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How do I manage my FreshBooks Payroll?

With your FreshBooks Payroll powered by Gusto account set up, you can manage your payroll settings, manage your team members, and access your tax filings as needed. 

 

If you're looking to run payroll, review How do I run FreshBooks Payroll? instead. 

 

 

Payroll Section

Payroll details, including pay stubs or pay slips, can be accessed by selecting the Payroll section. From here, you can find the below information:

Payroll section list of payments and run button at the top right corner.

  • More Actions
    • View Payroll Reports - Go to the Reports section to review your Payroll Journal report and Contractor Payment report
    • View Tax Documents - Review tax and payroll-related documents for your business, including 1099 forms
      • Check off the box(es) next to any form, select Bulk Actions, then select Download PDF to download copies anytime
    • Payroll Settings
      • Work Locations - If needed, add additional business and work locations
      • Bank Checking Account - If needed, update your bank account and verify your deposits
      • State Tax Details - If needed, review, edit, and submit tax requirements for each state
      • Payroll Setup Documents - If needed, review signed documents or sign outstanding documents as requested
  • Run Payroll - Run payroll for your employees or a contractor payment
  • Payment History - Each payroll run and contractor payment listed with its Pay Date, Pay Period, Type, Status, and Total
    • Year - Select the dropdown to switch years, up to 6 years maximum
    • Pay Period Details - Select any Payroll Period to review the details of the payroll, including pay stubs or receipts

 

Payroll Statuses

  • Submitted - The payroll run or payment has been submitted to Gusto, business bank debits have not been initiated yet
  • Processed - The payroll run or payment has completed and employee or contractor direct deposit payments have been initiated

 

Update Payroll Settings

If you need to edit yours or your employees’ work locations, update your bank checking account, or your state tax details, use the below steps:

  1. Select the Payroll section on the left
  2. Then select the More Actions button in the top right corner
  3. Select Payroll Settings
  4. Then select either Work Locations, Bank Checking Account, State Tax Details, or Payroll Setup Documents
    Payroll settings listing different options.
  5. If you select State Tax Details, then select the State you want to update 
    1. Inside the [State] Tax Requirements, select Edit next to any section, then select Save and Continue
      1. If there is no option to select Edit next to a section that needs to be updated, reach out to the Support team directly instead 
    2. Then select Back when you're finished updating and select Finish to submit the information 
  6. If you select Bank Checking Account, select Edit Details to confirm
    1. Re-enter your new Routing Number and Account Number, then select Save and Complete
    2. Once you receive your micro deposits in your bank account, repeat steps 1-5 to edit your Bank Checking Account
    3. Then enter the amounts for Test Deposit #1 and Test Deposit #2
    4. Select Validate, then select OK to verify your updated bank account details
    5. Once your updated bank details are verified, re-run payroll to pay your team members. 

 

Manage Team Members

To add additional team members to your payroll as employees or contractors, use the steps in Add Team Members to add them as Unassigned team members first. Once added, you can set them up as an employee or as a contractor on FreshBooks Payroll with the below steps.

If needed, you can invite the team member to work with you inside your FreshBooks account as well. This is optional and allows the team member to help you with running your business in FreshBooks, review What permissions can I assign to my team member? to learn more about what each role has access to.

 

Employees

Set Up Employees

Add team members as additional employees to FreshBooks Payroll, these can be added anytime after completing your FreshBooks Payroll setup. Add a new employee to your payroll using the below steps:

  1. Go to the Team Member section
  2. Then select the team member you want to add as an employee
  3. In the team member’s profile, under the Payroll section, select the Add to Payroll button, then select As an employee
    Team member profile with add to payroll button.
  4. Add in the employee’s information using the Employees steps here
  5. Once the team member’s payroll profile is set up, you can start running payroll for this employee. If needed, you can assign the team member a role and invite them to FreshBooks using the Invite Team Members steps.

 

Manage Employees

Update your employees’ information when needed to ensure payroll runs smoothly, as well as dismiss employees using the below details.

 

Update Employees’ Information

To update an employee’s payroll information, including address, compensation, or taxes, use the below steps:

  1. Go to the Team Member section
  2. Then select the employee
  3. In the employee’s profile, under the Payroll section, select either:
    Team member profile displaying active on payroll with options to select.
    1. Personal Profile to update the personal details and/or address
    2. Work and Banking Details to update the work location, pay type, compensation, and/or banking information
    3. Federal Tax to update the federal tax details
    4. State Tax to update the state tax details
  4. Then select Save to finish and your employee's information will be updated.

 

Dismiss Employees

Dismiss employees when their employment is ending and you won’t need to pay them anymore. Dismissed employees will remain available in your FreshBooks Payroll for your records, taxes, and possible rehiring. Before you dismiss an employee, review the following:

  • Dismissals can be edited or cancelled up until the dismissal date, or until the dismissal payroll’s check date
  • Review your state’s legal requirements on your employee’s final payment, including deadline to pay
  • You can process the employee’s final payment in the next payroll or through a dismissal payroll if needed sooner
  • Ensure you download the employee’s W-2 form at the end of the year and send it to them

 

To dismiss an employee, use the below steps:

  1. Select the Team Members section
  2. Then select the employee you want to dismiss
  3. Under the Payroll section, select Begin Dismissal
    Begin dismissal button next to employee.
  4. Then select Continue to Dismiss
    Notification with what to know about payroll dismissals.
  5. For Last day of employment, enter the specific date as yyyy-mm-dd or choose from the calendar
    Dismissal screen with three options to select.
  6. Next, for How will you pay your final paycheck?, choose either:
    1. Dismissal Payroll - If you need to process a separate payroll from your regular payroll with a custom payday
    2. Regular Payroll - If you want the dismissed employee’s unpaid hours and earnings to be lumped together with the regular payroll’s final payment and use the regular payroll’s payday
    3. Another Way - If you already dismissed the employee and paid them, or if you need to run an off-cycle payroll to manually calculate final amounts, or you need to pay the employee outside of FreshBooks
    4. Select Submit and Continue
  7. If Dismissal Payroll is selected, review the dismissal summary and offboarding checklist and select Finish or Run Dismissal Payroll
    1. If needed, select a dismissal payroll from the dropdown and then select Run Dismissal Payroll again to confirm
    2. Review the hours and additional earnings for the pay period, and then select Continue, a preview will begin generating
    3. In the Review and Submit section, review the details for Company Pays, Hours Worked & Take Home, and Taxed and Debited as needed
    4. Then select Submit Payroll
  8. If Regular Payroll is selected, review the dismissal summary and offboarding checklist, when you’re ready, select Finish
  9. If Another Way is selected, review the dismissal summary and offboarding checklist, when you’re ready, select Run off-cycle Payroll to process an-off cycle payroll, or Finish if you’re paying them outside of FreshBooks
    1. If running an off-cycle payroll, in the New Payroll section, enter the Start Date, End Date, and Payment Date
    2. For Deductions and Contributions, select Make all the regular deductions and contributions
    3. If needed, select the Edit button next to Tax Withholding Rates to adjust the payment schedule and rate for supplemental wages and earnings
    4. Ensure the dismissed employee is selected, then select Continue
    5. Review the hours and additional earnings for the pay period, and then select Continue, a preview will begin generating
    6. In the Review and Submit section, review the details for Company Pays, Hours Worked & Take Home, and Taxed and Debited as needed
    7. Then select Submit Payroll
    8. Then select the X in the top right corner to close the dismissal window. The team member’s Payroll section will update to reflect the upcoming dismissal date.
      Team member with upcoming dismissal date in payroll settings.

 

Rehire Employees

Rehire an employee when you want to add them back to your payroll. Before you rehire an employee, review the following:

  • FreshBooks Payroll does not ask for a new I-9 for rehired employees
  • When you rehire an employee, their original hire date will be replaced with the rehire date
  • If rehired within the same year, they’ll only receive one W-2 for all wages earned
  • Only employees can be rehired, if the dismissed employee is now working for you as a contractor, add them as a contractor instead

To rehire a dismissed employee, use the below steps:

  1. Select the Team Members section
  2. Then select the employee you want to dismiss
  3. Under the Payroll section, select Begin Rehire
    Begin rehire button in team member's payroll settings.
  4. Then select Continue to Rehire
    Notification on information about rehire.
  5. In the Rehire [Employee Name] section, select the employee’s Start Date of when they rejoined your company
    Start date, work address, and new hire report options.
  6. Next, confirm the Work Address
  7. For File a new hire report?, choose either Yes, file the state new hire report for me, or No, I have already filed
  8. Then select Submit and Continue
  9. Then select the X in the top right corner to close the rehire window. The team member’s Payroll section will update to reflect the upcoming rehire date. If needed, review and update the employee’s information to ensure details are accurate.
    Employee with upcoming rehire start date in payroll settings.

 

Contractors

Set Up Contractors

Add team members as contractors to payroll, which includes personal details, work and tax information. Your monthly Payroll Usage Fee will only count each contractor that has been paid through FreshBooks Payroll at least once during the usage period, regardless of whether the contractor is active or inactive.

 

Contractors can be added anytime after completing your FreshBooks Payroll setup. At least one active employee must be on FreshBooks Payroll to add contractors to FreshBooks Payroll.

 

Add a contractor with the below steps:

  1. Go to the Team Member section
  2. Then select the team member you want to add as a contractor
  3. In the team member’s profile, under the Payroll section, select the Add to Payroll button, then select As a contractor
    Add to payroll with add as a contractor selected.
  4. In the contractor’s Profile section, check the box next to I agree to collect and store this employee’s W-9 outside FreshBooks
    Contractor profile with fields to fill out.
    1. For Contractor Type, select either Individual or Business
      1. If Individual is selected, add or review the contractor’s First Name, Last Name, and Email Address - the contractor’s name must be their full legal name as written on tax documents
        1. Then enter the contractor’s Social Security Number
      2. If Business is selected, enter the Business Name, Federal Employer Identification Number (FIEN), and review the Email Address
    2. Add the contractor’s Country, Address, City, State/District, and Zip Code
    3. Select Save and Continue
  5. In the Compensation and Payment section, specify the Start Date the contractor began working for your business
    Compensation and payment section with fields to fill out.
    1. Then for Wage Type, choose between Hourly or Fixed dollar amount
    2. If Hourly is selected, specify the Hourly Rate
    3. For Payment Method, choose between Direct Deposit or Check
      Payment method options and fields for bank account information.
    4. For Bank Account Details, choose either Checking or Savings
    5. Then enter the contractor’s Routing Number and Account Number
    6. Select Save and Continue or Save and Complete
  6. If Individual is selected as the Contractor Type, in the New Hire Report section, choose between Yes, file the report for me or No, I filed the report or will file it myself
    New hire report with options to select.
    1. If Yes, file the report for me is selected, choose the State/District
    2. Then select Save and Complete to finish adding your contractor
  7. Once the contractor’s payroll profile is set up, you can start running payments for this contractor. If needed, you can assign the team member a role and invite them to FreshBooks using the Invite Team Members steps here.

 

Manage Contractors

Update contractors' information and mark contractors as inactive or active as needed using the below details.


Update Contractors’ Information

To update a contractor’s payroll information, including personal profile, and compensation and payment, use the below steps:

  1. Go to the Team Member section
  2. Then select the contractor
  3. In the contractor’s profile, under the Payroll section, select either Personal Profile or Compensation and Payment
    Contractor profile with two options to select.
  4. Make any updates as needed and select Save to finish.

 

Set Contractors to Inactive or to Active

Updating a contractor’s status to inactive is used for any of the following:

  • Removes the contractor from the list of contractors when processing contractor payments
  • To switch a contractor to an employee for FreshBooks Payroll instead

 

To update a contractor’s status, use the below steps:

  1. Go to the Team Member section
  2. Then select the contractor
  3. In the contractor’s profile, under the Payroll section, select the Set to Inactive or Set to Active button
    Set to inactive button next to contractor profile.
  4. Select the Set to Inactive or Set to Active button again to confirm.

 

State Tax Information

FreshBooks Payroll powered by Gusto uses Gusto’s tax payment system to file and pay your federal, state, and municipal payroll taxes on time. This requires having your state tax account numbers and appropriate third-party authorization during your FreshBooks Payroll setup. 

 

State Tax Registration and Resources

Use Gusto’s state registration and resources to find state tax requirements for your specific state. Listed below are some popular states for quick reference:

A complete list of websites and phone numbers for all state tax agencies can be found at Gusto’s State Tax Agency or IRS list.

 

State Tax Exemptions

If there are any payroll taxes that your business is not required to pay, reach out to our Support team directly with the following information to have this applied to your FreshBooks Payroll account:

  • The specific name of the tax
  • The effective date for the tax exemption
  • The reason provided by the relevant tax authority for the exemption

 

State Unemployment Tax

If you have not registered for State Unemployment Tax with your state’s tax agencies, FreshBooks Payroll can still deduct an estimated amount based on the New Employer Rate for your listed state. Once you receive your state tax account number, update your State Tax Details in your Payroll Settings. The updated rate will be used when filing and paying state taxes, and a Reconciliation Payroll will be completed automatically to debit or credit your bank account based on the finalized amount of the tax liability.

If this information is not entered prior to your tax deadline dates, there may be penalties and interest for late payments. In some cases, state taxes will have to be paid by your business outside of FreshBooks.

 

Other Tax Related Information - Use the below links to review Gusto’s other tax-related information:

 

FAQs 

How do I switch from using FreshBooks Payroll to the Gusto app instead?

If you need additional functionality outside of what FreshBooks Payroll can offer, you can use the Gusto app instead. To migrate your FreshBooks Payroll account to Gusto app directly, please reach out to our support team to send in a request from your FreshBooks account. This will also transfer your billing subscription for the FreshBooks Payroll add-on to Gusto instead.

 

How do I switch an employee to a contractor or a contractor to an employee in FreshBooks Payroll?

From Contractor to Employee

To switch a team member on FreshBooks Payroll from a 1099 contractor to a W-2 employee, use the following steps:

  1. Go to the Team Members section
  2. Select the contractor you want to switch
  3. Under the Payroll section for Contractor, select the Set to Inactive button
  4. Then select the Set to Inactive button again to confirm
  5. The page will refresh, the Employee option will appear, select Add to Payroll button and follow the steps to add them in as an employee instead.
    Add to payroll button for employee option.

From Employee to Contractor

To switch a team member on FreshBooks Payroll from a W-2 Employee to a 1099 Contractor, the employee must be dismissed first. Once dismissed, you can add the team member as a contractor with these steps:

  1. After the employee is dismissed by our Support team, go to the Team Members section
  2. Select the dismissed employee you want to switch to as a contractor
  3. Under the Payroll section for Contractor, select the Add to Payroll button and follow the steps to add them in as a contractor instead.

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