For small business owners who don’t want to spend all day doing the accounting, Payroll is a pain. It’s a necessary part of hiring and operating a business (unless you want particularly disgruntled employees and a truckload of lawsuits), but that doesn’t mean that it can’t be tedious—and easy to mess up. Luckily, there are choices for sanity-saving payroll software. Now, we’ll run through how to do Payroll in QuickBooks to save you the hassle (and liability) of making so many mistakes figuring it out on your own.
How To Do Payroll in QuickBooks in 6 Steps
Before you start, familiarize yourself with the QuickBooks payroll software if you haven’t already. You’ll also require a QuickBooks subscription with a payroll add-on or a stand-alone QuickBooks payroll subscription. QuickBooks 2024 Payroll comes with a few significant benefits, including same- or next-day deposits, benefits management and automated tax calculations and withholdings.
You also need to make sure QuickBooks has all of the information it needs to make your Payroll run smoothly. This is essentially employee hours (entered by either you or them) and bank account information (for both employer and employees). If this is your first time doing Payroll and you need more help with those steps, check out our article on how to do Payroll for a general overview.
Once you’ve got the basics of your payroll system set up, it’s time to learn how to use QuickBooks specifically.
Step 1: Go to Payroll
Head to the Payroll tab on the dashboard. If you’re not sure where to find it, check out the setup guide from QuickBooks for a guide to the dashboard. If you are setting up a subscription plan that includes payroll services, QuickBooks will now ask you for some additional information about your business (employees, work hours, HR and so on) to help you select a plan.
Step 2: Enter Year-to-Date Information
Once you’re all set with your payroll add-on, QuickBooks will ask you a series of questions about your employees, starting with whether or not you’ve sent out paychecks already in the past calendar year. If you’ve paid an employee within the last calendar year, you’ll need to add some year-to-date payroll information to keep your W-2 forms accurate. This critical step will help prevent some headaches during tax season, so be sure not to skip it.
Step 3: Enter Payroll Information
Next, QuickBooks will prompt you to enter other data about your Payroll. First, the software will ask you for a date to run Payroll and if it’s scheduled or unscheduled. If you’re setting up a new payroll schedule for an employee, you’ll be taken to an additional screen so that you can enter the information to allow for future automation.
QuickBooks will also ask you for the state in which most of your employees work. If that’s the same state as where your company is based, they’re considered resident employees. QuickBooks will calculate state and local taxes, plus state unemployment insurance, and make appropriate withholdings.
If your employees aren’t residents of the state where your business is based, things get more complicated. You’ll need to do some research into how both involved states handle the payment of nonresident employees. Don’t stress too much, though: With the increase in remote work, you’re definitely not the only one with this problem, and there are tons of tools and tips out there to help you navigate any issues you may have.
Step 4: Input Other Employee Data
Now, you’ll need to enter the rest of your employees’ data and answer some other questions about how you want to run Payroll in the future. You’ll only need to worry about this the first time you run Payroll for a particular employee. QuickBooks will save this information in the future, allowing you to skip directly to Step 5. In the meantime, though, here’s the lowdown on the details you’ll need to add.
Personal employee information:
- First and last name, plus middle initial
- Date of hiring
- Email address
Payroll schedule: You can make this applicable to all employees, so you only have to enter this once.
- Frequency of paychecks
- Date of next payday
- Last workday of the upcoming pay period
- Pay schedule name
- Pay rates
- Type of pay (hourly, salary, commission only)
- Pay rates
- Other types of payment/benefits (overtime, PTO, sick pay, vacation pay, etc.)
- Deductions (if applicable)
- Flexible and healthcare spending accounts
- Loan repayments
- Information from an employee’s W-4
- Social Security number
- Other income, deductions and withholdings
- Payment information
- Direct deposit
- Paper check
Step 5: Double-Check and Generate Paychecks
Now, you’re ready to generate your employees’ paychecks. Hit Preview Payroll to look at each one before doing the final confirmation. Even though your employees’ information will be automatically added from Step 4, you must review it each time in order to lower any chance of mistakes. This step is also where you’ll enter and confirm your hourly employees’ hours worked.
Step 6: Confirm
Choose Submit Payroll, and QuickBooks will take care of the rest! A summary copy of each paycheck will also be saved for your records.
Is QuickBooks Payroll Right for You?
If you’re already a QuickBooks user for other accounting processes, using a payroll add-on is by far the easiest way to start doing Payroll. You won’t have to get to know a new dashboard, and you’ll have a lot of information pre-populated. If you’re looking for automated Payroll and tax filing, plus next-day direct deposit, QuickBooks remains an industry-leading choice.
When To Use a QuickBooks Alternative
There are some cases where QuickBooks Support isn’t the best option. Luckily, there are plenty of alternative payroll software available. We recommend checking them out if you have international employees, require a lot of built-in tools or are looking for a professional employer organization. There are also better options if you’re in need of a free trial.
QuickBooks is an excellent option for automated Payroll. It’s straightforward, especially after the first time you input your payroll information, and the software is intuitive to use. Mainly, if your accounting department already uses QuickBooks for other purposes, it’s a seamless way to automate otherwise complex processes.