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Create employee liability and pay categories in QuickBooks Online Advanced Payroll

SOLVEDby QuickBooks1Updated March 16, 2023

Pay categories can be used to define the rates that employees are paid. This can be useful to simplify the management of employee rates, especially if you have employees with different pay rates.

In this article, we'll take a look at how to create pay categories and employee liability categories in QuickBooks Online Advanced Payroll.

Create a pay category

  1. Go to Payroll, and select Payroll Settings.
  2. Select Payroll Categories.You'll see a list of common pay categories that are already available. You can delete these and create new ones that match your business needs.
  3. To create a new pay category, select Add.
  4. Give your pay category a name.
  5. Select Save.
  6. Complete the fields below:
    • Name
    • Units–Hourly, annually, fixed or daily
    • PAYE exempt
    • Exempt from National Insurance
    • Employee pensionable
    • Accrues leave
    • Hide units on payslip
    • Employer pensionable
    • Net payment
    • Rate precision
      • You can set the rate at between 0 and 5 decimal places.
      • Additional earnings lines (configured in the employees' pay rates) can be specified to up to 5 decimal points, regardless of the pay category setting.
      • In the pay run, rates may be specified to up to 5 decimal points, regardless of the pay category setting.
    • NMW (National Minimum Wage) / NLW (National Living Wage)
  7. Select Save.

Add linked categories

In addition to the base pay category, you can add linked categories. For example, a pay category could be Part-time weekdays, but have linked categories of part-time Saturday and part-time Sunday.

If a pay category is linked to another, you only need to specify the base rate for the employee and the rate for the linked pay categories will be calculated. Following these steps to add a linked category:

  1. Go to Payroll, and select Payroll Settings.
  2. Select Payroll Categories.
  3. Select your chosen pay category, and select Add Linked Category.
  4. Enter the pay category name and select Save
  5. Once the linked pay category is added, you'll need to complete the relevant fields as you did for the pay category.
  6. Select Save.

Create employer liability categories

As an employer, it's important to keep track of your various employer liability categories. Here's how you can add employer categories in Advanced Payroll.

  1. Go to Payroll, and select the Payroll Settings tab.
  2. Under Pay Run Settings, select Pay Categories.
  3. Select Add.
  4. Give the category a name.
  5. Select Save.
  6. Assign an external ID to the category–this is optional.
  7. If you don't want employees to see the value of this liability within a pay run or on their payslip, select Hide from payslips.
  8. If you want employees to see the total cumulative payments for this liability category on their payslip, select Show total payments in payslips.
  9. Select Include in shift cost calculations–with pay condition rule sets, you can optionally include employer liabilities in shift costing calculations.

Edit or delete a liability category

  1. Select the pencil icon next to the liability category.
  2. Make the necessary changes and then Save.

To delete the liability category, select the X cross icon, and then Delete to confirm.

Note: You can't delete a liability category that is currently in use.

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