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Create employee liability and pay categories in QuickBooks Online Advanced Payroll

by Intuit•2• Updated 1 month ago

Pay categories help define the rates employees are paid. They simplify managing employees with different pay rates. Employer liability categories help track your business obligations. Learn how to create and manage both in Advanced Payroll.

This article is for customers who use QuickBooks Online Advanced Payroll.


Create a pay category

  1. Follow this link to complete the steps in product Open this link in a new window
  2. Select Payroll Settings.
  3. Select Payroll Categories. You’ll see a list of common pay categories. You can delete these or create new ones to match your business needs.
  4. To create a new category, select Add.
  5. Enter a name for the pay category.
  6. Complete the fields below:
    • 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 – Set between 0 and 5 decimal places. Additional earnings lines and pay run rates can also use up to 5 decimal points.
    • NMW/NLW – National Minimum Wage / National Living Wage compliance
  7. Select Save.

Add linked pay categories

Linked pay categories calculate rates automatically based on a base category. For example, a base category could be Part-time weekdays with linked categories Part-time Saturday and Part-time Sunday.

  1. Follow this link to complete the steps in product Open this link in a new window
  2. Select Payroll Settings, then Payroll Categories.
  3. Select your base pay category.
  4. Select Add Linked Category.
  5. Enter the name and complete the relevant fields as you did for the base 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. Follow this link to complete the steps in product Open this link in a new window
  2. Select the Payroll Settings tab.
  3. Under Pay Run Settings, select Pay Categories.
  4. Select Add and enter a name for the category.
  5. Optional: assign an External ID.
  6. Choose visibility settings:
    • Hide from payslips – Employees won’t see the value in the pay run or payslip.
    • Show total payments in payslips – Employees can see cumulative payments for this liability.
  7. Optionally, select Include in shift cost calculations to include employer liabilities in shift costing rules.
  8. Select Save.
  • To edit, select the pencil icon next to the category, make changes, then select Save.
  • To delete, select the X icon, then Delete to confirm.

Note: You cannot delete a liability category currently in use.

QuickBooks Online Payroll Advanced