Does QuickBooks Do Payroll

Discover how QuickBooks Payroll works in the UK, what features it includes, how much it costs and whether it is right for your business

At Towerstone Accountants we provide specialist limited company accountancy services for directors and owner managed businesses across the UK. We created this webpage for business owners who want practical guidance on choosing and using accounting software, including day to day bookkeeping tasks, invoicing, bank feeds, and reporting. Our aim is to help you keep accurate records, reduce admin time, and stay compliant with HMRC and Companies House requirements.

This is a question I am asked regularly by business owners who already use QuickBooks for bookkeeping and want to know whether they can keep everything in one place. Payroll is one of those areas where convenience matters but accuracy matters more. Getting it wrong leads to HMRC penalties unhappy staff and a lot of time spent fixing problems that could have been avoided.

In this article I am going to explain clearly whether QuickBooks does payroll in the UK how it works what it includes what it does not include and when it is a good fit for your business. I am writing this in the first person based on how I advise my own clients and everything here reflects UK payroll rules and HMRC requirements as set out by HM Revenue and Customs.

The short answer

Yes QuickBooks does offer payroll for UK businesses but with some important caveats.

QuickBooks payroll is designed primarily for small businesses with straightforward payroll needs. It works well in the right circumstances but it is not a one size fits all solution and it is not suitable for every type of employer.

Understanding those limits is key before you decide to rely on it.

What QuickBooks payroll is designed to do

QuickBooks payroll is built to handle core UK payroll requirements for small employers.

At a basic level it can:

  • Calculate employee pay

  • Deduct Income Tax and National Insurance

  • Submit RTI reports to HMRC

  • Produce payslips

  • Record payroll costs in your accounts

  • Handle statutory payments in many cases

For businesses with a small number of employees and simple pay structures this can be perfectly adequate.

QuickBooks payroll is a separate service

One of the first things to be aware of is that payroll is not automatically included with all QuickBooks subscriptions.

QuickBooks payroll is:

  • An add on service

  • Charged monthly per employee

  • Integrated into your QuickBooks account

This means you need to activate payroll separately even if you already pay for QuickBooks Online.

UK specific payroll not global payroll

QuickBooks offers payroll in different countries but the UK version is specifically built around UK payroll rules.

The UK payroll version is designed to comply with:

  • PAYE regulations

  • Real Time Information submissions

  • UK tax codes

  • National Insurance thresholds

  • Statutory payments

This matters because payroll software built for other countries is not suitable for UK compliance.

What payroll tasks QuickBooks can handle

For most small employers QuickBooks can manage the core payroll cycle.

This includes:

  • Weekly or monthly payroll runs

  • Automatic tax and National Insurance calculations

  • PAYE submissions to HMRC

  • Employee payslips

  • Payroll journals posted into the accounts

  • End of year forms such as P60s

From a compliance point of view this covers the essentials.

Directors and payroll in QuickBooks

QuickBooks payroll can handle directors as well as employees.

This includes:

  • Director salaries

  • Annual National Insurance calculations

  • PAYE reporting

However director payroll has some quirks particularly around National Insurance and uneven pay patterns. This is an area where setup and understanding matters more than the software itself.

Statutory payments and QuickBooks payroll

QuickBooks payroll can usually handle statutory payments such as:

  • Statutory Sick Pay

  • Statutory Maternity Pay

  • Statutory Paternity Pay

  • Statutory Adoption Pay

These calculations must be set up correctly and eligibility must still be assessed by the employer. The software does the maths but it does not replace judgement.

Workplace pensions and QuickBooks payroll

This is one of the most important areas to understand.

QuickBooks payroll does not fully manage workplace pension auto enrolment on its own.

In practice:

  • You still need a pension provider such as NEST

  • Employee and employer contributions must be calculated

  • Pension files often need to be uploaded to the provider

  • Ongoing compliance duties remain with the employer

QuickBooks can calculate pension deductions but it does not remove your legal responsibilities under auto enrolment rules.

Payroll integration with accounts

One of the biggest advantages of using QuickBooks payroll is integration.

Payroll costs are automatically posted into the accounts including:

  • Gross wages

  • Employer National Insurance

  • Pension contributions

  • PAYE and NIC liabilities

This reduces manual journals and keeps figures aligned provided the setup is correct.

Payroll setup matters more than the software

In my experience most payroll problems do not come from the software. They come from poor setup.

Payroll setup includes:

  • Correct employee details

  • Accurate tax codes

  • Correct pay frequency

  • Proper pension setup

  • Correct start dates and pay history

If these are wrong QuickBooks will calculate the wrong figures perfectly accurately.

What QuickBooks payroll does not do

This is just as important as what it does do.

QuickBooks payroll does not:

  • Advise on tax efficient director pay

  • Decide whether someone should be employed or self employed

  • Automatically handle complex benefits in kind

  • Manage salary sacrifice schemes fully in all cases

  • Replace payroll knowledge or professional advice

The software is a tool not a decision maker.

Benefits in kind and payroll

QuickBooks payroll has limited handling of benefits in kind.

For example:

  • Company cars

  • Medical insurance

  • Other taxable benefits

These often still require:

  • Separate P11D reporting

  • Manual input

  • Additional review

If your payroll includes multiple benefits QuickBooks may not be the most efficient option.

Payroll for growing teams

As teams grow payroll complexity tends to increase.

This includes:

  • Different pay rates

  • Overtime

  • Bonuses

  • Commission

  • Salary reviews

  • Leavers and joiners

QuickBooks can handle many of these but it becomes more important to have clear processes and regular checks.

Payroll errors and HMRC penalties

It is important to understand that HMRC does not care which software you use.

If payroll is wrong:

  • The employer is responsible

  • Penalties and interest can apply

  • Corrections can be time consuming

Using QuickBooks does not transfer responsibility to the software provider.

Payroll and RTI submissions

QuickBooks payroll submits RTI reports directly to HMRC.

This includes:

  • Full Payment Submissions

  • Employer Payment Summaries where applicable

RTI submissions must be accurate and on time regardless of whether employees are paid monthly or weekly.

Late or incorrect submissions can trigger penalties.

Payroll for one director companies

Many people ask whether QuickBooks payroll is suitable for one director companies.

The answer is usually yes provided:

  • The director salary is straightforward

  • There are no other employees

  • Pension arrangements are simple

  • The director understands annual National Insurance rules

In these cases QuickBooks payroll can work well.

Payroll for multiple directors

Where there are multiple directors payroll planning often becomes more strategic.

QuickBooks can process the payroll but it will not:

  • Optimise salary levels

  • Coordinate dividends and pensions

  • Adjust strategy as profits change

This is where advice sits alongside the software.

QuickBooks payroll and CIS

QuickBooks payroll does not replace CIS compliance.

If you operate in construction:

  • CIS deductions are separate from payroll

  • Subcontractors are not employees

  • CIS reporting has its own rules

QuickBooks has CIS functionality but payroll and CIS should not be confused.

Security and access control

Payroll data is sensitive.

QuickBooks allows you to:

  • Restrict user access

  • Control who can see pay details

  • Limit payroll permissions

This is important where multiple people access the accounts.

Common mistakes I see with QuickBooks payroll

There are a few recurring issues.

These include:

  • Assuming payroll is automatic once set up

  • Not checking tax codes

  • Forgetting pension submissions

  • Running payroll without reviewing figures

  • Using payroll without understanding director rules

  • Treating software outputs as advice

Most payroll problems come from these assumptions rather than software faults.

When QuickBooks payroll is a good fit

In my experience QuickBooks payroll works well where:

  • The business is small

  • Payroll is simple

  • There are few employees

  • Pay structures are straightforward

  • The owner is comfortable checking figures

For these businesses it can save time and keep systems tidy.

When QuickBooks payroll may not be the best option

QuickBooks payroll may not be ideal where:

  • Payroll is complex

  • There are many benefits in kind

  • Salary sacrifice schemes are used

  • There is frequent staff turnover

  • Compliance risk is high

  • The owner wants hands off payroll

In these cases dedicated payroll software or an outsourced payroll service is often better.

Using QuickBooks payroll with an accountant

Many of my clients use QuickBooks payroll alongside professional support.

This can work very well.

The accountant may:

  • Set up payroll initially

  • Review figures periodically

  • Handle year end reporting

  • Advise on director pay

  • Check compliance

This combines convenience with oversight.

Outsourced payroll versus in house payroll

QuickBooks payroll sits between fully manual payroll and fully outsourced payroll.

The choice depends on:

  • Time

  • Confidence

  • Risk tolerance

  • Cost

  • Complexity

There is no right answer for everyone.

Cost considerations

QuickBooks payroll pricing is usually based on:

  • A base fee

  • Plus a cost per employee

While this can look cheap initially costs add up as staff numbers grow.

It is also worth factoring in:

  • Time spent running payroll

  • Time fixing errors

  • Time dealing with HMRC

Sometimes outsourced payroll works out better value overall.

Payroll compliance is an ongoing responsibility

Regardless of the software you use payroll compliance does not stop once things are set up.

You must still:

  • Run payroll on time

  • Submit RTI reports

  • Pay HMRC on time

  • Manage leavers and joiners

  • Comply with pension rules

  • Keep records

Software helps but responsibility remains with the employer.

How I advise clients on QuickBooks payroll

When clients ask me whether to use QuickBooks payroll I always start with their situation rather than the software.

I look at:

  • Number of employees

  • Director pay strategy

  • Pension arrangements

  • Growth plans

  • Confidence with payroll

Then we decide whether QuickBooks payroll is appropriate or whether another solution would be better.

Final thoughts

So does QuickBooks do payroll. Yes it does and for many small UK businesses it can be a perfectly workable solution. It handles the core calculations RTI submissions and payslips and integrates neatly with the accounts.

However payroll is not just about pressing a button. It involves judgement setup and ongoing responsibility. QuickBooks payroll is a tool not a substitute for understanding or advice. Used in the right circumstances it can save time and keep things tidy. Used without understanding it can create compliance risks very quickly.

In my experience the best outcomes come when business owners understand what the software does and what it does not do and put the right level of review and support around it.

You may also find our guidance on how to submit an fps in quickbooks and what is quickbooks helpful when exploring related accounting software tasks. For a broader overview of software options and setup guidance, you can visit our accounting software hub.