How to Set Up Auto Payroll in QuickBooks Online

Running payroll every week or two can feel like a chore that pulls you away from a dozen other business priorities. A single data entry error can lead to incorrect paychecks and, even worse, inaccurate tax filings that attract IRS attention. QuickBooks Online’s Auto Payroll feature is designed to solve this by automating repetitive payroll runs so your team gets paid correctly and on time, every time. This guide breaks down the entire process, covering who can use it, how to get everything prepared, and the step-by-step process for turning it on.

First, Is Auto Payroll Right For Your Business?

QuickBooks Online Payroll designed its automation feature to handle simple, predictable payroll scenarios perfectly. It’s a powerful tool, but it's not a fit for every single business. Before you begin, confirm that your company and employees meet the eligibility requirements.

You may be a good candidate for Auto Payroll if:

• All employees are salaried. Auto Payroll processes the same payment amount each pay period. Because hourly employees' pay changes based on the hours they work, they are not eligible for this feature. All employees on your payroll must be salaried with fixed pay amounts.
• All employees use direct deposit. The system is built around electronic payments. You cannot use Auto Payroll if you issue paper checks to any of your employees.
• Your pay schedule is consistent. You need to have a regular, recurring pay schedule (e.g., weekly, bi-weekly, semi-monthly).
• No special deductions or contributions. Employees on Auto Payroll cannot have garnishments, child support orders, or other unique deductions that might vary. All withholdings and contributions must be standard and predictable.
• You have a QuickBooks Payroll Premium or Elite Subscription. Auto Payroll is included with these higher-tier plans. QuickBooks Payroll Core subscribers will need to upgrade to use this feature.

If your payroll includes a mix of salaried and hourly employees, or if you frequently add one-off payments like bonuses or commissions, Auto Payroll may not be suitable. In those cases, you’ll need to stick with running payroll manually to maintain control and accuracy over each changing pay run.

Your Pre-Setup Checklist: Gathering the Right Information

Walking into the setup process unprepared will only lead to frustration. Taking 15 minutes to gather all the necessary employee and company information beforehand will make the entire experience smooth and quick. Have this information available before you start.

Company Information:

• Federal and State Tax Details: You’ll need your Federal Employer Identification Number (EIN) and any state and local tax account numbers (like your State Unemployment Tax Act, or SUTA, ID).
• Bank Account Details: The business bank account information (routing and account number) that you’ll use to fund your payroll and pay payroll taxes. Make sure the account has been verified within QuickBooks.

Employee Information (for each salaried staff member):

• Personal Details: Full legal name, home address, and Social Security Number (SSN).
• Pay Rate and Schedule: Confirm their annual salary and the established pay schedule.
• Federal Tax Withholding Info: All information from their completed Form W-4, including filing status, number of dependents, and any additional withholding amounts.
• State Tax Withholding Info: The equivalent state withholding form details, if applicable for your state.
• Direct Deposit Details: Each employee’s bank account number and routing number for setting up direct deposit.
• Other Deductions: Amounts for ongoing deductions like health insurance premiums or retirement plan contributions (e.g., 401(k) plans).

Ensuring every employee profile is complete and accurate in QuickBooks is the most important step. Incomplete or incorrect W-4 details or bank account numbers are the most common reasons for payroll errors.

Step-by-Step Guide to Activating Auto Payroll in QuickBooks Online

With all your information gathered, you’re ready to enable the feature. The process itself is straightforward. QuickBooks guides you through it, but knowing the steps in advance helps.

1. Navigate to Payroll Settings

Log in to your QuickBooks Online account. From the main dashboard, look to the left-hand navigation menu and click on Payroll. From there, select the Overview tab at the top. On the overview page, you should see a shortcut or prompt to set up Auto Payroll. If not, click the gear icon in the top right corner and select Payroll Settings.

2. Locate the Automation Settings

Within the Payroll Settings menu, look for a section called Auto Payroll. Click to open it. This is where you’ll manage the automation feature. The system will first check your eligibility. If it identifies any issues—like hourly employees or employees who get paid by paper check—it will prompt you to resolve them before you can proceed.

3. Turn On Auto Payroll & Review the Employee List

Once you are cleared for setup, you will see a simple on/off toggle or a button titled "Set up Auto Payroll.” Click it to begin. QuickBooks will display a list of all your eligible salaried employees. This is your chance to double-check that everyone who should be included is on the list, and just as importantly, that no one who shouldn’t be is included. Carefully review the names shown.

4. Set Your Processing Deadline and Review the First Payroll

QuickBooks will show you the date and paycheck date for your next scheduled payroll. You'll also see a deadline for making changes. Auto Payroll processes payroll one business day before the pay date, usually around 5 PM PT. For example, if your pay date is a Friday, the system will process payroll Thursday evening. The tool will clearly state the last day and time you can make a change before the automatic run proceeds. Review these dates to make sure everything looks right.

5. Confirm and Save

The final step is to click Save or Turn on Auto Payroll. Once you do, the system is officially active. You will receive an email confirmation that the feature is live and another reminder email before each payroll run processes.

What to Expect After Setup

Activating Auto Payroll doesn't mean you can completely forget about payroll. It simply means you no longer have to perform the routine data entry work for each pay cycle.

Here’s what you should expect:

• The Reminder Email: For each pay period, QuickBooks will send you a notification email a day or two before your processing deadline. This email serves as a prompt to review the upcoming pay run and make any last-minute adjustments.
• Making Last-Minute Changes: Did an employee get a salary change? Or did they update their 401(k) contribution? You can still make changes before the deadline shown in the reminder email. Simply go to your payroll section, pause Auto Payroll for that specific run, edit the paycheck details, and then approve it manually. After that single manual run, Auto Payroll will automatically resume for the next cycle.
• Paying Bonuses or Commissions: Auto Payroll only processes regular salary. If you need to pay a one-time bonus or commission, you’ll have to run it as a separate, off-cycle payroll. Remember that this special payment needs to be processed manually.

Best Practices for Maintaining a Healthy Auto Payroll System

Treat Auto Payroll as a "set it and stay aware of it" system, not a "set it and forget it" system. Here are a few tips to prevent issues.

• Review Every Preview Email: Never ignore the payroll preview email. Take 60 seconds to open it and skim the total cash requirement and the processing deadline. This simple habit can help you catch a potential issue before money starts moving.
• Keep Employee Information Updated in Real-Time: When an employee tells you they are moving to a new address or changing their tax withholdings, update their profile in QuickBooks immediately. Don't wait until just before the next payroll run, when you might forget.
• Reconcile Your Bank Account Regularly: Reconcile the bank account used for payroll at least once a month. This ensures that payroll withdrawals, tax payments, and direct deposits all match what you have recorded in QuickBooks, helping you spot discrepancies early.

Final Thoughts

Setting up QuickBooks Auto Payroll automates one of your most repetitive administrative tasks, giving you more time to focus on growing your business. By ensuring you meet the eligibility rules, gathering the right information, and following a good review process, you can make sure your team is paid on time without weekly manual work.

Automated tools are incredible for consistent calculations, but tricky payroll questions will always come up around new hires in different states or evolving employee benefits. For accountants and CPAs who advise on these matters, getting fast, reliable answers is essential. When a client question involves navigating complex state-level tax withholding rules or federal guidelines, we built Feather AI to provide instant, citation-backed answers. It’s designed specifically for tax professionals who need authoritative sources, not generic blog posts, to guide their strategic client decisions with confidence.