How To Add Employees In QuickBooks Pro

Most businesses aren’t one-man shows. Odds are, you have a team of people who make running your business possible.

But there’s more to having employees than meets the eye.

Employees mean tax obligations, payroll schedules, and much more. That’s why we’re going to walk you through how to properly add employees into QuickBooks Pro, how to save important employee tax information, and how to set payroll defaults for your employees. Depending on the number of employees you have, this process can take quite a bit of time, but we’ll walk you through step by step to make everything as easy as possible.

To begin, go to Employees>Employee Center>New Employee…

Employee information is divided into four sections: Personal, Address & Contact, Payroll Information, and Employment Information.

Personal

Step 1: Enter Employee’s Legal Name

Type your employee’s legal last name.

Step 2: Edit Print Settings

Choose how you want your employee’s name printed on checks.

Step 3: Input Employee’s Social Security Number

Type your employee’s social security number using this format: XXX XX XXXX.

Step 4: Select Employee’s Gender

Use the drop-down menu to select your employee’s gender.

Step 5: Record Employee’s Date of Birth

Use the drop-down calendar to select your employee’s date of birth.

Step 6: Select Employee’s Marital Status

Select your employee’s marital status. The options include:

• Married
• Single
• Divorced
• Separated
• Widowed
• Domestic Partner

Step 7: Mark Employee’s Citizenship

Select whether or not your employee is a US citizen using the drop-down menu.

Step 8: Select Employee’s Ethnicity

Use the drop-down menu to select your employee’s ethnicity. Choose from:

• American Indian | Alaska Native
• Asian
• Black | African American
• Hawaiian | Pacific Islander
• Hispanic | Latino
• White
• Two or more races

Step 9: Enter Any Disability Information (If Applicable)

Enter information regarding any employee disabilities. Use the drop-down menu to indicate if the employee is disabled.

If “Yes” is selected, you can add any additional information using the disability description line.

Step 10: Add I-9 Information

If your employee is not a US citizen, mark whether there is an I-9 form on file for that employee using the drop-down menu.

Also, select the date their work authorization expires using the drop-down calendar.

Step 11: Mark Employee’s Military Status

Use the drop-down menu to select whether or not your employee is a US veteran.

If you selected yes, mark their military status as active or reserve.

Step 12: Enable Payroll (Optional)

At this point, you can enable payroll if desired. This feature comes at an additional cost. Click the blue “turn on payroll” link to be taken to the QuickBooks Payroll page.

Select the pricing plan and follow our How To Set Up Payroll In QuickBooks post for more instructions.

Address & Contact

Step 13: Enter Employee’s Address

Add your employee’s address information.

Step 14: Insert Employee’s Phone Number

Type in your employee’s main phone number.

Step 15: Add Employee’s Email

Enter your employee’s main email.

Step 16: Record Employee Details

Use the drop-down menus to save six fields of employee details, including:

• Work phone
• Home phone
• Mobile
• phone
• mobile
• Fax
• Alt Fax
• CC Email
• Alt Email 1
• Alt Email 2
• Website
• LinkedIn
• Facebook
• Twitter
• URL 1
• URL 2
• URL 3
• URL 4
• Skype ID
• Other 1
• Other 2
• Other 3

Step 17: Enter Emergency Contacts

Add a primary and secondary emergency contact for your employees. Include the emergency contact’s name, phone number, and relation.

Step 18: Add Employee ID

Add your employee’s account number or employee ID if applicable.

Step 19: Create Custom Fields

You can create a custom field for your employee. Click the “Define Fields” button in the bottom right-hand corner of the screen. Then write a label for your custom field and select whether that custom field applies to contact, vendors, or employees.

Payroll Information

Step 20: Create Payroll Schedule

If desired, create a payroll schedule for your employee. According to QuickBooks, “Payroll schedules allow you to group employees who have the same pay frequency in whichever way that helps make your payroll runs convenient and hassle-free.”

To create a payroll schedule, go to Payroll Schedule>Add New. You’ll be taken to the screen below, where you’ll be prompted to tell the software what you want to name the payroll schedule, how often your employees get paid, the pay period end date, and the date that should appear on paychecks for the pay period.

Once all of the information looks right, click the blue “OK” button in the bottom right-hand corner of the screen.

Step 21: Select Pay Frequency

Select how often you pay your employees. You can choose from:

• Daily
• Weekly
• Biweekly
• Semimonthly
• Monthly
• Quarterly
• Annually

Step 22: Enable Direct Deposit

If you are set up for QuickBooks payroll, you can set up direct deposit for your employees. Simply click on the “Direct deposit” button in the top right-hand corner of the screen and follow our How To Use Direct Deposit In QuickBooks post for further instructions.

Step 23: Add Tax Information

Next, you’ll need to add your employee’s tax information. This step may require the assistance of your accountant or tax professional. Click on the tax button in the top right-hand corner.

Federal Taxes

Employee taxes are divided into three sections: federal, state, and other. For the federal tax section, first, select your employee’s filing status.

Then note any allowances your employee claims.

Next, enter any extra withholding value.

If your employee is subject to Medicare, social security, advance earned income credit, or federal unemployment tax (or any combination of the four), make sure the appropriate boxes are clicked. Don’t click “OK” quite yet.

State Taxes

Next click on the “State” tax tab. Select the state your employee works in.

Certain additional criteria may pop up depending on the state you collect. For example, when we selected California, an SUI (State Unemployment Insurance) and an SDI (State Disability Insurance) box popped up. If your employee qualifies for these, make sure the appropriate boxes are clicked. (Selections vary by state).

Select a state subject to withholding, if applicable.

Add any miscellaneous data and/or previous state data. Don’t click “OK” quite yet.

Other Taxes

Add any other taxes if needed. If you don’t have any other taxes to add, you can finally click the blue “OK” button in the top right-hand corner. If you do, go to the “Other” tab and click on Item>Add New.

The actual process for adding other taxes is a bit lengthy, but we’ll explain it step by step to make the process as easy as possible.

Choose your tax from the “Other tax” drop-down menu. If you don’t see your tax, create a “User-Defined Tax.”

Choose whether you pay the tax or your employee pays the tax. Then click “Next.”

Enter a name for your tax. Then click “next.”

Use the drop-down menu to select the name of the associated tax agency.

Add the number by which that tax agency identifies you.

Select the liability account to which you want this tax attached. Then click “Next.”

Next, select a tax tracking type from the drop-down menu. (According to QuickBooks, “The tax tracking type determines how the payroll item appears on tax forms.”) Then click “Next.”

Choose whether the tax is calculated based on quantity, hours, or neither. Then click “Next.”

Set a default rate and limit. Use the drop-down menu to select a limit type as well. You can choose from:

• Annual — restart each year
• Monthly — restart each month
• One-time

Then click “Next.”

Check the boxes next to items that “increase wages for this tax.” Then click “Next.”

Check the boxes next to items that “reduce wages for this tax.” Then you can finally click “Finish.”

Repeat these steps until all other taxes are added into QuickBooks correctly.

Step 24: Set Sick/Vacation Days Policies

Enter the proper amount of sick days and vacation days allotted to your employee. Begin by click on the “Sick/Vacation…” button in the top right-hand corner.

For sick days, you’ll need to add the number of hours available as of the day you began using QuickBooks.

Then enter the number of hours that have been used so far this year.

Choose an accrual period. This dictates when your employees get paid for the sick days. Choose from:

• Beginning of the year (i.e. the first paycheck in January)
• Every paycheck
• Every hour on paycheck

Depending on which option you select, you’ll be asked to enter the hours accrued at the beginning of the year, the hours accrued per paycheck, or the hours accrued per hour paid.

Enter the maximum number of sick day hours available to that employee.

If your employee’s sick pay hours reset each year, check the box.

Tell QuickBooks what day your business year begins so it can accurately track the sick days.

Tell QuickBooks which day to begin accruing sick pay using the drop-down menu.

Before you click the “OK” button, be sure to add your employee’s vacation days.

For vacation days, follow the same steps you used for adding sick days. When all of the information looks correct, click the blue “OK” button in the top right-hand corner.

Step 25: Choose Employee Pay Rate

Much like adding “Other Taxes,” adding employee earnings can take a bit of time, but we’ll walk you through the whole process step by step, so you can start recording the proper pay rates for your employees.

First, click on Item Name>Add New. Select the type of payroll item you’re adding. Choose from:

• Hourly wages
• Annual salary
• Commission
• Bonus

Then click “Next.”

Choose whether the item you’re creating is for:

• Regular pay
• Overtime pay
• Sick pay
• Vacation pay

Then click “Next.”

Enter a name for the payroll item. Then click “Next.”

Select the expense account you want to be attached to this payroll item.

Then click “Finish.” Repeat as many times as necessary for other pay rates, like overtime, holiday pay, sick pay, and vacation pay. Be sure to manually fill in the hourly/annual rate for each item.

Before you click the blue “OK” button at the bottom of the screen, add all necessary deductions and company contributions.

Step 26: Add Any Deductions Or Company Contributions

The process for entering addition, deductions, and/or company contributions is incredibly similar to adding earnings. You may need the help of your accountant or tax expert to complete this step.

To begin, click on Item Name>Add New. Select the type of payroll item you’re adding. Choose from:

• Addition (tips, advances, etc.)
• Deduction (health insurance, retirement plans, social security, flexible spending accounts, HSA plans, etc.)
• Company Contribution (health insurance, retirement plans, social security, flexible spending accounts, HSA plans, etc.)

Note: According to QuickBooks, the difference between deductions and company contributions is that “the company pays a contribution and the employee pays a deduction.”

Enter a name for the payroll item. You may be asked to “track expenses by job.” Click “Help” to learn if this setting is right for you. Then click “Next.”

Use the drop-down menu to select the name of the associated tax agency.

Add the number that the tax agency identifies you by.

Select the liability account and expense account you want this payroll item attached to. Then click “Next.”

Select a tax tracking type from the drop-down menu. (According to QuickBooks, “The tax tracking type determines how the payroll item appears on tax forms.”) Then click “Next.”

QuickBooks will automatically select the taxes that are affected by the tax tracking type you selected. QuickBooks says, “in most cases, you don’t need to change the selections you see here.” We recommend double-checking these selections with your accountant or tax professional to be certain.

Choose whether the payroll item is calculated based on quantity, hours, or neither. Then click “Next.”

Set a default rate and limit. Use the drop-down menu to select a limit type as well. You can choose from:

• Annual — restart each year
• Monthly — restart each month
• One-time

Then click “Finish.” Repeat as many times as necessary for other additions, deductions, and contributions. Be sure to manually fill in the amount and limit for each item. Once all of the information looks correct, move on to the next step. Everything is smooth sailing from here.

Employment Information

Step 27: Add Hire Dates

Enter your employee’s hire date, original hire date, adjusted service date, and release date (if applicable).

Step 28: Select Employment Type

Choose the proper employee type. Choose from:

• Regular
• Officer
• Statutory
• Owner

Step 29: Choose Full-Time Or Part-Time

Mark whether your employee is full-time or part-time.

Step 30: Mark Exempt Or Not-Exempt

Choose whether your employee is tax-exempt or non-tax-exempt.

Step 31: Choose Key Employee Status

Here you can mark whether or not this employee is a “key employee.”

Step 32: Write Job Title

Add your employee’s job title.

Step 33: Attach A Supervisor (Optional)

Attach a supervisor to your employee.

Step 34: Select A Department

Select the proper department.

Step 35: Write Description (Optional)

You can choose to write a description for your employee and include it here.

Step 36: Add Target Bonus (Optional)

If you have a target bonus for your employee, you can add it here.

Step 37: Record Any Leave Of Absence Information

Enter any leave of absence information for your employee. First, select the start date, expected return date, and actual return date (if applicable).

Enter the type of leave of absence.

Add an optional description for the leave of absence.

Select whether the leave of absence is paid or unpaid.

Step 38: Enter Termination Details (If Applicable)

If applicable, enter the termination details for your employee. First, add the last day worked, last day of benefits, and last day on payroll.

Add a termination type.

Next, add a termination reason.

Select whether or not you would recommend this employee for rehire in the future.

Select whether or not you are protesting an unemployment claim.

Select “Yes” or “No” for severance paid and add any additional notes.

Step 39: Save Your Employee

Finally, you can click the blue “OK” button at the bottom of the screen to save your employee.

You can view your employee list or go back to the Employee Center to make sure your employee saved correctly. Repeat this process as many times as needed until all of your employees (and past employees) are successfully added to your QuickBooks account.

If you have any troubleshooting issues, check out the QuickBooks Community or call QuickBooks directly.

Don’t forget to check out the rest of our QuickBooks Desktop Pro 101 Series to learn how to set up payroll, how to run payroll in QuickBooks, how to write and print payroll checks, how to track time, and more.

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