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Set up and track time off in payroll

Learn how to set up and track time off, vacation, and sick pay for your employees.

With QuickBooks Online Payroll, QuickBooks Desktop, and Intuit Online Payroll, you can set up and track the time your employees take. First, you’ll set up time-off policies like paid or unpaid time off, sick pay, and vacation pay. If you need, you can add time off at any point if someone needs more.

How to set up time off in payroll

Before any of your employees can take time off, you first need to set up a time off policy. Set up vacation or sick pay with these steps for your version of payroll.

Note: Don’t know what payroll service you have? Find out which payroll service you have.

  1. Select Workers, then Employees.
  2. Select employee’s name.
  3. In the Pay section, select Edit ✎.
  4. In the How much do you pay [employee]? section, select Edit ✎.
  5. Select Paid time off,  Unpaid time off, Sick Pay, Vacation Pay or Holiday Pay.
  6. Enter hours per year and Maximum allowed hours (optional).
  7. Select OK, then Done.

Need to add hours that someone has earned? Add those hours to the Current Balance and then select OK.

  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.

  1. Select Employees, then the name of the employee.
  2. In the Vacation and Sick Pay section, select Edit ✎ and select the one you want to add.
  3. Select New Vacation Policy or New Sick Policy from the Vacation Pay or Sick Pay ▼ drop-down menu.
  4. Enter the accrual rate, frequency, and limit you choose.
  5. Select Continue (or Save if you are using Intuit Online Payroll)Need to add hours that someone has earned? Add those hours to the Current Balance and then select OK.

How to change your time off policy

Need to update your existing policy? Be sure to update your payroll.

Edit your policy with:

  1. Select Workers, then Employees.
  2. Select employee’s name.
  3. In the Pay section, select Edit ✎.
  4. In the How much do you pay [employee]? section, select Edit ✎.
  5. Select Paid time off, Unpaid time off, Sick Pay, Vacation Pay or Holiday Pay.
  6. Uncheck the box to unassign policy or select Edit ✎ to make changes to policy.
  7. Select OK, then Done.

  1. Select Edit, then Preferences.
  2. Select Payroll & Employees then go to the Company Preferences tab.
  3. Select Sick and Vacation.
  4. Fill in the defaults you want to set up.Note: Make sure to check the Do not accrue boxes at the bottom if you don't want time accrued when paying sick/vacation/overtime.

  1. Select Employees, then the name of the employee.
  2. In the Time off section, select Edit.
  3. From the ▼ dropdown menu, select an existing policy for this employee.
  4. Add any balance adjustments as necessary.
  5. Select Save.

How to add paid or unpaid time off

Need to give an employee more time off? Here's how to add more time.

  1. Go to Settings ⚙️ and select Payroll Settings.
  2. Select Paid time off or Unpaid time off.
  3. Add a Description.
  4. Adjust Accrual Frequency, Hours earned per year, and Maximum available hours.
  5. Select OK.

  1. Select Workers, then Employees.
  2. Select the name of the employee.
  3. In the Pay section, select Edit ✎.
  4. In the How much do you pay [employee]? section, select Edit ✎.
  5. Select Paid time off or Unpaid time off.
  6. Select an accrual option from the ▼ drop-down menu.
  7. Enter hours per year and maximum allowed hours (optional).
  8. Select OK, then Done.

  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 drop-down 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 4).
  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.
    1. Note: Use January 1 for calendar year or hire date if accrual happens on an employee's anniversary date.
  10. Enter the date that sick time should begin accruing.
  11. To specify accrual information for vacation hours, repeat steps 4 through 10 for the Vacation section of the window.
  12. Select OK to record your changes.

  1. Select Employees, then the name of the employee.
  2. In the Time off section, select Edit.
  3. Select Add paid time off or Add unpaid time off.
  4. Enter the desired policy and any accrual information.
  5. Select Continue.
  6. Add any balance adjustments as necessary.
  7. Select OK.

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