How To Create a Payroll Deduction Authorization Form Using the QuickBooks Letters function

Payroll deduction authorization forms should be completed, signed and kept on file for each employee who has money taken out of his/her paycheck for anything other than permissible withholding taxes.  Yes, it’s more paperwork and yet another task that an already busy payroll clerk needs to perform – BUT – QuickBooks can help you automate this task by using the tools that are built right into the program!

On Tuesday, we posted an article about Recording & Tracking Employee Personal Tool Purchases made on company credit cards or lines of credit with company vendors. In that blog post, the person who asked the question indicated that sometimes the workers purchased tools on the company American Express card and would write TOC for “Take Out of Check” on the receipt – this just doesn’t cut it as being considered a real payroll deduction authorization form.

QuickBooks provides us a very handy built-in tool for generating letters and forms, one that I think is often overlooked and under utilized, and that’s the Prepare Letters with Envelopes feature – found on the Company menu.  If you go to the Company menu –> and choose Prepare Letters with Envelopes, you’ll see that there are already options and some pre-built letters for:

  • Collection Letters
  • Customer Letters
  • Vendor Letters
  • Employee Letters
  • Letters to Other Names
  • and, an option to Customize Letter Templates

Ok, so the pre-built letters aren’t all that glamorous and there certainly isn’t a huge amount of choices for you to work with – but you can create your own, and that’s what this article is all about!

The first thing that you want to do is to find a really good Payroll Deduction Authorization form – do a Google search for “sample payroll deduction authorization form – your state” and see what you come up with that will meet the requirements of your State Department of Labor and then modify that form to meet the needs of your company.  Once you’ve found what you want, now it’s time to get that form into QuickBooks so that you can automate this task.  If you already have something typed up in a Word document – even better, because QuickBooks will allow you to convert that Word template to a QuickBooks Letter template!

How to Create a Payroll Deduction Authorization form

In QuickBooks, go to the Company menu –> choose Prepare Letters with Envelopes –> and select Customize Letter Template.  You’ll be presented with a window that asks you if you want to create a letter from scratch – OR – if you would to convert an existing Word document to a QuickBooks letter template.

1 letter type

How to create a new letter template from scratch:

If you’ve found something on the internet – but don’t have anything typed up in Word yet, select this option from the “Choose What You Want to Do” window and click the Next button at the bottom.

You’ll be presented with the following window, where you’ll choose who this letter will be used for and to give it a name.  Click the Next button when you’re ready to continue.

2.  letter type and name

A blank Word document will now open behind QuickBooks and you are ready to get to work.  Do NOT close QuickBooks, just minimize it or click on Word to lay it on top of QuickBooks.

Click the Add-ins tab at the top of Word, our sample is using Word 2013 so you may need to hunt a little to find the Add-ins in your version.  Once you find the Add-Ins tab, you’ll see a section for Custom Toolbars – the Custom Toolbars allow you to choose between Company and Employee fields from QuickBooks.

3 add-ins tab

From this point forward, it’s pretty much like creating a normal Word merge letter.  You type in the unchanging body of the document and select merge fields from QuickBooks Company information fields and Employee information fields to add the variables.  The highlighted sections of the screen shot below are the variable I’ve selected from QuickBooks.

4 select variable

When you’ve finished making your selections and typed in the body of the template, close Word by clicking the “X” in the upper right corner of Word.  This will save your document where QuickBooks can later find and use it when you select it.  Don’t worry you will be prompted to save your changes!

When you switch back to QuickBooks, you’ll see a button to Use this Letter – click on it, select an employee from the next window – click the Next button, choose your template, click Next, enter your Name and Title, click Next  and ta-da — there’s your deduction authorization letter all generated.  Yes, there are still details that you’ll need to complete – but part of the work has already been done for you.  The highlighted items in the screenshot below are the variables we selected above.

5 generated letter

How to convert an existing Word document to a Letter template:

If you already have a Word document that you use and you just want to convert it to a QuickBooks letter template – make that selection from the “What do you want to do” window and click the Next button.  On the window shown below, use the Browse button to locate your Word document and then select Employee.

1. select document

Enter a name for your letter in the small pop-up window and click the OK button.

2.  name your letter

With an existing Word document, you may have some clean up to do.  The screen shot below shows some highlighted items that I would need to delete out of this template.

3. delete items

The screenshot below, shows the same template where I deleted the items and replaced them with the QuickBooks document variables.  Make sure you save all the changes you made.

4.  insert variables

Using QuickBooks Letter templates

There are several ways in which to access the letter templates.

  • You can send the same letter to multiple Employees, Customers, Vendors or anyone in your Other Names list by going to the Company menu –> Prepare Letters with Envelopes –> choosing the group that you’d like to send a letter to –> selecting specific names from that list -> and then selecting the template that you’d like to use.
  • You can quickly generate a letter for a specific “name” as well, just by going to their record in QuickBooks.

To quickly generate a Payroll Deduction Authorization form for a specific employee, like our Joe Test for the saw that he purchased, you’d go to Joe’s employee record in QuickBooks -> click the Word option and choose Prepare Letter to Test, Joe.  Choose the Payroll Deduction Authorization form and then quickly fill in any details that you want and print.

Ta-da!  Here’s the final Payroll Deduction Authorization form ready for Joe Test to sign.

NOTE:  You can grab a free copy of this template in Word format from our companion site – Learn to use QuickBooks in your construction business.

Hope you found this article helpful – I apologize for the length!