Hiring your first employee is a major milestone for any small business. Whether you’re expanding your crew on the job site or bringing in admin help to lighten your load, it means your business is growing, and so are your responsibilities.

One of the best tools to help you stay organized from day one is QuickBooks Online (QBO). With built-in payroll features and employee management tools, QuickBooks can help you simplify onboarding, stay compliant, and get payroll done right, all without the paperwork headache. In this blog, we’ll walk you through how to hire and set up your employee in QuickBooks Online, plus a few tips to keep things smooth behind the scenes.

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Step 1: Set Up QuickBooks Payroll

If you haven’t already, you’ll need to activate QuickBooks Payroll within your QuickBooks Online subscription.

To get started:

• Go to the Payroll tab in the left-hand menu
• Choose “Get Started”
• Select the payroll plan that fits your needs (Core, Premium, or Elite)
• Follow the prompts to add your business details, tax info, and bank account for direct deposit

Even if you’re not running payroll yet, setting this up in advance will make onboarding employees a breeze.

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Step 2: Collect the Right Paperwork

Before you input anything into QBO, make sure your new hire fills out the required forms:

• W-4: Employee’s Withholding Certificate (federal income tax)
• State tax forms (if applicable)
• I-9: Employment eligibility verification
• Direct deposit form (optional, but recommended)

You’ll need the information from these forms (SSN, filing status, and bank account numbers) when setting them up in QBO.

Step 3: Add the Employee to QuickBooks

Now you’re ready to enter your new team member into QuickBooks Online.

Here’s how:

1. Go to Payroll > Employees
2. Click “Add an Employee”
3. Enter the following:
   • Full name and contact info
   • Hire date
   • W-4 tax info
   • Pay rate (hourly or salary)
   • Pay schedule (weekly, bi-weekly, etc.)
   • Work location (especially important for multi-state businesses)
   • Direct deposit details (if applicable)

QuickBooks will automatically calculate federal and state taxes based on this info, saving you from doing the math manually.

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Step 4: Set Up Deductions, Benefits, and Time Tracking (Optional)

Depending on your business and payroll plan, you can also set up:

• Benefits like health insurance, retirement plans, or PTO policies
• Deductions for things like garnishments or union dues
• Time tracking (Premium and Elite plans include time tracking tools that sync directly with payroll)

Be sure to review all state-specific requirements (like workers’ comp insurance or sick leave laws) based on where your employee is working.

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Step 5: Run Payroll with Confidence

Once your employee is set up, running payroll in QBO is simple:

1. Go to Payroll > Run Payroll
2. Select the pay period and review hours (or enter them manually)
3. Review paycheck details (wages, taxes, deductions)
4. Submit payroll — QuickBooks will handle direct deposit and tax filings automatically

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Bonus Tips for Success

• Stay compliant: QuickBooks Payroll files your payroll taxes and W-2s automatically (depending on plan level). But always double-check your state and local compliance rules.
• Track job costs: If you work in construction or trades, turn on job costing features to track labor costs by project or client.

Automate onboarding: With Premium and Elite plans, employees can self-onboard and e-sign their W-4s and direct deposit forms.

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Final Thoughts

Hiring someone should be a sign of growth, not a bookkeeping nightmare. With QuickBooks Online, you can streamline the entire process from offer letter to first paycheck. Whether you’re a contractor hiring a second pair of hands or a small shop bringing on a full team, getting your payroll right from day one sets the foundation for a healthy, scalable business.

Need help setting it all up? We specialize in helping service-based businesses like yours hire with confidence and keep your books clean along the way.