- Processing payroll in QuickBooks Online is easy and effective.
- You can sync both your business account and your employees’ accounts and process payroll with same-day payments.
- Creating a pay schedule allows for recurring payroll payments.
- This article is for business owners, human resources professionals and accountants who want to run payroll in QuickBooks Online.
QuickBooks Online helps streamline accounting tasks while keeping all the data, information, and reporting in one place. Payroll is another feature that QuickBooks Online (QBO) offers, should your business have employees and need to do any of the following:
- Pay your team.
- Manage employee benefits.
- Automatic tax calculation and withholding.
- Store federal and state tax information.
- Link payroll expenses to general ledger accounts.
did you know? QuickBooks is the No. 1 online payroll provider for small businesses. Read our QuickBooks Payroll review, and see how Quickbooks compares to Gusto Payroll.
Adding payroll options to your QBO account increases the cost of your subscription, along with additional features. These include the ability to make same-day or next-day direct deposits, the ability to manage employee benefits, and automatic tax calculations and withholding. [Related: Best Payroll Software Providers]
Editor’s Note: Looking for the Right Accounting Software for Your Business? Fill out the questionnaire below to have our vendor partners contact you about your needs.
Before You Run Payroll in QuickBooks Online
If you’re familiar with QBO, setting up payroll is easy. Here’s a four-step process to set up payroll in QBO:
1. Under payroll Tab on Dashboard, click employees,
If you’re new to QBO, you’ll need to complete the Get Started steps the first time you log into your account. After a brief tutorial and setup, you will be able to access the Payroll tab.
The next command will ask you different questions about employees, working hours, human resource support, etc. This allows QBO to help you find the best payroll add-on for you, meeting your needs without adding any unnecessary features or functions.
2. Key to payroll information for employees.
After finding the best plan for your needs, QBO will ask if you have paid employees in the current calendar year. Whether you used accounting software or a manual system to pay employees, if you paid them in the current calendar year, you’ll want to answer yes. If you are paying an employee or employees for the first time within this calendar year, answer no.
If you answer yes, you will need to enter current year payroll information for each employee you paid in the active calendar year. This helps ensure that W-2 information is accurate when you release the statement for tax purposes. QuickBooks Pro does a great job of creating tax documents like W-2s, which is another bonus of running payroll through QBO.
3. Set a date to run payroll.
The next prompt will ask when you plan to run your first QBO payroll. After you set up a date, QBO will ask about the location where most of your employees work.
If your employees live in the state in which the company is located, they are considered resident employees. Typically, resident employees owe state and local taxes, as well as state unemployment insurance taxes paid by their employer, while state taxes are withheld.
If your employees live in other states, it gets a little more difficult. Since remote working has become very popular over the years, it is no longer uncommon in many states to have employees. For non-resident employees or out-of-state employees, employers withhold state tax from the state in which their employee resides. Since states do not conform to their own laws and tax requirements, you may want to do some research about how your state and their state handles nonresident employees.
4. Enter employee information.
You must enter the following information for each employee.
- personal information: Here you enter their first name, middle name and last name. You also enter their rental date and email address. In this first step, you can also check if you want the employee to be able to add their own hours and view their pay stubs and W-2s online.
- Frequency of Salary: In this step, you can create a salary schedule and answer the following questions.
- How often do you pay? There is a drop-down menu that allows you to select weekly, biweekly, semimonthly or monthly pay.
- When is the next pay day? Enter the specific date.
- When is the last day of work (pay period) for that pay day? Enter the specific date.
- What do you want to name this pay schedule? Create a name.
After answering these questions, you can use the same schedule for all employees. QBO then shows you the next four pay periods and the next four paydays for your employee.
- rate of pay: There is a drop-down menu that allows you to select only hourly, salary or commission with the appropriate dollar amount. You can also add other payment types, such as overtime, paid time off, sick pay, vacation pay and holiday pay.
- Deduction: This move allows you to make a significant contribution to all deductions for this employee. Deductions you can add include healthcare, retirement plans, flexible spending accounts, HSA plans, garnishments, and loan repayments. The normal repetition is the same amount each pay period. You can filter the amount by dollar amount or percentage of gross pay.
- Withholding: You’ll get your employee’s information from their W-4 and key in all withholdings in this step. Their general information goes here, along with their Social Security number, tax filing status, dependents claimed, and any other income, deductions or withholdings mentioned on their W-4.
- payment method: The drop-down menu gives you the option of direct deposit, paper cheque, direct deposit in two accounts and direct deposit with the balance in the form of cheque.
After completing these steps, you are ready to run payroll in QuickBooks.
Tip: Learn how to set up direct deposit for an effective way to pay your employees.
How to Run Payroll in QuickBooks
Processing payroll in QBO is a simple four-step process. Once you’ve entered all employees into the system, you’re ready to run payroll.
1. Access your Dashboard payroll, then choose run payroll.
2. Enter hours. You will be prompted with the regular Pay Hours function. While QBO automates the number of hours worked for each employee, as you completed in the steps above, it is important to verify the accuracy of each pay period and adjust as needed.
3. If all is correct, select preview payroll and review.
4. Select Submit payroll. Like many of QBO’s functions, you can review, download, and print a summary of the payroll report.
FYI: Once you submit payroll, you can print checks for your employees or have QBOs communicate with banks and financial institutions to transfer funds from your business account to their direct deposit accounts, thereby Your payroll will become part of the paperless office.
Ease of Running Payroll in QuickBooks Online
Whether you’re a new or experienced user, running payroll in QBO is straightforward. While the system involves some manual data entry when entering each employee’s information, running payroll through QBO weekly, biweekly, semimonthly or monthly will save you time so you can run and manage other aspects of your business. For other options, see our best pick of accounting software.