How to Change Payday in QuickBooks Online

Changing your payday in QuickBooks Online seems like a simple switch, but getting it wrong can disrupt employee trust, cash flow, and even land your company in legal trouble. This guide provides a clear roadmap for updating your pay schedule correctly, covering the essential preparatory checks, the step-by-step process within the software, and how to handle a transition without causing a payroll headache. We'll walk through everything you need to communicate to your team and ensure your payroll remains compliant.

Key Steps to Take Before Changing Your Paydate

Jumping straight into your payroll settings is a common mistake. A smooth transition requires careful planning and communication before you even log in to QuickBooks Online. Skipping these foundational steps can create confusion and compliance issues down the road.

Step 1: Finalize and Run Your Current Payroll

You cannot change a pay schedule while a pay period is in progress. Before you do anything else, ensure you have processed and completed the final payroll run under your old schedule. This creates a clean break, preventing issues with prorated pay, tax calculations, and accrued time off for the transition period. Confirm that employees have received their final payment on the old schedule and all associated tax payments and filings have been scheduled correctly by QuickBooks.

Step 2: Check Your State's Payday Laws

Compliance is non-negotiable. Many states have specific regulations about pay frequency and how much notice you must give employees before changing their payday. For example, some jurisdictions require employees to be paid weekly or bi-weekly and prohibit monthly pay schedules for hourly workers. Other states mandate a specific notice period, such as 30 days, before a new pay schedule takes effect.

Failing to adhere to these rules can result in penalties and legal action. Always verify your state and local labor laws regarding pay frequency and notification requirements. Don’t rely on a quick Google search; go directly to your state’s Department of Labor website for the most accurate and up-to-date information.

Step 3: Communicate Clearly with Your Employees

A surprise change to payday is one of the fastest ways to erode morale. Your employees build their personal budgets around when they expect to be paid. A sudden shift can cause significant financial stress, leading to bounced checks or missed payments on their end. Proactively communicating the upcoming change is not just courteous—it’s a critical part of managing your team professionally.

Draft a clear, concise notice at least one full pay cycle in advance. Your communication should include:

• The reason for the change: Briefly explain why the payday is being adjusted (e.g., "to align with our new banking processes" or "to standardize payroll company-wide").
• The last payday on the old schedule: State the exact date they will receive their final paycheck under the current cycle.
• The first payday on the new schedule: Clearly state the date they will receive their first paycheck under the updated schedule.
• A calendar or visual aid: For some teams, a simple calendar showing the last old payday and the first new one can prevent a lot of confusion.
• Who to contact with questions: Designate a single point of contact in HR or management to handle any employee concerns.

Step 4: Plan for Benefit and Deduction Adjustments

Moving from one pay frequency to another requires adjusting per-paycheck deductions, and this is a step that often gets missed. For example, if you switch from a bi-weekly schedule (26 pay periods per year) to a semi-monthly one (24 pay periods per year), the amount deducted for health insurance, 401(k) contributions, and other benefits must be recalculated.

The total annual deduction remains the same, but the per-paycheck amount changes. Forgetting this can lead to under- or over-collecting premiums for the year, creating a big reconciliation problem later.

Example: An employee pays $2,600 per year for health insurance.

• On a bi-weekly schedule, the deduction is $100 per check ($2,600 / 26).
• On a semi-monthly schedule, the deduction must be adjusted to $108.33 per check ($2,600 / 24).

Review every recurring deduction for every employee and calculate the new per-paycheck amount before making changes in QuickBooks.

A Step-by-Step Guide to Changing Your Pay Schedule in QuickBooks Online

Once you’ve completed the preparatory work, you’re ready to update the settings in QuickBooks Online Payroll. For the clearest record-keeping and smoothest transition, the best practice is to create a new pay schedule rather than editing the existing one. This preserves the historical data of the old schedule and prevents accidental errors.

1. Navigate to Payroll Settings

Start from your QuickBooks Online dashboard. Click the Settings ⚙ icon in the top right corner. From the dropdown menu, select Payroll Settings.

2. Open Your Pay Schedules

In the Payroll Settings screen, look for the 'Payroll and Services' section. Click on Pay Schedules. Here, you'll see a list of any pay schedules you currently use (e.g., "Weekly Schedule" or "Bi-Weekly Hourly").

3. Create a New Pay Schedule

Instead of clicking 'Edit' on your current schedule, click the green Create pay schedule button. This opens a window where you can configure the new schedule from scratch.

4. Configure the New Schedule's Details

Fill out the fields with care. Every date you enter here will set the pattern for all future paydays.

• Pay schedule frequency: Use the dropdown to select the new frequency (e.g., Semimonthly). Be clear on the difference between "Bi-weekly" (every two weeks, 26 pay periods) and "Semimonthly" (twice a month, like the 15th and last day, 24 pay periods).
• Next pay period end date: This is the last day of the first work period on your new schedule. For example, if you're switching to a semi-monthly schedule paying on the 15th and last day of the month, and your first period ends July 15th, you would select that date.
• Next payday: This is the date employees will actually receive their money for the period mentioned above. This date must be after the pay period end date. This field dictates all future paydays for this schedule.
• Give this pay schedule a name: Create a descriptive name to avoid confusion, such as "Salaried Semimonthly (from July 2024)."

Click Done to save the new schedule.

5. Assign Employees to the New Schedule

After creating the schedule, QuickBooks will prompt you to assign employees. Select all the employees who are moving to this new pay frequency. If you don't assign anyone, the schedule will exist but won't be used.

6. Deactivate the Old Pay Schedule

Once you've run your first payroll successfully on the new schedule, it’s good practice to clean up your settings. Navigate back to your list of Pay Schedules. Find the old schedule, click the dropdown under the 'Actions' column, and select Make inactive. Do not delete it, as this can affect historical reporting. Making it inactive simply removes it as an option for future payroll runs, preventing anyone from accidentally using it.

Handling Transitional Payroll Issues

The move from one payday to another can sometimes create an unusually long stretch between paychecks. For example, if an employee's last bi-weekly paycheck was on a Friday and their first semi-monthly one isn't until the end of the month, they might go nearly three weeks without pay.

This "gap" can be a major hardship for employees. Here are two ways to handle it:

1. Offer a Pay Advance or Off-Cycle Payroll: You can run an unscheduled or off-cycle payroll to pay employees for the days that fall in the gap. This bridges the financial canyon and keeps morale high. This payment should cover the specific days between the end of the last old pay period and the start of the first new one. QuickBooks Online allows you to run unscheduled or bonus checks to handle these types of situations.
2. Full Transparency and Time for Preparation: If a bridging payment isn't feasible, revert to your communication strategy. Give your team as much advance notice as humanly possible—perhaps two to three months—so they have ample time to adjust their personal finances for the one longer-than-usual pay gap.

The right choice depends on your company’s cash flow and culture, but addressing the gap proactively is always better than reacting to employee complaints later.

Final Thoughts

Changing your payday in QuickBooks Online is more a strategic planning exercise than a technical one. The most critical work—ensuring legal compliance, calculating new deduction amounts, and communicating with your team—happens long before you change a single setting in the software. By following these steps, you can execute a smooth and professional transition.

When payroll questions go beyond software settings, such as researching a specific state’s payday notification requirements or final wage payment laws, you need answers you can trust. With our platform, Feather AI, accountants and financial professionals can get instant answers to complex compliance questions, backed by citations from official sources like state labor codes and IRS guidance. This gives you the audit-ready confidence needed to advise your clients or company without hours of manual research.