Set up and track time off in payroll

For a better experience, open this article in QuickBooks Online. Launch side-by-side view

1. Go to Payroll, then Employees (Take me there).
2. Select your employee.
3. From Pay types, select Start or Edit.
4. Scroll down to the Time off policies section. Select Add new [time off pay] policy from the dropdown ▼ menu to add a policy for:
   • Paid time off
   • Unpaid time off
   • Sick Pay
   • Vacation Pay
5. Complete the on-screen fields to create your policy, then select Save.
6. When finished, select Save.
7. The policy you created will be available to all of your employees. Select this policy for your other employees or create a new one for them.

Step 1: Create a time off payroll item

1. Select Lists, then Payroll Item List.
2. Select Payroll Item ▼ dropdown, then New.
3. Select Custom Setup, then Next.
4. Select Wage, then Next.
5. Select Annual Salary or Hourly Wages, then Next.
6. Select Sick or Vacation Pay, then Next.
7. Enter a name for the item, then Next. Note: If you use time off you can rename this item to TO.
8. Choose the expense account you want for the item, then Finish.

Step 2: Add a time off policy to your employee

1. Select Employees, then Employee Center.
2. Select the employee name.
3. Select Payroll Info, then select Sick/Vacation.
4. Enter the number of hours that are currently available for the employee in the Hours available as of mm/dd/yyyy field. Note: This is the total amount of hours available as of the date you add sick or vacation to the employee profile.
5. Select the Accrual period ▼ dropdown menu and choose one of the three accrual periods for sick time listed above.
6. In the Hours Accrued field, enter the number of hours that will be accrued (based on your selection in step 5).
7. (Optional) In the Maximum number of hours field, enter the maximum balance of sick hours that the employee can have.
8. If you do not allow hours to roll over to the next year, select “Reset hours each new year?”.
9. Enter the start date of the accrual year.
10. Note: Use January 1 for calendar year or hire date if accrual happens on an employee's anniversary date.
11. Enter the date that sick time should begin accruing.
12. To specify accrual information for vacation hours, repeat steps 4 through 10 for the Vacation section of the window.
13. Select OK to record your changes.

For a better experience, open this article in QuickBooks Online. Launch side-by-side view

1. Go to Payroll, then Employees (Take me there).
2. Select your employee.
3. From Pay types, select Start or Edit.
4. Scroll down to the Time off policies section. Select Edit ✎ next to the policy to make changes. Or update the Current balance.
5. Edit the policy, then select Save.
6. When finished, select Save.

Change your policy settings

1. Select Edit, then Preferences.
2. Select Payroll & Employees then go to the Company Preferences tab.
3. Select Sick and Vacation.
4. In the Sick or Vacation pay section, you can update the Accrual period, Hours accrued, and Maximum number of hours to accrue.
5. Select “Reset hours each new year?” if you don’t allow hours to roll over to the next year. 
6. In the Sick and Vacation Accrual section, make sure to select Sick and Vacation hours paid if you don't want time accrued when paying sick and vacation.

Update your employee’s time off balance

1. Select Employees, then Employee Center.
2. Select the employee name.
3. Select Payroll Info, then select Sick/Vacation.
4. In the Sick or Vacation pay section, enter the number of hours that are currently available for the employee in the Hours available as of mm/dd/yyyy field. Note: This is the total amount of hours available as of the date you add sick or vacation to your employee’s profile. 
5. Select OK to record your changes.