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As an UK employer, you’re obliged to report your employees’ payments and deductions to HMRC on or before each payday. And if you’re taking the DIY approach to running your payroll, you’d need to work out how much tax and National Insurance you owe, including your National Insurance contribution on each employee’s earnings.¹
Although this approach can save you a lot of money, it can be quite overwhelming and prone to errors. This is why most companies employ a payroll provider or software to do the job for them - saves them a lot of time and effort for a small to medium cost. Quickbooks is one of the few accounting software that helps automate payroll tax reporting.
In this article, we’ll show you how Quickbooks online payroll works and what benefits you could get from it. We’ll also introduce a cost-effective way of paying overseas contractors, employees and suppliers using Wise Business.
There are 2 versions available for Quickbooks online payroll: Standard Payroll and Advanced Payroll. And both of them are subscriptions that can be added to your standard accounting software. The service is tailored to SMEs for helping them automate real-time submissions to HMRC from any location. Let's check the differences between the two options:
|Features and comments
|Small business, director only or small quantity of employees
|For medium sized business who need HR features
|Weekly or monthly pay schedules
|Calculate leaves (maternity, paternity and sick)
|Automatic pension submissions
|Automatic pay runs
|Employee portal and HR features
Quickbooks payroll is an add-on to the Quickbooks accounting software. The standard version costs an additional £4 to your monthly subscription and the Advanced version costs you £8 monthly.²
- Pay, tax and NI (National Insurance) - calculates your team's net pay (including overtime and bonuses), taxes and National Insurance. It also provides full NI support for directors.
- Payslips - software can create payslips and email them to your team. You also have the option to print them.
- HMRC submissions - submits your real-time information (Employer Payment Summary and Full Payment Summary) directly to HMRC.
- Workplace pensions - Assess your workforce for auto enrolment and manage workplace pensions.
- Journals - Automatically creates journals for you and posts them to your QuickBooks account.
- Weekly/monthly pay schedules - Supports multiple pay schedules for staff who are paid on either a weekly or a monthly basis.
- Basic statutory pay - Pay your team what they’re owed when they’re on sick, maternity or paternity leave.
- Tax code updates - Automatically updates HMRC’s tax codes every year, so you’ll always be on track.
- GDPR compliant - Keep records in a safe, secure way that complies with data regulations.
- CIS - Our advanced payroll product covers Construction Industry Scheme (CIS suffered) reporting.
- Pension scheme integration - Instant updates and contributions sent to 5 pension providers. Advanced Payroll integrates directly with NEST, Aviva, Smart Pension, The People's Pension and Now Pension allowing you to send pension contribution information and submit your contributions automatically.
- More pay schedules - Supports multiple pay schedules for staff who are paid on a fortnightly, four-weekly, quarterly and annual basis.
- All statutory payments - Advanced Payroll also covers all types of statutory adoption and shared parental leave payments.
- Split journals - It’s easy to split your journals by class, location and pay type into different accounts so you can understand your payroll expenses better.
- Employee portal - (Self-service portal for employees) Get your team to upload their own data, ready for your approval, using the portal and mobile app available in QuickBooks Online Advanced Payroll. It lets them log timesheets, accept/decline shifts, view bank information, submit expenses, submit leave requests, accept payslips and view rotas.
- **Automatic pay runs **- Process pay in a matter of seconds. QuickBooks Online Advance Payroll offers automatic pay runs (including payslips, reports and HMRC submissions) with no manual input required.
- Salary sacrifice and other deductions - QuickBooks Advanced Payroll supports salary sacrifice schemes such as childcare vouchers, a company car or a cycle to work scheme. It also lets you comply with court orders.
- Comprehensive reporting - With 30 off-the-peg or bespoke payroll reports available in QuickBooks Advanced Payroll, it’s easy to understand your expenses. Create batches to send and share them automatically.
Quickbooks also has a useful feature: the connection with Wise Business, that enables you to automatically sync your transactions with your accounting, saving you on admin time.
You’ll need to turn on payroll in QuickBooks Online and provide some information about your company and employees. You would need the following information about your employees:⁵
- Proper name, date of birth and contact information. You can find their info on their most recent P45 for new employees. If your employee doesn't have a P45, ask them to fill out the HMRC's starter checklist.
- If you’re switching from another payroll, get their last payslip. If you have their P11 Working Deductions sheet or details of their last FPS submission, you’ll need that as well. You will need to include the Tax and NI information for payments already made to your employee for this tax year.
- Go to Employees, Payroll, and under Let's get your business ready for payday, select Let's go.
- Select whether this is the first time you are paying your employees, or if you have paid them before, then Save and Continue. Select Save and next after each step to move on to the next one.
- The setup will remain in the system for future use until you make any changes with them.
Quickbooks online payroll supports different payment schedules. If you want to pay your employees at different frequencies
Under the standard version, you can choose between weekly and monthly pay schedules.The advanced version supports fortnightly, four-weekly, quarterly and annual basis.
You’d need to set up the pay schedules before you run the payroll.
Here’s how to do it:
- Click Employees > Click on an employee > Pay Schedules > Add schedule
- Select your pay schedule name, next pay date and days you are paying your employees for
- Save your changes
Note that you can’t change an employee’s pay frequency if he has been paid on an existing pay schedule.
If you’re switching from another payroll provider or Quickbooks Desktop version, you have the option to import an FPS (Full Payment Submission) file in an XML format into QuickBooks Online Standard Payroll⁶
The following instructions could come in handy if you’re switching from another provider.
- Log in to QuickBooks Online Standard Payroll
- On the Employees page, select Let's go
- When prompted, select Yes, import my data
- On the next page, select your previous payroll software and select Next
- Click on Upload file on the next page and select your exported XML file
- On the last page, select Next to start the import. If we're unable to import your file, you'll see a message explaining what action you need to take.
Keep in mind that you can only import one file and it must not contain multiple payroll schedules.
Quickbooks online brings a lot of convenience in so many phases in running your payroll, however, if you have employees or independent contractors overseas, you won’t be able to run it through Quickbooks online payroll.
The good news is that there are services like Wise Business that offer a specialised service for running payroll in different currencies. Unlike many other services, Wise uses the real mid-market exchange rate to convert your funds and charge fair and transparent fees, processing up to 1,000 payments in one go, saving you time. You can also hold, send and receive payments in 40+ currencies and convert between them.
Discover how Wise Business can help you pay contractors, employees and suppliers all over the world
Sources used in this article:
- PAYE and payroll for employers: Introduction to PAYE - GOV.UK
- QuickBooks Pricing & Costs
- Standard Payroll Software | QuickBooks UK
- Advanced Payroll Software | QuickBooks UK
- Add employees to QuickBooks Online Standard Payroll
- Data Import in QuickBooks Online Standard Payroll
Sources last checked June 07, 2023
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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