As a company, you don’t just get to enjoy income coming in, you also have to deal with your expenses. One of your main expenses will be paying people who are your employees or contractors.

QuickBooks Online gives you a way to handle your payroll, however it is currently included as an add-on, much like their payments plans. So, in order to use it, you need to enroll in it.

Making sure that your employees are paid on time every time is easier than ever with accounting software that boasts payroll capabilities, and QuickBooks Online is one of the biggest out there. Millions of business owners rely on QuickBooks Online for balancing the books, tracking inventory, and performing other tasks, including payroll.

If you’re ready to set up your payroll to ensure your employees are paid on time while also remaining compliant with payroll tax laws, keep reading. We break down each step of signing up, setting up, and running payroll quickly and easily through QuickBooks Online — no prior payroll experience is required!

What You Need to Run Payroll in QuickBooks Online–

Before you sit down and get started, there are a few items you need to have handy in order to successfully and accurately set up and run payroll through QuickBooks Online. The list of that items are as follows:

• Personal Info of Employees
• Employee Pay Rates
• Employee Deductions
• Employee W-4s
• Direct Deposit Authorization Forms & Voided Checks
• Business Bank Account Login Information
• Basic Information About Your Business

Not only can you set up payments via QuickBooks for each employee, but you can also take a few extra steps to make sure that payroll taxes are accurately calculated and paid. In order to do this, have the following information in addition to the items listed above.

• Federal EIN
• State Account & Withholding Numbers
• Workman’s Comp Policy Information

How to Set Up Payroll in QuickBooks Online–

After you’ve gathered everything you need, it’s time to set up your payroll. Depending on the number of employees you have, this process can be time-consuming, so make sure you’ve set aside plenty of time to make sure everything is input correctly. Though these steps can take some time to complete for each employee, the good news is that it’s all very simple and straightforward, so it shouldn’t be a problem — even if you’ve never set up payroll before.

1. Step 1- Sign up for Payroll- In order to run payroll through QuickBooks Online, you have to sign up for QuickBooks Payroll. This is actually quite easy and can be done right from your dashboard.

On the menu on the left side of your screen, select Payroll. From here, you can choose whether to set up payroll for employees, contractors, or workers’ comp.

From this point, you will need to select a QuickBooks Payroll subscription plan. You can select various features to get a plan recommendation from QuickBooks or you can choose your own.

1. Step 2- Basic Information to Set Up Payroll- Next, you will need to answer a few basic questions about your business in order to set up your payroll. These questions include:

• Have you paid employees in this fiscal year?
• When is your next payday?
• What is the primary work location?

iii.  Step 3- Add Employees- Now, it’s time to pull out all of that employee information so you can set up payroll and get them paid. This includes:

• Personal Information
• Pay Schedule
• Pay Rate
• Deductions
• Withholdings
• Personal Details
• Payment Details

Once all information has been added for this employee, save your changes and continue to add each employee following each step outlined above.

1. Step 4- Add Workman’s Comp Policy Information- The next step is to add your workman’s comp policy to QuickBooks Online. If you’re already covered, QuickBooks makes it easy to add your policy information. If you don’t have a policy, you can opt to have QuickBooks help you find a policy, or you can choose to do so yourself at a later time.
2. Step 5- Set Up Payroll Taxes- Now, you will need to make sure that you have the correct information in QuickBooks for payroll taxes and forms. For this section, you will need to enter your filing name, filing address and other necessary information.
3. Step 6- Connect Your Bank Account- If you are paying your employees through direct deposit, you will need to add your bank account information to QuickBooks. Adding your account info also allows you to send payments (whether you’re paying bills or paying contractors), as well as e-file and pay your taxes online.

For this step, you have the option of signing into your bank account. Simply select the bank that you use for your business account and input your login information. You also have the option to enter bank information manually, although this process may take several days before your account is connected.

vii.  Step 7- Sign Your Tax Forms- While this step isn’t required, it certainly doesn’t hurt to take a few extra minutes to sign tax forms. This way, you can be prepared come tax time.

If you get confused at any point in the process, QBO makes it easy to stay on track. Simply click Payroll in the side menu and go through the To-Do list in the Overview tab, or select the relevant tab to go back and add or change information. You can also take advantage of the in-software QB Assistant if you have additional questions or need assistance in getting payroll set up.

How to Do Payroll in QuickBooks Online In 6 Steps–

Now that you have everything set up, it’s time to run payroll. The hard work is behind you, and the rest is relatively simple, particularly if you take advantage of the software’s automations. To run payroll in QuickBooks Online, follow each of these steps.

1. Step 1- Confirm Employee Information- Start running your payroll by clicking on the Payroll tab in the sidebar, then selecting the Employee tab along the top of the screen. This screen will show the name of each employee, their pay rates, pay method, and employee status. You can click each employee name to edit information as needed.
2. Step 2- Salary, Hours and Memos- In this step, you’ll need to confirm additional information. Make sure that the pay rate for each employee is accurate. If you entered in daily hours and days worked per week during setup, you’ll notice that QuickBooks has already calculated the hours for you. If this isn’t accurate, you can easily make changes.

iii.  Step 3- Preview Payroll- Once you’ve confirmed that all information is accurate, select the Preview Payroll button at the bottom right of the screen. From here, you will get an overview of your payroll. This includes total payroll costs, broken down by net pay, employee costs, and employer costs. You’ll also see the total number of payments, types of payments, and a delivery date.

1. Step 4- Submit or Save Payroll- If you’ve confirmed that everything is good to go, it’s time to run payroll. Simply click “Submit Payroll” to complete the process. If employees are being paid via direct deposit, funds will be deducted from your connected account and delivered directly to the bank accounts of your employees. If you’re paying via paper check, you can view and print each check before mailing or handing them to your employees. You can also print paycheck stubs and view and export employee and employer payroll reports. Once everything is done, click Finish Payroll, and you’ll return to your QuickBooks dashboard.
2. Step 5- Correct Errors or Reprint Checks- You thought you did everything right, but uh-oh! You realized after clicking “Submit” that you’ve made a mistake. No worries. You can view your paychecks and make corrections, void, or delete them. Go back into the Payroll tab and select Employees. Click on the employee’s name, and select the Paycheck List tab right under their name. Select the paycheck, then choose your action. Checks can be edited, voided, deleted, or reprinted.
3. Step 6- Automate the process- According to QuickBooks, Auto Payroll is available only to a select number of customers. In order to qualify, you must meet the following requirements:

• All employees must be salaried.
• Payroll setup must be complete.
• There are no holds on your account.
• Auto Payroll is not available for your first payroll.

Once you qualify, you can easily turn on Auto Payroll by selecting the gear icon, choosing Payroll Settings, and then toggling on the Auto Payroll switch.

The ease of running payroll in QuickBooks Online–

Whether you are a new or experienced user, running payroll in QBO is straightforward. While there is some manual data entry involved when you’re entering each employee’s information into the system, running payroll via 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 accounting software best picks.