How to Do Payroll in QuickBooks Online in 7 Steps

Payroll can be challenging for small businesses, but QuickBooks Online makes it easy with its intuitive interface. This guide will teach you the steps to set up payroll in 7 straightforward steps. You’ll need no fancy software or complicated instructions – just a computer and internet access!

Consider adding QuickBooks Payroll to your subscription if you’re currently using QuickBooks Online and need to pay staff. It may be accessed from the same system you use to keep track of your company’s finances, allowing for a smooth transfer of payroll costs to the relevant general ledger accounts.

You can set up payroll with QuickBooks Online and perform your first pay run in just a few easy steps. If you subscribe to a QuickBooks Payroll plan, you may even handle payroll as frequently as you need at no additional cost.

Additionally, when you add QuickBooks Payroll to your current QuickBooks Online subscription, you have access to additional HR and pay processing tools, including subsequent- and same-day direct payments, employee benefits, and automatic tax calculations and filings. For the first 30 days, new users may check out the system for free. Register for QuickBooks Payroll right now.

Checklist for Payroll Setup: What You Need to Know

Before you can set up and handle payroll in QuickBooks, you’ll need both employer and employee information on hand to ensure a seamless setup. We’ll walk you through the process in this post, so you know when to utilize the information. Here’s a checklist to ensure you have both the employer and employee data you need.

In QuickBooks Payroll, you’ll enter employer information.

• Types of employee remuneration include: You’ll enter information like overtime, paid time off (PTO), bonuses, and commissions that you provide to your employees regularly.
• Optional employee perks: You must define the employee benefits you provide. It’s worth noting that all QuickBooks Payroll plans to provide access to health benefits. It also provides workers’ compensation choices such as 401(k), retirement, flexible spending account (FSA), and pay-as-you-go.
• You will need the entire routing number of the checking account from which you will make payroll tax payments and create payroll checks, in addition to the account number.

A payroll account should be kept distinct from the bank account used for day-to-day company activities.

You’ll use documents and information on employees to input information into QuickBooks Payroll.

• Employee information and hiring date: You’ll need basic information about your employees, such as their legal names, birth dates, and employment dates.
• Pay rate and schedule: If necessary, QuickBooks allows you to create different pay schedules.
• Paycheck deductions: A list of your workers’ contributions to health insurance, retirement schemes, and garnishments should be kept on file.
• Form W-4: When you hire new workers, you must have them fill out and sign a W-4 form so that you can input their withholding information and other facts needed to compute payroll tax deductions appropriately.
• Payroll history: If you’ve previously paid workers this calendar year, you’ll need to have your previous payroll data available to guarantee appropriate tax computations.
• If you want to pay workers by direct deposit instead of paper checks, you’ll need to have them fill out a direct deposit permission form.
• PTO policy and balance: If you give vacation and sick pay, you’ll need to know how many PTO hours each employee will get over the year.

If you’re switching to QuickBooks Payroll in the middle of the year, you’ll need to input an employee’s sick and vacation hours from their old system.

Most online payroll systems include an easy-to-use interface that makes payroll setting simple. The same is valid with QuickBooks, a setup wizard that will walk you through the whole procedure. As a result, the setup may be completed in just a few easy steps.

1. Go to the Payroll tab.

Go to “Payroll” and then “Employees” after logging into your QuickBooks account. You’ll notice a “Get Started” button if you’ve recently bought your QuickBooks Online membership. To go on to the next screen, click it.

Hover over the “Payroll” icon in the left menu bar, about halfway down the list of navigation choices, and then select “Employees.”

You won’t see the “Get Started” option if you already have QuickBooks Payroll but haven’t used it. Instead, the screen will inform you that payroll must be set up.

Hover over the “Payroll” icon in the left menu bar, about halfway down the list of navigation choices, and then select “Employees.”

You won’t see the “Get Started” option if you already have QuickBooks Payroll but haven’t used it. Instead, the screen will inform you that payroll must be set up.

If you’re just getting started with QuickBooks Payroll, the system will ask you a few questions, such as if you need HR assistance or need to log employee work hours. While these questions will aid in matching you with the correct plan, you may also choose one of the three payroll alternatives individually.

QuickBooks will suggest the ideal payroll plan for you, and you may even try it out for free for 30 days.

2. Fill in the blanks with general information about your employees’ pay.

Next, the system will inquire whether you have already paid staff for the current calendar year. Again, if you’re converting from a manual system or another payroll software to QuickBooks Payroll, you’ll need to choose “Yes.”

Select “No” and then “Next” for newly founded enterprises that have yet to conduct their first payroll.

Note that the system will want you to provide year-to-date (YTD) salary information and tax payments made for each employee later in the setup. Therefore, past the start of your QuickBooks Payroll subscription, you must provide information regarding prior paychecks sent to workers to guarantee that your W-2 forms are correct at year’s end.

You may retrieve YTD data for each employee from the most recent paycheck you completed. You may also ask your old payroll provider for complete pay information.

Aside from payments to workers for the current calendar year, the system will ask you when you intend to execute your first QuickBooks payroll. It will also ask you to input the actual address of your company’s headquarters.

3. Increase the number of employees

After you’ve entered your workplace, a new window will emerge, allowing you to input the essential information and payroll data for your workers. Start filling the needed data for each staff member on your payroll, even those who no longer work with your firm but were paid inside the current calendar year, by clicking the “Add an employee” button.

4. Complete information about the employee

You have the option of entering your workers’ email addresses when you enter basic staff information into QuickBooks. This enables the system to give customers a link to check their pay stubs and W-2s online via QuickBooks Workforce, the provider’s self-service portal. There’s also an option for the system to enable workers to use QuickBooks Time to monitor and report their work hours.

To use the time tracking service, you’ll need to subscribe to one of QuickBooks Payroll’s premium plans.

The employee information fields you must put in to complete the QuickBooks Online Payroll setup are listed below.

• Pay schedule: In the “How frequently do you pay (employee)” area, click the “create pay schedule button” to set up a pay plan for your workers. Next, select the appropriate schedule from the dropdown menu, which includes weekly, twice a month, and monthly, among others. You’ll also have the option of making the schedule you just established the default schedule for new workers added to the system.
• Employee pay: In the “How much do you pay (employee)” column, enter the employee’s salary. You must also provide the default amount of work hours per day and workdays per week for the personnel.
• Employee deductions/contributions: Select the relevant contribution and deduction items in the “Does (employee) have any deductions” column.
• Employee withholding information: Use the information from Form W-4s in the “What are (employee’s) withholdings” section. Select whether you need the current year’s tax form or an older version when you click “Enter W-4 form.” As of this writing, the form was modified in December 2020, and QuickBooks keeps both new and old forms. This allows you to print one from the system and present it to workers while capturing the relevant data.
• If you paid the employee this year, utilize the most recent payroll check information and enter the YTD payroll data into the system. QuickBooks will ask for totals paid in previous quarters of the current year, as well as any monies paid this quarter but before you started using QuickBooks Payroll.
• Payment method: A selection box in the “How do you wish to pay (employee)” section allows you to pay the employee by direct deposit or (manual) cheque. Use the information from the direct deposit permission form and the voided check you requested from the employee if you choose direct deposit.

As of this writing, QuickBooks Workforce has implemented a new feature that allows workers to immediately input their tax (W-4 information) and bank account information.

Click the “Add extra pay” button in the “How much do you pay (employee)” box.

By clicking on each area, you can examine the information you supplied. Finally, click “Done” after you’ve completed all of the necessary information.

You must double-check the YTD totals. This information will affect federal and state taxes with yearly maximums, as well as restrictions on 401(k) and retirement plan contributions.

Payouts for Coronavirus

Under the “How much do you pay (employee)” section of QuickBooks Payroll, there is a coronavirus pay function. It enables you to categorize paid absences taken by workers due to the coronavirus. You must also select this if you intend to take a tax credit against the employees’ wages under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Paychecks may be booked accurately and handled on schedule if paid leave is classified according to the pay categories established by the Families First Coronavirus Response Act.

Make sure you meet the requirements for the CARES Act credit (for instance, workers must be employed a minimum of 30 days for their wages to be eligible).

You’ll see a list of workers on your payroll for the year after you’ve completed all of the relevant information for each one. First, examine it thoroughly to ensure that all pay information is right. Then, click the “add an employee” option if you have new staff or mistakenly left someone out.

If you see anything on the list that needs to be fixed, click the employee’s name to make the necessary changes.

Don’t forget to establish your company’s tax information now that you’ve put up workers in the system.

How to Use QuickBooks Online to Process Payroll

You may now process your first pay run once you’ve finished setting up payroll in QuickBooks. To handle payroll in QuickBooks Online, follow these three steps.

1. Select “Run Payroll” from the drop-down menu.

To run payroll, go to your “Payroll” dashboard and click the “Run Payroll” button in the right-hand corner.

2. Enter the current time.

Enter the actual hours worked for all hourly workers in the “Regular Pay Hrs” column, then double-check the rest of the data for correctness. Select the “Preview Payroll” button in the bottom right corner after you’re finished.

The system automatically fills in the total hours based on the default amount of work hours you provided for an employee during the initial setup. If the staff’s working hours change, feel free to adjust them in the system.

3. Payroll Review and Submission

Before confirming the payroll information, here is your last opportunity to examine and change it. First, check the payment method to ensure that workers who direct deposits should pay and paychecks show up appropriately, apart from the total hours worked and other compensation data. Also, double-check the tax amounts for both the employer and the employee.

When you’re sure everything is in order, click the “Submit Payroll” button in the bottom right corner of the screen. After that, you may print payroll checks and direct deposit remittance advice for workers to distribute.

The “Payroll” dashboard also includes a list of the workers you’ve added to your account, as well as critical payroll-related alerts.

You’ll only see the payroll amount when you run payroll, not the actual hours worked by paid personnel.

Check the net compensation and the employer and employee tax amount for accuracy when examining payroll.

To obtain pay-related reports, go to the bottom center of the page and click “View payroll reports.”

Conclusion

Users of QuickBooks Online who want a payroll solution do not need to look for another software supplier. In QuickBooks Online, you can effortlessly set up payroll and have access to full-service pay processing solutions, including health insurance and benefit choices for your employees. If you haven’t already, you may test QuickBooks Payroll for free for 30 days.