If you pay employees, QuickBooks Online Payroll can help you pay your employees faster while staying compliant with the Canada Revenue Agency (CRA). 

Using QuickBooks Online Advanced Payroll powered by Wagepoint? Click here instead.

Turn on payroll

  1. Select Employees from the left menu
  2. Select Set up payroll
  3. Review and select features, then select your payroll product
  4. Review the Terms of Service and select Turn On Payroll Now
  5. In the pop-up window, select Get started with payroll
  6. Enter information about your business and employees to set up your payroll account.

Set up payroll

This guide will show you how to:

Note: Although QuickBooks Online Payroll takes you through the payroll setup process with a series of simple questions, if this is your first time working with payroll or if you’re transitioning from a manual system or a service, you may want your accountant or tax advisor to assist you. Check out the links below to get familiar with CRA payroll guidelines. 

Required documents


Type of information needed

  • The frequency that employees are paid (weekly, every other week, twice a month, or monthly)
  • The date you plan to start using Payroll
  • The first pay period that you’ll run within QBOP
Compensation, Benefits, Contributions and Deductions
  • Types of compensation (hourly wages, salaries, commissions, vacations)
  • ​Sick and vacation time policies
  • Insurance benefits (health, dental, vision)
  • Retirement benefits offered (RSP)
  • Additional deductions that the employee wants withheld (child support, repayments of employee advances or loans, life insurance)
  • Additions (bonuses, travel reimbursements, employee advances or loans and tips)
Tax Information
  • Federal tax business number (BN)
  • CRA Payroll number
  • T4 transmitter number
  • Employee names, addresses, and Social Insurance Numbers from your employees’ T4 forms
  • Employee withholdings from the employee’s TD1 form
  • Employee wages/salaries, additions, deductions, and company contributions
  • Sick and vacation time hours and monies accrued
Year-to-Date History (YTD)

  • You'll need to enter year-to-date payroll information ONLY if you've started using QBOP after January 1 of the calendar year AND if you’ve already run payroll using another system at least once since January 1. (If you start using QuickBooks Online Payroll after January 1 but have not yet run a payroll this calendar year, you will have no year-to-date information to enter.)
  • Year-to-date information for each employee is available on the employee’s most recent paystub from the previous system.
  • Copies of payroll liability cheques from the beginning of this calendar year to the date you started using QBOP
NOTE: Once you run a payroll in QuickBooks Online, you'll no longer be able to add or edit year to date information. Be sure to  add all employees & payroll data prior to running payroll.

Set payroll preferences

  1. Select the Gear icon.
  2. Select Payroll Settings.
  3. From the Setup Overview screen, you can access other windows to set up the following information:
    • Pay Policies (like pay schedules and vacation policies)
    • Tax Setup (information required to ensure tax payments are captured and applied properly)
    • Deductions (to set basic information that’s common for all employees like health insurance and retirement plans)
    • Preferences (for accounting and cheque printing selections)
      • Note: If you set up items like pay policies and deductions here, they will appear as default selections when you set up your employees. You can also set them up “on-the-fly” when you add employees. You will be asked a series of questions to take you through the process. The choice is yours. If you want to set them up when you add the employee, you can skip those steps in this guide.
  4. From the Setup Overview screen, under the Company and Account section, select Accounting.
  5. In the Accounting Preferences screen, you can assign new accounts to track payroll expenses. If the account you want to use is not listed in the drop-down list, you will need to add it to the Chart of Accounts.
  6. Once everything is correct, select OK.

Verify tax information

When you setup QuickBooks Accounting for the first time, you also set general tax information for your business. Now is a good time to verify that the information is correct.
  1. From the Gear icon menu, select Payroll Settings.
  2. Select Tax Setup.
  3. Select General Tax Information.
  4. In the Company General Tax Information screen, verify the information. The Filing Name is the name that will be used when you file company information with the CRA.
  5. Select OK. 

Set up company payroll tax information

  1. Select the Gear icon.
  2. Select Payroll Settings.
  3. Select Tax Setup.
  4. From the Tax Setup Overview screen, select Federal Tax Information.
  5. In the Company Federal Tax Information screen, enter your Canada Revenue Agency (CRA) Payroll Number. You would have received this number when you registered your business with the CRA. This number will be printed on T4 slips and other payroll forms.
  6. Enter your T4 Transmitter Number (also called a Magnetic Media number). This number is required to send your T4s electronically to the CRA. If you are a current magnetic media (MM) transmitter, use the MM number that the CRA has already assigned to you. If you are a new transmitter, use the number MM 555555.
  7. Entering the Owner SIN number is optional.
  8. Select OK to save. 

Set pay cheque printing preferences

With QuickBooks Online Payroll, you can choose how you want your pay cheques to print and the information that should be included on the pay stub.
  1. Select the Gear icon.
  2. Select Payroll Settings.
  3. Under Preferences, select Pay Cheque Printing.
  4. Review the options in the window and make any adjustments that will work for your business.
  5. Select OK.

Select reports to print

You can select the reports you would like to make available for group reports after pay cheques have been created.
  1. Select the Gear icon.
  2. Select Payroll Settings.
  3. Under Preferences, select Reports.
  4. In the Reports Settings screen, mark the boxes next to the Employee and Employer reports you'd like. 
  5. Select OK
  6. These reports will print automatically to the default printer after your pay cheques have been processed.

Set up pay schedules

Before you run payroll and even before you add your first employee, its helpful to establish the frequency of your pay runs for employees. You may have different pay periods for different employees. For example, you may pay hourly employees every week, but pay salaried employees twice a month.

Note: You can set up pay schedules before you add employees, or you can set them up “on-the-fly” when you add employees. Here's how:
  1. Select he Gear icon.
  2. Select Payroll Settings. 
  3. Select Pay Schedules.
  4. From the Pay Schedules section, select Create.  
  5. Determine when you're going to pay your employees and select the appropriate option from the Pay Period drop-down menu. The Pay Period determines how often you will pay the employees. Your options are:
    • Every Month (12 times a year)
    • Twice A Month (24 times a year)
    • Every Other Week (26 times a year)
    • Every Week (52 times a year)
  6. Enter the starting date and ending date for each pay period. This determines the days that are included in the pay period, which is especially important for calculating overtime, vacation, sick pay, and other exception pay types.
  7. When everything is correct, select OK.
  8. The Pay Schedule Confirmation screen will open and display the pay dates for the next four pay periods based on the information you entered.
  9. If everything looks correct, select OK to save the Pay Schedule or select Back to return to the previous window and make changes.
    • Note: If you mark the Use this schedule as the default for employees I add field, that pay schedule will automatically be assigned to all new employees that you add. You'll be able to edit e can still change the pay period for each employee in the employee window.
  10. Once you select OK, the new pay schedule will be listed under Pay Schedules in the Edit Pay Policies screen. 
  11. Repeat these steps for each pay schedule you want to set up.

Set up sick leave policies

About Paid Sick Leave:
Paid sick leave is an optional benefit employers may grant to employees. Several employers address the issue of periodic absence from work due to ill health by providing employees with a limited number of paid days off per year often referred to as “sick days”. This type of plan is usually found in workplace policies or collective agreements. However, some provinces and territories require employers to provide unpaid sick leave. They include: the federal jurisdiction, Quebec, Yukon, Newfoundland and Labrador, New Brunswick, Nova Scotia, Prince Edward Island, and Saskatchewan.

Before you run payroll and even before you add your first employee, it is helpful to set policies for paid sick leave.

Note: Policies can be set up before you add employees, or you can add them “on-the-fly” when you add employees. Here's how:
  1. Select the Gear icon. 
  2. Select Payroll Settings.
  3. Select Pay Schedules.
  4. From the Vacation and Sick Leave Policies section, select Create.
  5. Select Sick from the Category drop down menu. 
  6. Enter a description that will help you select the correct policy when you set up employees. For example, 10 hours/year.
  7. Enter the frequency that the sick time will accrue and the maximum amount of hours of sick leave the employee can bank. For example, if the employee is granted 10 hours of sick time at the beginning of the year and the time expires at the end of the year, you will input the following in each field: 
    • Accrual Frequency: at the beginning of the year.
    • Hours earned per year: 10 hours.
    • Maximum Available: 10 hours. When the employee’s sick time reaches this amount, no more sick hours will be added until the banked amount is less than the number you entered.
  8. Select OK to save the policy.
Note: If employees earn time off at different rates, you should set up multiple sick policies. Enter the first policy, select OK, and then create the next one. You can create as many as you need.

Set up vacation policies

Before you run payroll and even before you add your first employee, it is helpful to set policies for vacation. Typically, hourly employees earn a minimum of two weeks of vacation per year. For full-time employees, that’s 80 hours or 4%. Provinces may have additional rules and regulations. If you’re not sure which rates apply to your employees, this is a great time to seek assistance from your tax advisor or a payroll expert. For more information regarding vacation policies, refer to Canada's labour standards.

Note: Policies can be set up before you add employees, or you can add them “on-the-fly” when you add employees. Here's how:
  1. Select the Gear icon.
  2. Select Payroll Settings.
  3. From the Vacation and Sick Leave Policies section, select Create.
  4. Select Vacation from the Category drop down menu. 
  5. Enter a description that will help you select the correct policy when you set up employees.
  6. In the Vacation Pay field, select whether vacation is paid out automatically or retained.
  7. Select the frequency that vacation time accrues. Options include:
    • At the beginning of year.
    • Each pay period.
    • Per hour worked.
    • On anniversary date.
  8. Enter the amount of hours the employee can earn per year. Based on your selections, QuickBooks Online Payroll will automatically calculate the accrual rate for the employees assigned to this policy during the pay run.
  9. Select OK to save the policy. 
Note: The Vacation and Sick Report tracks accrued vacation using hours. For this report to track vacation accrued, you must choose each pay period in the frequency drop-down list.

Set up deductions and contributions

  1. Select the Gear icon.
  2. Select Payroll Settings. 
  3. Select Deductions/Contributions.
  4. Select Add a New Deduction/Contribution.
  5. Select Health Insurance, Retirement Plans or Other Deductions from the Category drop-down menu.
    • The selection you make here determines the options that appear in the Type field. If you set up a Health Insurance or Retirement plan, you will need to enter the provider information. If you choose Other Deductions, you will be prompted to enter a description for the deduction or contribution. The description will print on the employee’s pay stub.
  6. Once everything is filled out correctly, Select OK to save.
Note: You will enter the specific deduction and contribution amounts for each employee when you add employees in QuickBooks Online Payroll.