If you already use QuickBooks Online and need to pay employees, consider addingQuickBooks Payrollto your plan. You can access it from the same system you use to manage your company's ledgers, allowing you to seamlessly transfer your payroll expenses to the appropriate ledger accounts.
Learn how to set up payroll in QuickBooks Online in a few simple steps and process your first payment run. You can even do payroll whenever you need it at no extra cost as long as you sign up for a QuickBooks Payroll plan.
Plus, adding QuickBooks Payroll to your existing QuickBooks Online subscription means your business has access to other payment processing and human resources features, such as next-day and same-day direct deposits, employee benefits, and payroll calculations and statements. payroll. New users get a 50% payroll discount for the first three months. Apply for QuickBooks Payroll today.
Payroll Setup Checklist: Information to Have on Hand
Before setting up and doing payroll in QuickBooks, you need to have your employer and employee details handy. Here is a checklist you can use to ensure you have the necessary data from both the employer and the employee.
- employer information
- Types of Employee Compensation:You will enter information such as overtime, paid time off (PTO), bonuses and commissions that you regularly provide to your team.
- Employee benefit options:You have to specify whichemployee benefitsYour offer. Please note that with QuickBooks Payroll, access to health benefits is included with all plans. It also offers 401(k), retirement, flexible spending account (FSA) and prepayment.workers compensationoptions
- Business bank account information:In addition to the account number, you need the full routing number of the checking account from which you will be making payroll tax payments and issuing payroll checks.
You must have a payroll account separate from the checking account used for your daily business operations.
- Employee details and date of hire:You need basic information about your team members, such as their legal names, birth dates, and hire dates.
- Pay rate and hours:You can set multiplepayment schedulesin QuickBooks, if necessary.
- Salary deductions:You should have a list of your employees' contributions to health insurance, retirement plans, and garnishments.
- Form W-4:When hiring new employees, you must have them complete and sign aForm W-4so that you can enter your withholding information and other pertinent details needed to correctly calculate your labor tax deductions.
- Payroll history:If you already paid employees in the current calendar year, you should have previous payroll data handy to ensure accurate tax calculations.
- Direct deposit authorization form:If you pay employees by direct deposit instead of paper checks, you must have them fill out adirect deposit authorization form.
- PTO Policy and Balance:If you offer vacation and sick pay, you need to know the total number of PTO hours you are allocating to each employee per year.
If you are converting to QuickBooks Payroll in the middle of a calendar year, you must enter the total sick and vacation hours an employee had in your previous system.
more onlinepayroll servicesThey offer an intuitive interface that makes setting up payroll easy. The same goes for QuickBooks: its setup wizard guides you through the entire process. If you want to see it in action, check out our QuickBooks Payroll Setup video.
Step 1: Go to Payroll
After logging into your QuickBooks account, navigate to the "Payroll" tab to get started.
When you hover over the "Payroll" tab, you'll see three options: Employees, Contractors, and Workers' Compensation. You can explore each of these options, but let's start with Employees.
If you've just purchased your QuickBooks Online subscription, you'll see a "Get Started" button. Click on it to proceed to the next screen. If you're just signing up for QuickBooks Payroll, the system will ask you a few questions, like do you need HR support and do you need to track employee work hours.
While these questions will help you find the right plan, you also have the option of manually selecting one of three payroll options. QuickBooks will recommend the best payroll plan for you, and you can even sign up for a 30-day free trial.
Since our last update:QuickBooks Payroll has launched a "Contractor Payments" plan, which is ideal for companies that only hire and pay contract workers. It costs $15 per month for up to 20 contractors (plus $2 for each additional worker).To learn more about how QuickBooks Payroll Automated Payroll and Direct Deposit works, including other features you and your employees may need, check out ourQuickBooks Payroll Review.
Step 2: Enter general pay information for your employees
In the next step, the system will ask you whether or not you have already paid employees in the current calendar year. If you are switching to QuickBooks Payroll from a manual system or other payroll software, click 'Yes'.
Newly established companies that have not yet run their first payroll can select "No" and click "Next".
Note that the system will require you to enter YTD (YTD) payroll details and tax payments made for each employee later in setup. Providing information about previous paychecks issued to employees prior to starting their QuickBooks Payroll subscription is an essential step in ensuring that yourW-2 Formsare accurate at the end of the year.
You can get YTD information from the last payroll processed for each employee and also request detailed pay reports from your previous payroll provider.
In addition to payments to employees in the current calendar year, the system will ask you to enter the date you plan to run your first payroll in QuickBooks Online. It will also require you to enter the physical address where most of your employees work.
Step 3: Add Employees
After entering your workplace, a new window will appear allowing you to add your employees' basic information and payroll details to the system. Click the "Add an Employee" button and start entering the necessary data for each staff member on your payroll, including those who are no longer employed by your company but were paid in the current calendar year.
Step 4: Fill in the employee information
When adding basic staff information to QuickBooks Online, you have the option of entering your employees' email addresses. This allows the system to send them a link to view their pay stubs and W-2s through QuickBooks Workforce, the provider's self-service online portal. There is even an option for the system to invite employees to track and log their work hours via QuickBooks Time.
Please note, however, that you need a subscription to the QuickBooks Payroll premium plans to access the time tracking solution.QuickBooks Schedule.
Here is a list of the employee information fields you need to fill in to complete QuickBooks online payroll setup.
- Payment schedule:Specify a pay schedule for your employees by clicking the "create pay schedule" button in the "How often do you pay (employee)" section. From the drop-down menu, select the applicable schedule such as weekly, bimonthly, monthly, and more. You will also have the option to use the schedule you just created as the default schedule for subsequent employees to be added to the system.
- Employee Payment:Enter the employee's salary in the "How much (the employee) should pay" section. You must also enter the default number of working hours in a day and working days in a team week.
- Employee deductions/contributions:In the "Does (employee) have any deduction" section, select the applicable contribution and deduction items.
- Employee Retention Information:The section "What are (employee) withholdings?" This is where you will use the information from Form W-4. When you click "Enter W-4 Form", select whether you need the current year's tax form or an earlier version. As of this writing, the form has changed in December 2020 and QuickBooks stores both old and new versions. This allows you to print one directly from the system to give employees and capture the correct information.
- Accumulated Payroll Information:If you paid the employee this year, use the information from the last paycheck issued andenter YTD payroll details into the system. Note that QuickBooks will prompt you for totals paid in previous quarters of the current year and amounts paid in the current quarter, but before you start using QuickBooks Payroll.
- Form of payment:The "How would you like to pay (employee)" section contains a dropdown menu where you can selectdirect depositor check (manual) to pay the employee. If you select direct deposit, use the information from the direct deposit authorization form and the voided check requested from the employee.
After entering the employee's name, you can provide the employee's email address, which will allow you to enter tax information (W-4) and bank account details directly into QuickBooks Online.
In the "How much you pay (employee)" section, you can click "add additional pay types" for any employee who needs it.
You can review the information entered by clicking on each section. After filling in all required fields, click "Done".
It is extremely important to ensure that the year-to-date totals are accurate. This information will be crucial to ensure that yourreportingit is accurate and reliable. It will also affect federal and state taxes that have an annual cap, including limits on contributions to 401(k)s and retirement accounts. For more information on deduction and contribution limits, see our guide onhow to make payroll.
After filling in all the required information for each employee, you will see a list of employees on your payroll for the year. Please review it carefully and make sure all payment details are correct. If you have new employees or accidentally left someone out, click the "add an employee" button.
If you find something in the list that needs fixing, click on the employee's name to edit it.
Now that you've set up employees in the system, don't forget to set up your company's tax information. See our article onpayroll tax setup in QuickBooksIf you need help
.
Once you've completed setting up payroll in QuickBooks, you can process your first pay run. Follow these steps on how to do payroll in QuickBooks Online.
Step 5: Click "Run Payroll"
Go to the "Payroll" panel and click on the "Run Payroll" button located in the right corner of the screen.
Step 6 – Enter the current time
Note that for salaried employees, the system will automatically populate the total hours based on the default number of working hours you entered for an employee during initial setup. For hourly employees, you must manually enter actual working hours in the "Regular Pay Hours" column or load time data from your time tracking solution into the system.
For those who subscribe to the QuickBooks Payroll Premium or Elite plans and use QuickBooks Time (included with both tiers) to capture and track employee attendance, your team's work hours will automatically appear in QuickBooks Payroll, ready for you to review and to approve. If there are changes to the team's work schedule, feel free to update it in the system.
On the payroll screen, you can enter hours for all hourly employees. For salaried employees, you won't see hours worked, just the total amount owed for that period.
Step 7: Review and Submit Payroll
This step is your last chance to review and edit payroll information before finalizing payroll. In addition to total hours worked and other pay details, check the pay method to ensure employees who are due to be paid by direct deposit and paychecks are displayed correctly. Also, review the employer and employee tax amounts.
Once you have finished reviewing your employee's time data and payment information, click on the "View Payroll" button located in the lower right corner of the screen.
QuickBooks Payroll allows you to enter an employee's direct deposit details during the payroll run and even switch payment methods from direct deposit to paycheck and vice versa.
If you are satisfied that everything is correct, click on the "Send Payslip" button in the lower right corner of the screen. so you canprint paychecksand/or direct deposit remittance notices to distribute to employees. if you are usingonline speed booksFor your accounting software, an invoice will automatically be created for each payroll processed, making it easy to reconcile your payroll account. For more information, see ourguide to reconciling in quick books.
When reviewing your payroll, be sure to verify that employer and employee take-home pay and tax amounts are reasonable. When everything is correct, click "Send Payslip" to complete.
For more general help with payroll processing, see ourpayroll trainingspikes.
In short
By following these seven easy steps, you can set up your account and process your payroll in just minutes. QuickBooks Online users don't need to look elsewhere forfind the right payroll solutionfor your business. You can easily set up payroll on the platform, as well as access complete payment processing solutions, including health insurance and benefits options for your workforce. New users get a 50% payroll discount for the first three months. Apply for QuickBooks Payroll today.