Managing sales invoices on QuickBooks Online
Management steps
Managing payroll options in QuickBooks Online (QBO) involves setting up your company's payroll preferences, adding employees, and configuring tax and deduction settings. Below is a step-by-step guide to setting up payroll in QuickBooks Online:
Enable Payroll in QuickBooks Online
- Log in to your QuickBooks Online account.
- Navigate to the Payroll menu in the left-hand navigation pane.
- Choose a payroll subscription plan:
- If you haven’t subscribed yet, click Get Started and follow the prompts to select and activate a payroll plan.
- If you already have a subscription, proceed to configure your payroll.
Set Up Company Payroll Information
- In the Payroll Dashboard, click on Settings (gear icon).
- Configure your payroll settings:
- Company Information: Enter your legal business name, EIN (Employer Identification Number), address, and phone number.
- Pay Schedule: Choose the pay frequency (weekly, bi-weekly, semi-monthly, or monthly).
- Time Off Policies: Set up sick leave and vacation accrual policies if applicable.
- Save the settings.
Add Employees
- Go to Payroll > Employees.
- Click Add an employee.
- Enter the following details for each employee:
- Personal Information: Full name, email address, and Social Security Number (SSN).
- Pay Details:
- Hourly rate or annual salary.
- Overtime rate, if applicable.
- Tax Information:
- Filing status and allowances from their W-4 form.
- Additional deductions or withholding preferences.
- Payment Method:
- Set up direct deposit or choose a manual check payment option.
- Save the employee profile.
Set Up Tax Details
- Navigate to Payroll Settings > Taxes.
- Enter your federal tax details:
- EIN, tax filing frequency, and deposit schedule.
- Enter state tax details:
- State tax ID, unemployment tax rates, and any local taxes.
- Verify that all tax information is accurate.
Configure Benefits, Deductions, and Garnishments
- Go to Payroll Settings > Benefits & Deductions.
- Add any employee benefits (e.g., health insurance, retirement plans).
- Configure deductions or garnishments as needed:
- Specify the type, amount/percentage, and applicable employees.
Set Up Workers' Compensation
- Go to Payroll Settings > Workers' Compensation.
- If applicable, integrate your workers' comp policy or purchase a policy through QuickBooks.
- Assign classification codes to employees for accurate premium calculations.
Test Payroll Configuration
- Run a test payroll:
- Click Run Payroll from the dashboard.
- Enter time data for employees (if applicable).
- Verify that paychecks, taxes, and deductions are calculated correctly.
- Confirm the pay period and pay date.
- Submit the payroll for processing.
Schedule and Automate Payroll (Optional)
- In Payroll Settings, enable automatic payroll if desired.
- Select employees to include.
- Set up recurring pay schedules.
- Ensure all direct deposit and payment methods are active.
File and Pay Taxes
- Go to the Taxes section under Payroll.
- Set up e-filing and e-payment options.
- Verify bank account details for tax payments.
- Ensure that tax filings (e.g., 941, 940) are scheduled in compliance with deadlines.
Review Payroll Reports
- Access payroll reports through the Reports menu.
- Review reports like:
- Payroll Summary
- Tax Liability
- Employee Earnings
- Use these reports to ensure accuracy and compliance.
With these steps completed, your QuickBooks Online payroll setup will be configured and ready to use for employee compensation, tax compliance, and reporting.
Configuring Advanced Payroll Options
Configuring Advanced Payroll Options in QuickBooks Online (QBO) requires fine-tuning payroll settings for businesses with complex payroll needs. Advanced options include managing multiple pay schedules, custom deductions, benefits, overtime, workers' comp, and tax customization.
Here’s a step-by-step guide to setting up advanced payroll options:
Access Payroll Settings
- Log in to QuickBooks Online.
- Navigate to the Payroll menu on the left-hand panel.
- Click the Settings gear icon in the Payroll dashboard.
- Select Payroll Settings to access advanced configuration options.
Configure Pay Schedules
- In Payroll Settings, select Pay Schedules.
- Create multiple pay schedules for different employee groups:
- Click Add a new schedule.
- Choose pay frequency (weekly, bi-weekly, semi-monthly, or monthly).
- Assign the schedule to applicable employees.
- Save the settings.
Set Up Custom Earnings Types
- In Payroll Settings, go to Earnings.
- Add custom pay types for specific needs:
- Overtime, double time, bonuses, or commissions.
- Custom hourly rates for specific projects or roles.
- Define whether these earnings are taxable.
- Save the custom earnings.
Configure Benefits and Deductions
- Navigate to Benefits and Deductions under Payroll Settings.
- Add custom benefits or deductions:
- Examples: Retirement plans (401(k), IRA), health insurance, child support, or union dues.
- Enter details like the deduction type, calculation method (flat amount or percentage), and applicable employees.
- Assign each benefit/deduction to specific employees or groups.
Manage Overtime Rules
- Go to Payroll Settings > Overtime.
- Define overtime rules for your state or organization:
- Set thresholds (e.g., time-and-a-half after 40 hours per week).
- Configure double-time rules if required.
- Apply these rules to employees working under specific conditions.
Set Up Multiple Employee Types
- Under the Employees section:
- Add and categorize employees as Hourly, Salaried, or Contractors.
- Assign pay rates and custom fields for unique compensation.
- For contractors, configure payment schedules and ensure proper 1099 tracking.
Configure Tax Settings for Complex Scenarios
- Navigate to Taxes in Payroll Settings.
- Set up additional state and local tax options:
- Enter state-specific unemployment tax rates.
- Configure city/local tax codes for applicable jurisdictions.
- For multi-state employees:
- Enable the Multi-State Employment option.
- Configure tax calculations for each state.
Customize Time Tracking Integration
- Integrate time-tracking software if applicable (e.g., QuickBooks Time).
- Go to Apps > Time Tracking to enable integration.
- Map timesheet data to payroll:
- Assign pay types (regular, overtime) based on time entries.
- Review and approve timesheets before running payroll.
Automate Workers' Compensation
- Navigate to Workers' Compensation under Payroll Settings.
- If using a third-party provider:
- Link your workers' comp policy to QuickBooks.
- Assign classification codes to employees based on their roles.
- Automate premium calculations and reporting.
Set Up Garnishments
- In Benefits and Deductions, add garnishment settings:
- Specify the type (e.g., child support, tax liens).
- Enter the garnishment amount or percentage.
- Link garnishments to applicable employees.
- Verify compliance with federal and state garnishment limits.
Configure Payroll Automation
- In Payroll Settings, enable Auto Payroll:
- Select employees to include in the automated payroll process.
- Ensure all deductions and benefits are configured for automation.
- Set up notifications for upcoming payroll runs.
Advanced Reporting and Compliance
- Access advanced payroll reports in the Reports menu:
- Payroll Summary
- Tax Liability
- Paycheck History
- Set up alerts for tax deadlines to ensure compliance:
- E-file forms like 941, 940, W-2s, and 1099s.
Multi-Company or Multi-Department Tracking
- Enable Classes and Locations under Account Settings:
- Go to Settings > Advanced > Categories.
- Turn on Track Classes and Track Locations.
- Assign payroll expenses to specific departments or projects for detailed tracking.
Conduct a Payroll Test Run
- Run a test payroll to ensure:
- All custom rules, deductions, and taxes are calculated accurately.
- Employee compensation aligns with the configured settings.
- Verify reports for errors or discrepancies.
Ongoing Maintenance
- Regularly review payroll settings to:
- Update tax rates.
- Adjust benefits or deductions as needed.
- Conduct periodic audits to ensure compliance with labor and tax laws.
These steps should help you configure advanced payroll options effectively in QuickBooks Online.

Table of content
- Management steps
- Enable Payroll in QuickBooks Online
- Set Up Company Payroll Information
- Add Employees
- Set Up Tax Details
- Configure Benefits, Deductions, and Garnishments
- Set Up Workers' Compensation
- Test Payroll Configuration
- Schedule and Automate Payroll (Optional)
- File and Pay Taxes
- Review Payroll Reports
- Configuring Advanced Payroll Options
- Access Payroll Settings
- Configure Pay Schedules
- Set Up Custom Earnings Types
- Configure Benefits and Deductions
- Manage Overtime Rules
- Set Up Multiple Employee Types
- Configure Tax Settings for Complex Scenarios
- Customize Time Tracking Integration
- Automate Workers' Compensation
- Set Up Garnishments
- Configure Payroll Automation
- Advanced Reporting and Compliance
- Multi-Company or Multi-Department Tracking
- Conduct a Payroll Test Run
- Ongoing Maintenance