choose Lists > Payroll Item List. Click Payroll Item on the lower left and select New.
- Simple Start: Click Payroll at the top to enter the Payroll Center. Click the Setup and Maintain drop-down arrow and select View / Edit Payroll Items. Click Add a new Payroll Item.
Choose Deduction and click Next.
Name the payroll item and click Next.
Enter the agency name and account number. Select the accounts you want to affect in your Chart of Accounts. Click Next.
Select the Tax Tracking Type as None. Click Next.
In the Taxes window, be sure no taxes are selected. Click Next.
In the Calculate based on Quantity window,select Calculate the item based on hoursand click Next.
In the Gross vs. Net window,select Net pay and click Next.
In the Default rate and limit window, leave the rate as $0.00. You must enter this information in the employee record under Payroll and Compensation information. (If you don't, the Washington L&I tax will not be calculated on the employee's paycheck.)
Add the payroll items you created to the employee profile under Additions, Deductions and Company Contributions on the Payroll and Compensation Info tab so they appear on every paycheck.
When you create a paycheck, the system applies the tax rate to hours worked for the employee.
QuickBooks will not automatically exclude any earnings items from the payroll item calculation. If you need to exclude pay, you must manually modify the paycheck.
Tom2/15/2013