How do I manage team members on FreshBooks Payroll?

While using FreshBooks Payroll powered by Gusto, you can add additional team members to your payroll as employees or contractors, manage your team members’ information, and dismiss or rehire employees as needed.

• Add Team Members
• Manage Team Members
  • Employees
    • Set Up Employees
    • Manage Employees
      • Dismiss Employees
      • Rehire Employees
  • Contractors
    • Set Up Contractors
    • Manage Contractors
• FAQs

 

Add 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.

 

Manage Team Members

Manage your employees and contractors on FreshBooks Payroll with the following information:

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
   
4. Add in the employee’s information using the Employees steps
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 compensation or taxes, use the below steps:

 

Certain team member information like home address, work locations, and the team member’s SSN are greyed out and unavailable to edit due to tax implications for payroll runs. To update any of these, reach out to our Support team instead with the details and effective date for the change.

 

1. Go to the Team Member section
2. Then select the employee
3. In the employee’s profile, under the Payroll section, select either:
   
   1. Personal Profile to update the personal details and/or address
      1. To update the team member’s home address and/or the team member’s SSN, reach out to our Support team instead with the effective date for the change
   2. Work and Banking Details to update the work location, pay type, compensation, and/or banking information
      1. To update the team member’s work location, reach out to our Support team instead with the effective date for the change
   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
• Dismissed employees will be reflected in your next billing as usage fees are charged in arrears

 

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
   
4. Then select Continue to Dismiss
   
5. For Last day of employment, enter the specific date as yyyy-mm-dd or choose from the calendar
   
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 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.
      

 

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
   
4. Then select Continue to Rehire
   
5. In the Rehire [Employee Name] section, select the employee’s Start Date of when they rejoined your company
   
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.
   

 

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
   
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
   
   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
   
   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
      
   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
   
   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.

 

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
   
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
   
4. Select the Set to Inactive or Set to Active button again to confirm.

 

FAQs

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.
   

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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How do I furlough an employee?

If an employee is going on leave or not getting paid for a period of time without their employment being terminated, edit their Payroll Profile and change the employee’s Pay Type to Hourly. When you run payroll for this employee, enter 0 in the Hours field.

Afterwards, the furloughed employee’s Pay Type can be switched to Salary or hours can be entered for them when running payroll at any time.

 

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I just dismissed a team member, why did my usage fee not decrease?

Usage fees for FreshBooks Payroll are charged in arrears, calculated on the 2nd of each month for the previous month. The quantity is updated in your subscription at that time and payment is processed at the same time as your regular FreshBooks subscription payment. After cancelling FreshBooks Payroll, the usage billing will continue to appear on your receipt until all activity has been accounted for.