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Creating & managing pay categories in QuickBooks Online Advanced Payroll


Pay Categories are used to define the rates that employees are paid. Setting up your pay categories will help simplify the management of employee pay rates.


Create a Pay Category


You can Create a Pay Category by following these steps:


  1. Go to Payroll Settings and select Pay Categories.
  2. When you create a new business, a number of common pay categories will already be available. You can however delete these and create new ones that match your business needs. To create a new Pay Category, click on Add.
  3. Enter your Pay Category Name, and click Save.
  4. Complete the fields below and click Save.
    • Name
    • Units - Hourly, Annually, Fixed, or Daily
    • PAYE Tax Exempt
    • Accrues Leave
    • Exempt from National Insurance
    • Rate Precision - option to set rate at between 0 and 5 decimal places.


In regards to rate precision, please note the following:


  • Additional earnings lines (configured at the bottom of the employees' pay rates screen) can be specified to up to 5dp, regardless of the pay category setting.
  •  In the pay run, rates may be specified to up to 5dp, regardless of the pay category setting.


Manage Pay Categories


In addition to the base value pay category, you are able to create linked categories.


For example a pay category could have the base value of Part-time weekdays but have linked categories of Part-time Saturday and another one for Part-time Sunday.


When a pay category is linked to a base pay category, you only need to specify the base rate for the employee and the rate for the linked pay categories will be automatically calculated.


You can create Linked Categories, by following the the steps below:


  1. Go to your chosen pay category and click on Add Linked Category.
  2. Enter the Pay Category Name and click Add. Please note, you have the opportunity to delete the Linked Pay Category before actually using it. If you move your cursor towards the end you will see a figure like this by clicking on this figure you are able to delete the new Linked Pay Category.
  3. Once the Linked Pay Category is added you will need to complete the relevant fields as you did for the pay category.
  4. Click Save.

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