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    Processing a late payroll (backdating paychecks)

    Article ID: 2000092
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    Overview

    Customers using QuickBooks Assisted Payroll or Direct Deposit services are required to submit payroll 5:00 P.M. Pacific Time at least 2 banking days prior to the paycheck date. A banking day is a banking business day (Monday through Friday) that does not fall on a Federal Reserve Bank holiday, or a state or local holiday. The deadline allows Intuit to process the payroll, properly deposit funds and/or submit filings on your behalf.

    Transmitting a late payroll can negatively impact your business in several ways:

    • Direct deposits will take still two banking days to post, so employees may not get paid on time.
    • Tax amendments and penalties can be incurred if filing submissions were incorrect. Any fees, penalties or interest due to the agency will be your responsibility, and you may also have to pay service fees for filing amendments.
    • For Assisted payroll, a Late Payroll Processing Fee will be assessed.

    Assumptions

    You have an active Intuit QuickBooks payroll subscription with direct deposit or you are on the Intuit QuickBooks Assisted Payroll service.

    Details

    How will missing the payroll submission deadline affect direct deposit paychecks?

    Since it takes Intuit and the banks at least 2 banking days to process a direct deposit, not allowing 2 banking days means that your employees will not get paid on the date of the check. In most cases, the funds will appear in the employee's account 2 banking days after the payroll is processed.

    How will creating a late paycheck affect tax filings and payments?

    The impact of transmitting a late payroll or recording a paycheck after the pay date depends on several factors such as:
    • Your tax agency and your tax payment frequency
    • Whether you are processing filings on your own behalf or having Intuit file them for you (e.g., if you are on the Assisted Payroll service)
    • Whether the late paycheck is from a prior filing quarter or filing year (e.g., you create a check in July for a June pay date)

    Since tax agencies calculate payments based on the check date, not the pay period date, late paychecks will often result in a late payment to state or federal agencies. Late payments can result in agency notices, fees, penalties, and interest. Amendments may also be necessary if tax filings have been completed.
    Important: Any fees, penalties or interest due to the agency will be your responsibility. Assisted Payroll customers may also have to pay service fees for filing amendments.

    How should I schedule and transmit a payroll in order to avoid a late payroll?

    Paychecks should be transmitted to Intuit before 5:00 p.m. Pacific Time on Wednesday for a Friday paycheck date. If you send a paycheck after the 5:00 p.m. Pacific Time deadline on Wednesday or any time on Thursday or later, it's considered a late payroll since there was less than two banking days between the day you transmitted the paycheck and the effective date of the paycheck.


    Your payroll schedule will also need to be adjusted to take into account the Federal Reserve Bank holiday calendar.

    In the above Friday pay date example, if there is a Thursday holiday, you will need to transmit your paychecks before 5:00 PM Pacific Time on Tuesday to meet the submission deadline.



    What are common scenarios that drive payroll processing exceptions and how should I handle them?

    1. Termination Checks: Employers often need to create a same-day check for employees that are released. Customers will not be charged an additional backdate fee if the following conditions are met:
      • The employees in the payroll run have release dates entered in QuickBooks
      • The check date is NOT in the past (so it is dated today or tomorrow)

        Refer to our article on Termination checks for additional information on how to finalize payroll for released employees.
    2. Same-day pay: If an employee needs a paycheck for the same day and is not a released employee, consider using the payroll advance and repayment feature in QuickBooks.
    3. Payroll corrections: To correct payroll errors discovered after the fact, you may make an unscheduled payroll run or include underpaid amounts in an upcoming payroll run.
    4. Performance-based pay: Some employees such as corporate officers may receive pay that is based on company revenues or quarterly profit. Your accountant may want to wait until after the quarter revenue has been calculated to create a paycheck, and then ask you to date your distribution checks so that they fall within the end of the quarter or fiscal year. You should work with your Accountant to review options that avoid creating the paycheck after the desired pay date.
    5. Prior Quarter Payments: You need to pay an employee for work in a prior quarter and it must be reported in that quarter. Please check with your Accountant to be sure late processing, or backdating is required.
    6. Cash Flow: You expect you will be backdating because of cash flow problems. For Assisted Payroll, due to the two-business day processing requirement to fund, pay and file your payroll taxes, having Intuit process, pay and file your taxes may be undesirable. You may want to consider other Intuit Payroll offerings that allow you to process your own payroll and tax filings.

    For Assisted Payroll, the only time Intuit considers waiving the fee for late payroll processing is due to an Intuit error or there is an uncontrollable circumstance and arrangements have been made in advance with Intuit.

    How do I know I was charged a late payroll processing fee?

    For Assisted Payroll only: You can find the late payroll processing fee under the Expenses tab on the QuickBooks Service Liability Check. There you will find the Payroll Service Fee: Payroll not sent 2 days in advance.

    I cannot avoid creating a late paycheck? What do I do?

    It is important NOT to do either of the following:
    1. Do not give your employee a paper check with an earlier date than the date on the payroll you transmit to Intuit.
    2. Do not issue a check outside the payroll module. If you want to create a check, you have to transmit it.
    In both of these cases, the information that you transmit to Intuit will not match the paper check. If you are subject to an audit by a government agency, this could be considered tax fraud, regardless of intent, since it may appear like an attempt to avoid payroll taxes. You may also be subject to penalty fines and interest for incorrect or late filings and payments,

    For Assisted Payroll: If there is an unavoidable reason for you to backdate, before doing so, please contact the QuickBooks Assisted Payroll Support team. We can help you through the process to make it as easy as possible for you.

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