Doing your own payroll is one way for business owners to save money. If you use Quickbooks Online, you can set up and run payroll easily in no time. We will show you what info you will need and provide step by step instructions on how to set up and process payroll in QuickBooks Online in nine easy steps.
When you add Payroll to your existing QuickBooks Online subscription, your business gains access to benefits such as same day direct deposits, assistance with setting up your company’s payroll, and your taxes are prepared for you.
Payroll setup checklist
Doing payroll in QuickBooks online involves setting up QuickBooks Online Payroll, an easy process that has five easy steps, and running payroll, which is fast and be done in four steps. We will walk you through both step by step. In order to follow along, you are going to need a few documents and pieces of information relating to your business and your employees handy. Below is a checklist that you can use to ensure you have everything you will need.
Add employer information in QuickBooks online payroll
You will need your business bank account and routing number of the bank account you will use to pay employees and make tax payments. In addition, you should have the hourly rate or salary information along with other benefits you will offer employees, such as health insurance and retirement plans. Listed below is the employer information you will need in order to complete QuickBooks Online Payroll setup:
Bank account information
The full routing number and account number of the checking account that you will write payroll checks from as well as make your payroll tax payments.
Hourly wages, salaries, bonuses, commissions, tips, and any other compensation you provide your employees.
Health and dental insurance, 401k, retirement plans, vacation/sick leave policy, or Flexible Spending Account.
Add employee info in Quickbooks online payroll
In order for QuickBooks to calculate payroll checks for you, you will need Form W-4, the employee’s pay rate and deductions, and how often you will pay employees. You will find a list below a list of employee items you will need in order to set up QuickBooks Online Payroll.
Upon hiring a new employee, you need to have them complete a W-4 form, which will provide you with their witholding information and other pertinent information you need in order to correctly calculate their payroll tax deductions.
Employee contributions to health insurance, retirement plans, or garnishments.
In general, this will be weekly, bi weekly, semi monthly, or monthly. You can also set up multiple pay schedules if you need to in QuickBooks. For example, if you pay hourly employees every week and salaried employees every other week, you can set up both of these pay schedules.
Sick/Vacation hours policy and balance
If you offer sick/vacation pay, you will need to enter this information for each employee. In general, these hours will be earned each pay period.
The Hire Date for each employee must be entered during the payroll setup.
Direct deposit authorisation form
You can offer your employees direct deposit in lieu of a check. To do so, you must have them complete a direct deposit authorisation form, which not only gives you permission to make deposits to their account, but it will include the bank account and routing information you need to make the deposit.
Doing payroll in QuickBooks online involves setting up QuickBooks Online Payroll, an easy process that has 5 steps, and running payroll in QBO which can be done in 4 steps. We will walk you through both step by step.
How to setup Quickbooks online payroll in 3 easy steps
In this section, we will cover QuickBooks enhances payroll service. For a full guide to the features and benefits of the different payroll software offered by Intuit, check out our QuickBooks Payoll Service guide. Now that you have got all of the information you need, it is time to roll up those sleeves and get to work. Below are the five steps on how to do payroll in QuickBooks Online:
1. Navigate to the employee center
Click on the Employees tab located on the left menu bar as indicated in the screenshot below.
2. Process to the payroll setup
If you purchased payroll with your QuickBooks Online subscription, then your screen will resemble the one in the screenshot below. Click the “Get set up” button to proceed to the next screen.
3. Respond to questions regarding prior payrolls
If you are converting to QuickBooks from a manual or computerised payroll system, then you will need to provide some additional information to ensure that your W-2 forms are accurate. You will need to provide information about any payroll checks issued during the year.
Have you paid any W-2 employees in 20XX?
This question is pretty self explanatory. If you have paid employees this yearm select “yes.” If this is the first time you are paying employees this year, select “no.”
When will you first run payroll with QuickBooks Online Payroll?
Indicate the date that you plan to run your first payroll in Quickbooks. The options that appear here will be based on the current date.
How did you pay your employees?
Indicate the manner in which you paid your employees in your manual/old system. Your response to this question is very important because if you paid employees and withheld taxes from their paychecks, you will need to provide the year to date payroll information for each employee later on in the setup.
Click on add an employee
Complete employee info
Complete the fields that come up after you add an employee. The employee information fields you need to complete the QuickBooks Online Payroll setup are:
Employee withholding information
This information will come from Form W-4, which we discussed earlier. When you click on the edit pencil, the above screen will display.
From the drop down, select the pay schedule for the employee.
Enter the employee’s wage in this field.
Select the deductions/contributions for the employee, as indicated in the screenshot below.
Select either direct deposit or live check from the drop down. If you select direct deposit, enter the employee;s banking information directly from the direct deposit authorisation form we discussed previously.
Enter year to date payroll information
If you paid this employee this year, enter their year to date payroll information from their last payroll check issued out of the old system.