Setting Up Paid Time Off in QuickBooks Online
Learn how to add a paid time off policy, assign accrual rules, and apply PTO to employee paychecks in QuickBooks Online with clear steps.
Paid time off helps you track vacation, sick leave, and other paid absences for your team.
We walk you through each step.
This guide shows the exact steps to get started.
Creating a PTO policy
Navigate to the Payroll menu and choose Employees. Click the employee name you want to edit, then select Pay settings. In the Paid time off section, click Add policy. Give the policy a clear name such as Vacation or Sick leave. Choose the type of time off and decide whether it accrues each pay period or is granted as a lump sum.
Save the policy. Repeat the process for any additional time off types you need to track.
Setting accrual rules
After adding the policy, select the accrual method that matches your company policy. Options include hourly accrual, daily accrual, or a fixed amount per pay period. Enter the rate, for example 0.05 hours of PTO for each hour worked. Confirm the maximum balance you allow, if any, and the reset date if you use a yearly accrual.
Assigning the policy to employees
Return to the Employees list and open the profile for each team member. In the Pay settings tab, locate the Paid time off section and click Edit. Choose the policy you created from the dropdown menu. If you have different policies for different staff, assign them individually.
Applying PTO to paychecks
When you run payroll, QuickBooks Online automatically calculates the accrued PTO based on the rules you set. The accrued hours appear as a separate line item on the employee’s pay stub. You can also manually add or subtract time off by using the Adjust paycheck option before finalizing the run.
Reviewing PTO reports
To verify that accruals are correct, go to Reports and select Payroll Summary or Paid Time Off report. Choose the date range and employee group you want to review. The report shows earned, used, and available balances for each person. Use this information to make adjustments or to answer employee questions.
Run a test payroll for one employee to see the PTO line appear, then confirm the numbers match your expectations before processing the full payroll.