How do I set up FreshBooks Payroll?

FreshBooks Payroll powered by Gusto is a paid add-on that facilitates payments to your employees as well as help with tax and labor compliance. Once your FreshBooks Payroll setup is completed, it takes up to 2 business days to review before you can begin running payroll for your team.
 
FreshBooks Payroll is only available for US-based businesses with employees (W-2) located in the US (excluding US territories). If you're using other Gusto features listed in Payroll Eligibility here, fill out this form and use the Gusto app instead.
 
 

Before You Begin

Before you set up Payroll for your W-2 employees, make sure you have the following information ready:
 
The Payroll setup requires you to complete each section below:

Payroll Eligibility

FreshBooks Payroll is designed for businesses that pay W-2 employees their regular payroll with a 4-day ACH deposit speed. If your business needs any of the below features, fill out this form, and in the meantime, use the Gusto app instead:
  • 2-day ACH direct deposit speed
  • Contractor payments
  • Employee benefits and Worker's Compensation contributions
  • Frequent off-cycle payrolls
  • Paid Time Off
  • Withholding State taxes in States the business is not registered in
 
If your business is eligible, answer a few quick questions to confirm if FreshBooks Payroll is right for you:
  1. In your FreshBooks account, select the Payroll section
  2. Under FreshBooks Payroll powered by Gusto, select the Get Started button
    FreshBooks payroll screen with get started button.
  3. Complete the questions to determine if FreshBooks Payroll is right for you
  4. If eligible, select Continue to Setup to agree to Gusto’s Terms of Service. Next, complete the Business Information steps below.
 

Business Information

Add your company addresses, FEIN number and payroll schedule:
  1. In the Payroll section, next to Tell us about your business, select Continue
    Continue button next to step one.

  2. In the Business Details section, confirm your Legal Business Name, and if needed, your Doing Business As (DBA) name
    Business details section with fields to fill out.

    1. Next, choose your Business Structure
    2. Then choose an Industry Category that closely fits your business
    3. For Federal Filing Form, choose between 941 for quarterly, or 944 for annually
    4. Then choose Yes or No if your business is taxed as an S-Corporation
    5. Select Save and Next
  3. In the Business Address section, if needed, uncheck the box next to Filing and Mailing address is the same to enter a second address
    Business addresses section with fields to fill out.

    1. Next, enter your Address, Town/City, State, Zip Code, and Business Phone Number
    2. If needed, select Add an Address if you have additional working addresses including remote employees and employees who work from home
    3. Select Save and Next
  4. In the Payroll Setup section, choose a Pay Frequency
    Payroll setup section with fields to fill out.

    1. Choose the First Pay Date for a date at least two weeks in the future when you are ready to run payroll, including any time needed for your FreshBooks Payroll account to be approved first
    2. If Twice a month: Custom is selected, choose the First Pay Day of Month and Second Pay Day of Month
    3. Next, choose the First Pay Period End Date, this will be used to calculate future pay periods
  5. Then select Complete to finish setting up your business information. Next, complete the Business Bank Account steps below.
 

Business Bank Account

Add a business bank account for direct deposits:
  1. In the Payroll section, next to Set up a bank account, select Start
    Start button next to step two.

  2. In the Bank Account Details section, enter your Routing Number and Account Number
    Bank account details section with fields to fill out.

  3. Check the box off next to I confirm this is a checking account then select Save and Next
  4. Select Got It to confirm the bank account verification, verifications are made at 5 pm PT daily and can take up to 2 business days to appear in your bank account
  5. Next, complete the Employees steps below.
 

Employees

Add employees’ details like personal, work and tax information:
  1. In the Payroll section, next to Set up employees, select Start
    Start button next to step three.

  2. In the Set Up Employees section, select the + New Employee button or select an existing team member in the list of employees below
    List of employees with option to create new employee or select an existing employee from the list below.

    1. In the employee's Profile section, check the box next to I agree to collect and store this employee’s I-9 outside FreshBooks
      Profile section with fields to fill out.

    2. Add or review the employee’s First Name, Last Name, and Email Address
    3. Enter the employee’s Date of Birth and Social Security Number
    4. Add the employee’s Country, Address, City, State/District, and Zip Code
    5. Select Save and Continue
  3. In the Work Location and Compensation section, choose an Office Address
    Work location and compensation section with fields to fill out.

    1. For Compensation Details, enter in the Job Title
    2. Then for Pay Type, choose between Salary/No overtime, Salary/Eligible for overtime, or Paid by the hour
    3. Next, specify the Start Date
    4. Then enter the Amount and choose a Per type
    5. For Payment Method, choose between Direct Deposit or Check
      1. If Direct Deposit is selected, check off the box next to I agree to collect and store Direct Deposit Authorization forms
    6. For Bank Account Details, choose either Checking or Savings
    7. Then enter the employee’s Routing Number and Account Number
    8. Select Save and Continue
  4. In the Federal Tax Details section, choose the employee’s Federal Filing Status
    Federal tax details section with fields to fill out.

    1. Then for Multiple Jobs (2c), choose Yes or No
    2. If needed, specify the Dependent Total, Other Income, Deductions, and Extra Withholdings
    3. Check the box next to I agree to collect and store this employee’s W4 outside of FreshBooks
    4. Select Save and Continue
  5. In the State Tax section, choose the employee’s Filing Status
    1. If needed, specify the totals in the fields provided for this particular employee and their state
    2. Select Save and Continue
  6. Repeat steps 2-5 until all employees have been added and set up, then select Complete
  7. Then select OK. Next, complete the State Tax steps below.
 

State Tax

FreshBooks Payroll will automatically pay taxes to relevant authorities automatically on the relevant due dates for each particular tax on your behalf. Add the State Tax Registration details for all states you have locations in:
  1. In the Payroll section, next to Set up state tax for your business, select Start
    Start button next to step four.

  2. In the State Tax section, select the Continue Setup link next to the State listed
    1. Review and answer the requirements, then select Save and Continue
    2. Then review your State Tax summary and select Back
  3. Repeat step 2 for each state you operate in until there are no more Continue Setup links, and then select Finish. Next, complete the Sign Documents steps below.
 

Sign Documents

Documents must be electronically signed by the owner of the FreshBooks account, as the company signatory who may also be the business controller. The company signatory is responsible for signing all government forms created by Gusto to confirm your FreshBooks Payroll setup:
  1. In the Payroll section, next to Sign Documents, select Start
    Start button next to step five.

  2. In the Business Controller Details section, enter your First Name, Last Name, and Job Title
    Business controller details section with fields to fill out.

    1. Enter your Home Address, or check the box next to Home address is the same as a listed business location
      1. If the box is checked off, choose a location from your list of addresses
    2. Enter your Email, Phone Number, Date of Birth, and Social Security Number
    3. Then select Save and Continue
  3. In the Sign Company Documents section, select Review to preview the form as a PDF file
    Review and sign form buttons next to two forms listed.

    1. Then select Sign Form next to the form when you’re ready to sign it
    2. Check the box off and select Sign
    3. If needed, select Review again to view a preview of the now-signed form in a new window
  4. Repeat step 3 for each form until all forms have been signed, then select Complete.
 

Deposit Verification

Confirm your business bank account by verifying deposits. Bank account verifications are sent at 5 pm PT each day and take up to 2 business days to show up in your bank account:
  1. In the Payroll section, next to Set up a bank account, select Verify
    Verify button next to step two.

  2. In the Verify your Bank Account section, enter the amount for Test Deposit #1 and Test Deposit #2
    Validate your bank account section with fields to fill out for deposit amounts.

  3. Select Validate, then select OK to finish.
 

Next Steps

Once your FreshBooks Payroll setup is complete, your information will be reviewed to verify your identity - this takes up to 2 business days.
If additional information is required, you will be contacted by email. This ensures Gusto’s compliance with banking and financial institution regulations and must be done before your FreshBooks Payroll setup can be verified. Reviewing submitted additional information can take up to an extra business day.
Once your FreshBooks Payroll setup has been verified and approved, you can begin running payroll with the steps in How do I run payroll with FreshBooks Payroll? here. You'll also receive a prorated receipt for the FreshBooks Payroll add-on.