Intuit Online Payroll: How to Record an Employee's Paid Time Off Hours

Record an Employee’s Paid Time Off Hours in Intuit Online Payroll By Goshen Bookkeeping

Spring break and summer is right around the corner and your employees are starting to use their vacation hours. So, how do you record the vacation hours used by your employees in Intuit Online Payroll?

Watch the below video tutorial and keep reading to find out how to pay your employees PTO in Intuit Online Payroll system.

Add Your Paid Time Off Policy

I am using my sample company file for this tutorial. The first thing you need to do is to make sure the employee has been assigned a paid time off policy or vacation pay policy or a sick pay policy under their profile.

To setup a policy or double check if you have one, click the setup tab, then select Vacation / Sick / PTO. If you have an existing policy, it will show up under the Paid Time Off Policies section with the number of hours per year you have setup for your organization based on your employee handbook.

If you don't have a policy setup, you can edit the existing default option by changing the policy name in the description field or leave it as is. Then, select the accrual frequency and enter the maximum hours that can be earned per year for your organization. 

The bottom section will show which employees this policy will be assigned to going forward. Once done, click OK.

Assign Paid Time Off Policy to Employee’s Profile

To verify that the policy is now attached to an employee's profile, click the Employees tab, select the name of one of your employees.

Review the pay section to make sure vacation pay is showing. Review the time off section to make sure vacation beginning balance is also showing.

Using the employee named Bill as an example, I can see that we have not told the system how many hours this employee accumulates and how often.

You need to enter the number of hours an employee is going to spend or use for the current calendar year based on his hire date. 

So, in my example, I am going to enter 120 hours as the total current vacation balance for Bill. Then, click OK to save the information.

Process Payroll

Now, it time to run payroll and let's say Bill has used 16 hours for vacation for this pay period and we need to reflect those hours used in the payroll system.

To record this payroll, select the Payday tab and do the following:

  • Select a pay schedule

  • Enter the pay period and the pay date

  • Click on the check icon under the check details column for the employee you need to record their vacation pay

  • A popup window will appear

  • In the popup window, reduce the regular hours worked by the number of vacation hours used.

  • Under the Additional Pay Types section, enter the vacation hours used in the vacation box

  • Review everything to make sure you have entered all of the correct hours, then click the Create button to create the paycheck

  • The popup window will automatically close and bring you back to the create a paycheck screen

  • Continue entering the hours for all of your other paychecks or repeat the above steps again if you need to add vacation pay for other employees

  • Click the create paychecks button to continue to the next screen

Approve Payroll

In the approve payroll screen, you see Bill's total hours for this pay period is 40 hours. This is a combination of his regular hours which was 24 hours and his vacation hours which was 16.

To see a breakdown of how the hours are reflected on his pay stub, click on the view/edit option next to his name to open the pay stub.

If you click on the edit button in his pay stub, you will see the salary hours listed as 24 and vacation as the 16 hours we entered in the previous screen.

Under the benefits section, you will also see that Bill now has 104 hours remaining to use for vacation for this year.

If you made a mistake in entering the hours, this also the place for you to make any last minute changes before you approve the payroll. Once you are done with all the changes and have done one last review, click save to exit the paystub screen.

The system will bring you back to the approve payroll screen. Here, you need to click approve paychecks, and complete the rest of the screen prompts to finish processing your payroll.


That is how to setup your vacation, sick pay or paid-time off policy and pay your employees in Intuit Online Payroll system.

Do have questions about using QuickBooks Online or Xero Accounting to run your business? Contact me - I am happy to help!