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Set up guide for QuickBooks Online Advanced Payroll

Our guide will show you how easy it is to manage timesheets, pensions and payroll alongside your accounts. It’s easy to stay organised when everything’s in QuickBooks. You can download a step-by-step PDF guide here.

1. Before you get started

It’s important to get a few details together before you run payroll. You’ll find this information either in your own records, from previous payroll providers (if applicable), or HMRC. Make sure you have your:

  • Company information 
  • HMRC Gateway credentials and PAYE reference from HMRC 
  • Employee details such as name, gender, date of birth, address, email address, bank details, National Insurance number and previous employer if relevant. You can ask your employee to enter their own details through the self-setup portal if you prefer
  • Employee start date, pay schedule and pay rate
  • Pay history (if you haven’t paid anyone in the current PAYE tax year you won’t need this) 
  • Pension information

2. Setting up

First things first, log into QuickBooks Online and select the Payroll tab. You’ll be asked to choose your payroll plan. Select Advanced Payroll and then Begin set up.

  1. Enter your Company Registration Number (CRN) and your company details will be entered automatically. If you don't have a CRN, manually enter your business name and postcode, as well as the name and email address of the person who will get communications about payroll. The payslips sent to employees will also come from this email address.
  2. Under payroll information select your standard hours for an ordinary working week, how often you pay your employees and the industry you work in.

From the payroll homepage click Payroll Settings and HMRC Settings under the first column Business Settings. Then fill in your:

  • Employer PAYE Reference
  • Accounts office reference

Indicate whether you're eligible for Small Employers' Relief and if you'll be claiming the Employment Allowance. You'll also have the option of enabling Real Time Information (RTI) for the business. If you do this, you'll need to enter your HMRC user ID and password.

You'll then be asked: Would you like to make RTI submission in Test mode for this business?

Tip: The test mode can be used to make sure HMRC is happy with the details you've added in to the HMRC Settings screen in QuickBooks. If you choose Yes, QuickBooks will get a 'non-filing' notification from HRMC when you make a submission.

When you are ready to submit a pay run, change the Test mode setting to No. Then indicate that you've registered with the Government Gateway and fill in the details. For more information on how to enter HMRC details in QuickBooks, click here.

Next you need to select a date for submitting your monthly Employer Payment Summary (EPS). You can submit this automatically or manually when you have a statutory payment to recover or want to let HMRC know that you're not paying anyone for a tax period.

To submit automatically, complete Submit Employer Payment Summary (EPS) monthly with a date between the 5th and 19th of the month.

If you select Don't submit automatically, you can get the EPS by clicking Reports in the Payroll homepage and select the Employer Payment Summary Report. To note, you can only access this if RTI is enabled.

In case of any refunds from HMRC, complete the accounts details where refunds should be deposited. Learn how to submit an EPS here.

From the Payroll Settings and Manage Users, you can add new users and assign permissions as well as edit and export all user permission settings in QuickBooks. This article will show you how.

Tip: If you've added any other users to your QuickBooks the Company Admins will be able to view the Payroll.

You can customise your payslips by adding your company logo and choosing the information that's displayed on them, and even add a personal message to show on the payslip notifications emails (not the payslips themselves). Click here to learn how to customise payslips.

To make sure payroll expenses and liabilities are organised correctly, you need to set up your chart of accounts. If you want to customise the default settings, follow these steps:

  1. From the Payroll homepage select Payroll Settings and Chart of Accounts under the first column, Business Settings.
  2. Select default accounts, then use the dropdown menu to select the settings you want to change. You can choose to split each account by location. If you don't see this option you have not set up location tracking.
  3. You can follow the same steps for pay categories, deduction categories and expense categories.

If you're paying different staff at different frequencies and have more than one pay schedule, here's what you need to do:

  1. Go to Payroll Settings and select Pay Schedules which is under the Pay Run Settings column. Once this is open you'll see the pay schedules you have set up.
  2. Select the pay schedule you want to automate.
  3. Select Add, and enter the name for the new pay category.
  4. Add a name for the schedule and select a frequency from the dropdown menu. You can add employees to this pay schedule now or you can skip this now, and set a pay schedule for each employee as you add them.
  5. Choose the warning settings and whether you want to run payroll automatically. Here's a list of pay run warnings.
  6. Select Save.

Automating a pay run is a good way to save time if you have employees who are paid a fixed amount each month (for example, directors). You can choose which components of a pay run you want to automate, and what components you want to manage manually. Read this article to learn how to automate pay runs.

There are 3 ways to add employees:

  1. Manually

This is a simple 4-step process where you can manually enter your employee’s details. If you want your employee to have access to the self-service function, they can view their payslips, manage their personal information and apply for leave via their internet browser or the WorkZone app. Follow these steps to manually add employees to QuickBooks.

2. Import employees from an Excel spreadsheet

You may find this is a quicker option if you have more than five employees to add. All you need to do is manually add the first employee and then follow the steps in this article to import employees via Excel CSV or XLSX file. This article will walk you through all the steps. If you've been previously running payroll and would like to upgrade payroll providers, click here.

3. Employee self set up

This feature allows your employees to set up their employee file. All you need to do is invite them in QuickBooks and they will get an email with a link for them to follow and fill in their details. You’ll receive an email when they have completed this, and you can finish setting the employee up by adding their employment and pension details. Learn more about employee self set up here.

If you’re moving to Advanced Payroll from another software during the PAYE tax year, you’ll need to set up opening balances for leave entitlements and year-to-date payments for your employees. This is so that the correct information can be reported to HMRC. 

QuickBooks Advanced Payroll will add these figures to the pay run and work out the PAYE and National Insurance number on the whole amount. To set up the opening balance for an employee, click here.

3. Pensions

You can automate your pension reporting with PensionSync, check out the full list of providers here.

You can set up pensions manually. If you’re not sure which provider to use, The Pensions Regulator can tell you what to look for. Before you start you’ll need to have set up your pension scheme with your pension provider and know which taxation method is being used. You can get this from your pension provider.

Set up your pension scheme manually here.

4. Running payroll

When you process a pay run you need to lodge a Full Payment Summary (FPS) to HMRC on or before pay day. Before you run your first payroll make sure you’ve correctly configured your RTI username and password under the HMRC settings section. Click here to edit your settings.

Once you’ve entered your RTI details, it’s time to create your pay run.

On the payroll homepage, click the New Pay Run button and then follow the instructions in this article to create a pay run.

When you’ve created a pay run, you’ll be taken to a screen which shows you the breakdown of the payments. Next to an employee’s name, you can see more details including their rate of pay, National Insurance, pension and so on. You can add notes here too. If you’d like to see how the payslips will look, select the draft payslips button to customise it.

Before you finalise your payroll, click on the Warnings tab to see any potential issues that need to be resolved. You can still finalise your payroll with warnings in place.

Once you’ve finished making changes to your pay run, you can finalise it. Finalising the pay run makes the data in your pay run available in reports and also allows payslips to be visible to employees from the employee portal. 

It also exports an automatically created journal entry into QuickBooks similar to the pay run.

Unlike FPS filings, an EPS filing is created for specific reasons and might not be required every month or at all. Check out this article for more information and steps on how to submit an EPS to HMRC.

5. The employee portal

The employee portal, including self-setup and the WorkZone mobile app, allows employees to request leave, log their timesheets and access their payslips. They can log in via an internet browser or download the WorkZone mobile app.

To invite an employee and give them access to their employee file on the portal, click here. If you want to know more about the WorkZone mobile app and how it works, head over to this article.

6. Reports

The P32 Report shows all monthly payments owed and already paid to HMRC in a financial tax year. To see it, select Reports then P32 Report under the fourth column, HMRC Reporting. The report can be filtered by financial year. This article explains the P32 Report in more detail.

The gross to net report provides details about each payroll in the tax year. It includes employee payments, along with any taxes, NI, and other deductions.

  1. From the payroll homepage select Reports and select Gross to Net Report under the first column, Payroll. 
  2. Specify your date range. You can also select a pay schedule, location, employee, pay category and group. Leave as All if you don’t want to add a filter.
  3. Select Run report to see the breakdown for the salary, PAYE, any loans, pensions, National Insurance contributions and Net wages. You can export this to Excel or CSV for customisation.

Use Report Packs to save time. Your chosen reports will be automatically generated on a recurring basis.

  1. From the Payroll home page click Payroll Settings and select Report Packs under the third column Business Management. 
  2. Select Add Report Pack Name this and choose which reports you would like to be included and how often. You can also add email addresses for the reports to be sent to.

7. Final steps

Once you’ve run payroll you’re ready to pay your employees. Remember this is something you’ll have to arrange outside of QuickBooks. If the bank account you are paying them from is linked to your QuickBooks Online account, the details will be automatically uploaded. If not, please record the details manually.

Advanced Payroll will calculate all of your Tax and National Insurance contributions for you, and automatically post the journal. You will need to make the payment. It’s also important to keep a record of payments you’ve made yourself. You can also run a report for HMRC liabilities, so you always know where you stand.

Advanced Payroll will calculate your pension contributions for you, but you’re responsible for making the payment. When you finalise your pay run you’ll be given the option of downloading a file with details of the payments that need to be made.

Congratulations, you completed your set up and first pay run.

Don't forget to bookmark the Advanced Payroll hub for more useful articles on managing employees and payroll.

Want to learn more? Register for a training webinar, contact customer success or visit quickbooks.co.uk/payrollhelp

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