How to Do Payroll in QuickBooks

Running payroll in QuickBooks Desktop is a core task for any small business owner or accountant who wants to pay employees accurately and on time. With an active QuickBooks Payroll subscription, the process covers setting up employees, entering hours, creating paychecks, and remitting payroll taxes to the appropriate agencies. This guide walks through every step in detail, from first-time employee setup to paying payroll tax liabilities, so you can run payroll confidently without errors.

What Is Running Payroll in QuickBooks?

Running payroll in QuickBooks Desktop is the process of calculating employee wages, applying the correct federal and state tax withholdings, issuing paychecks or direct deposits, and recording the associated payroll liabilities in your books. QuickBooks automates the math once your employees and pay schedules are configured, but you still control when payroll runs and how it is funded.

QuickBooks Desktop Payroll comes in three subscription tiers. Basic Payroll handles paycheck creation and federal tax table updates. Enhanced Payroll adds state payroll form preparation and e-filing capability, so you can file W-2s and quarterly tax forms directly from QuickBooks. Full Service Payroll takes the tax filing entirely off your plate, with Intuit's team handling all federal and state deposits and filings on your behalf.

The payroll workflow in QuickBooks Desktop follows a consistent pattern regardless of subscription level: set up employees and pay schedules, run payroll by entering hours or confirming salary amounts, print or electronically submit paychecks, and then pay your accumulated payroll tax liabilities before each deadline.

Before You Begin

Before running your first payroll, confirm the following items are in place:

• Active Payroll Subscription: Go to Employees > My Payroll Service > Account/Billing Information to verify your subscription is active. If you do not have a subscription, you can purchase one from Intuit before proceeding.
• Payroll Tax Table Updated: Go to Employees > Get Payroll Updates and download the latest payroll tax table. Outdated tax tables produce incorrect withholding calculations.
• Company Payroll Settings Configured: Go to Employees > Payroll Setup if this is your first time. The payroll setup wizard walks through company information, federal employer identification number (EIN), state tax ID, and pay periods.
• Employee Records Ready: Each employee needs a Social Security Number, filing status, W-4 allowances (or the 2020+ W-4 amounts), pay rate, and payment method (check or direct deposit) entered before you can include them in a payroll run.
• Administrator Access: You need administrator-level QuickBooks access to create paychecks and pay liabilities.

Step-by-Step Guide

Method 1: Set Up an Employee

Before you can pay an employee, their record must exist in QuickBooks with complete tax and pay information.

1. Go to Employees > Employee Center
2. Click New Employee in the upper left
3. On the Personal tab, enter the employee's legal name, Social Security Number, address, and date of birth
4. Click the Address and Contact tab and confirm the address is correct; QuickBooks uses it for W-2 mailing
5. Click the Additional Info tab and enter the employee type (Regular, Statutory, or Owner)
6. Click the Payroll Info tab - this is where the pay details live:

- Under Earnings, click Add and select the pay item type (Hourly, Salary, Commission, etc.) and enter the pay rate

- Under Pay Schedule, click Create Pay Schedule or select an existing one (Weekly, Biweekly, Semi-Monthly, or Monthly)

- Under Additions, Deductions and Company Contributions, add any benefits, garnishments, or retirement contributions that apply

1. Click Taxes on the Payroll Info tab to open the tax withholding settings:

- On the Federal tab, enter filing status and the W-4 information (the 2020 and later W-4 uses Additional Withholding amounts rather than allowances)

- On the State tab, enter state filing status and withholding information

- On the Other tab, confirm local taxes if applicable

1. Click Direct Deposit if the employee receives direct deposit. Enter their bank routing number and account number. You will need an active QuickBooks Direct Deposit subscription for this feature
2. Click OK to save the employee record

Repeat this process for each employee. Salaried employees do not require hours entry at payroll time; hourly employees will need their hours entered each pay run.

Method 2: Run Payroll Using Pay Employees

Once employee records are set up, running payroll takes only a few minutes for most pay runs.

1. Go to Employees > Pay Employees
2. Select Scheduled Payroll for your regular pay runs. You will see a list of all active pay schedules
3. Click the pay schedule you want to run (for example, Biweekly)
4. Confirm or adjust the Pay Period End Date and Check Date in the payroll window
5. Review the list of employees in the payroll. By default, all employees on that schedule are selected. Uncheck any employee who should not receive a check this period
6. For hourly employees, click into the Regular Pay Hours column and enter the hours worked for the pay period. For salaried employees, the pay amount populates automatically
7. If an employee worked overtime, enter those hours in the Overtime Pay column. QuickBooks calculates the 1.5x rate automatically if the earnings item is set up as overtime
8. Review the Total column for each employee to spot any amounts that look unusual before creating the paychecks
9. Click Preview Payroll to see a summary of gross pay, withholdings, deductions, and net pay for each employee
10. If everything looks correct, click Create Paychecks
11. QuickBooks displays a confirmation screen summarizing the number of paychecks created. Click Print Paychecks or Print Pay Stubs if you are printing, or click Close if you are using direct deposit

Method 3: Print Paychecks or Submit Direct Deposit

After creating paychecks, you need to either print physical checks or transmit the direct deposit file.

To print paychecks:

1. In the confirmation screen after creating paychecks, click Print Paychecks
2. Select the check stock type (standard, wallet, or voucher) that matches your printer setup
3. Confirm the starting check number in the First Check Number field
4. Click OK to print
5. QuickBooks asks you to confirm whether the checks printed correctly. If any check failed to print properly, you can reprint individual checks without creating duplicates

To submit direct deposit:

1. After creating paychecks, QuickBooks displays a message asking you to send the direct deposit file
2. Click Send to transmit the file to Intuit's payroll processing service
3. Intuit processes the file and initiates ACH transfers to employee bank accounts. The funds typically settle within two banking days, so submit at least two business days before the pay date
4. QuickBooks marks the direct deposit paychecks as transmitted in the payroll register

Method 4: Pay Payroll Tax Liabilities

Creating paychecks generates payroll tax liabilities that must be remitted to the IRS and state agencies on a schedule based on your deposit frequency (monthly or semi-weekly for federal taxes).

1. Go to Employees > Payroll Taxes and Liabilities > Pay Scheduled Liabilities
2. QuickBooks displays all outstanding tax liabilities with their due dates. Liabilities highlighted in red are overdue; those in yellow are due soon
3. Select the liabilities you want to pay. You can select individual items or check Select All to pay everything due
4. Click View/Pay
5. In the payment window, confirm the payment method:

- E-payment (Enhanced or Full Service): QuickBooks submits the payment electronically to the agency. A processing fee may apply

- Check: QuickBooks creates a liability check you print and mail with any required payment coupon

1. Confirm the bank account the payment draws from
2. Click Create or Submit to complete the payment
3. QuickBooks records the payment against the liability, reducing the balance to zero for that period

For federal payroll taxes (941 deposits), most businesses deposit monthly or semi-weekly depending on their lookback period. QuickBooks tracks the schedule and alerts you when deposits are due.

Tips and Variations

Running an Unscheduled Payroll

Use unscheduled payroll for one-time checks that fall outside your regular pay schedule, such as a final paycheck for a terminated employee or a mid-period correction.

1. Go to Employees > Pay Employees > Unscheduled Payroll
2. Select the employees who need a check
3. Enter a custom Check Date and Pay Period End Date
4. Enter the pay amounts or hours and click Create Paychecks

Unscheduled paychecks follow the same withholding logic as scheduled payroll.

Running a Bonus Payroll

Bonus paychecks can be run as supplemental wages, which are subject to a flat federal withholding rate (currently 22% for amounts under one million dollars) rather than the standard withholding tables.

1. Go to Employees > Pay Employees > Unscheduled Payroll
2. Select the employees receiving bonuses
3. In the earnings columns, locate or add a Bonus pay item. If no Bonus item exists, go to Lists > Payroll Item List > New and create one as an Addition type
4. Enter the bonus amount in the Bonus column. Leave regular hours and salary fields at zero if this is a bonus-only paycheck
5. Click Preview Payroll to confirm the supplemental withholding rate is applied
6. Click Create Paychecks

Updating the Payroll Tax Table

Always keep the payroll tax table current. An outdated table causes incorrect withholding for federal income tax, Social Security, and Medicare.

1. Go to Employees > Get Payroll Updates
2. Select Download Entire Update to get all tax table changes since your last update
3. Click Update
4. QuickBooks downloads and installs the new table. You do not need to restart QuickBooks, but tax calculations in future payroll runs will use the updated rates immediately

Common Mistakes to Avoid

• Skipping W-4 data entry: If you leave the federal or state tax sections blank for an employee, QuickBooks defaults to the highest withholding rate. Always enter the actual W-4 information to avoid over-withholding.
• Missing the direct deposit cutoff: Direct deposit files must be transmitted at least two banking days before the pay date. Submitting on payday results in late payment to employees.
• Running payroll without updating the tax table: Intuit releases tax table updates multiple times per year. Running payroll with a table that is more than one quarter old is likely to produce incorrect withholding amounts.
• Using Unscheduled Payroll for regular runs: Unscheduled payroll bypasses the automated reminders and pay schedule tracking. Regular pay runs should always go through Scheduled Payroll so QuickBooks maintains accurate pay period records.
• Not reconciling payroll liabilities monthly: QuickBooks tracks what you owe to the IRS and state separately from what you have paid. If you pay liabilities outside QuickBooks (such as through EFTPS directly without recording it in QuickBooks), your liability register becomes inaccurate. Always record every tax payment through Employees > Payroll Taxes and Liabilities.
• Issuing paper checks without voiding in QuickBooks: If a printed paycheck needs to be voided, do it through Employees > Edit/Void Paychecks. Destroying the physical check without voiding it in QuickBooks leaves the transaction in your records and causes payroll reports to be wrong.

When to Call Support

Contact QuickBooks payroll support if you encounter the following situations:

• Payroll tax calculations are clearly wrong after confirming your tax table is current and W-4 data is entered correctly
• Direct deposit paychecks are marked as transmitted but employees report the funds never arrived
• Your payroll liability balance shows amounts that do not match your actual filings and you cannot reconcile the discrepancy
• QuickBooks locks you out of payroll features with a subscription error even though your account shows an active subscription
• You receive a payroll tax notice from the IRS or a state agency and need help understanding how to respond within QuickBooks

You can reach payroll support through the QuickBooks support phone number or through Help > QuickBooks Desktop Help inside the software, which connects you to chat and callback options.